Scale efficiency in Australian dairy farms

Data Envelope Analysis, (DEA), a linear programming technique, provides a more consistent measure of efficiency than the commonly cited partial measures of farm efficiency. It yields a relative measure of efficiency and identifies inputs or outputs that are under utilized.In this paper, DEA is used to assess the technical efficiency of a sample of dairy farms across all dairy regions in Australia. Regions vary in size and scale of operation and are examined to see the relationship between farm size and technical efficiency, and to see if there is justification in the move towards bigger dairy production units than currently exist, given their factor mix.