SCALE EFFICIENCY IN AUSTRALIAN DAIRY FARMS
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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.
