Milk quota and the development of Irish dairy productivity: a Malmquist index using a stochastic frontier approach
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Several studies of the Irish dairy productivity and efficiency have been carried out in recent history, but none have been able to use Irish farm level data going back before milk quota’s implementation. This study uses recently digitized data going back as far as 1979 to examine trends in an index of Total Factor Productivity (TFP) constructed from the parameters of Greene’s ‘true random effects’ specification of the stochastic frontier. There is some evidence that the implementation of milk quota was associated with a general decrease in TFP, and the series also moves in line with changes in the policy which liberalised quota trade. Technical efficiency and scale efficiency are dominated by movements of the frontier as represented by the technical change component of the index.