Fiona Thorne

The associations of management and demographic factors with technical, allocative and economic efficiency of Irish dairy farms

The phasing out of the European Union (EU) milk quota will create opportunities for producers to expand without the constraint of quota which has limited expansion since 1984. Therefore, it will be necessary for Irish dairy producers to become more competitive by increasing performance using the least amount of inputs per unit of output and maximizing the level of technical and economic efficiency. The objectives of the current study were to measure technical, allocative and economic efficiency, and to investigate the associations of key management, qualitative and demographic characteristics on efficiency. Efficiency scores were calculated using the non-parametric methodology data envelopment analysis (DEA). The DEA results showed that on average the sample of Irish dairy producers were not fully efficient in 2008 with technical, allocative and economic efficiency results under variable returns to scale (VRS) of 0·771, 0·740 and 0·571, respectively. In a second stage analysis, Tobit regressions were used to determine the associations of key variables with the technical, allocative and economic efficiency scores. The efficiency scores were included as dependent variables and the key independent variables were a variety of management and demographic variables. Mean calving date, number of grazing days, breeding season length, milk quality, discussion group membership and soil quality were all associated with technical and economic efficiency. Milk recording, use of artificial insemination (AI) and level of dairy specialization were associated with allocative and economic efficiency only. Age and age squared were the only significant demographic associations with the efficiency scores.

A comparison of stochastic frontier approaches for estimating technical inefficiency and total factor productivity

This article compares standard stochastic frontier models for panel data with a number of recently developed models which attempt to control for unobserved heterogeneity in the inefficiency component. Results are used to construct a generalized Malmquist Total Factor Productivity (TFP) index for the Irish tillage sector. While our application yields similar general TFP trends across models, it is evident that this new class of model leads to fewer theoretical inconsistencies in the production frontier. Furthermore, inefficiency estimates across models are critically compared and the potential benefits of controlling for unobserved heterogeneity are highlighted.

The Location Economics of Biomass Production for Electricity Generation

The opening decade of the twenty-first century has been marked by substantial increases in the cost of fossil-fuel based energy. This increase in energy costs has been driven by a variety of factors including the diminishing availability of these resources, political uncertainty in some of the major fossil-fuel producing regions of the world and a rapidly increasing demand from growing economies such as China and India (Clancy et al. 2008). Ireland, given its limited availability of domestic fossil-fuel, is particularly vulnerable to the uncertainty regarding future energy supply and prices. Furthermore, concerns over man-made greenhouse gas (GHG) emissions and their potential impact on global climate change have fostered a desire in many countries for substitution of fossil-fuels which produce high levels of GHG emissions with renewable energy sources. For example, the European Union (EU) has proposed that 20 % of EU energy consumption should be from renewable energies by 2020 (Directive 2009/28/EC). As a result, Irish energy policy is set firmly in the global and EU context which has put energy security and climate change among the most urgent international challenges (Department of Communications and Marine and Natural Resources 2007). This combination of economic, regulatory and environmental pressures heightens Ireland’s need to identify viable alternative renewable energy sources.

The Role of Innovation in Farm Economic Sustainability: Generalised Propensity Score Evidence from Irish Dairy Farms

We assess the impact of innovation on Irish dairy farm economic sustainability by focusing on profitability, productivity of land and market orientation. A generalised propensity score method is applied to a representative sample of 342 Irish dairy farms. Our empirical findings reveal that innovation increases economic sustainability, but not in a linear way. More specifically, economic gains depend on the level of innovation. Small efforts to increase innovation can lead to economic gains of over €200 per hectare. The results also reveal that innovative farmers can achieve higher economic gains by further innovation. Overall, our findings support the current focus of the Irish extension system on fostering the uptake of innovative technologies and practices in order to achieve an economically sustainable expansion of the dairy sector.

The Effects of Direct Payments on Technical Efficiency of Irish Beef Farms: A Stochastic Frontier Analysis

The 2003 Mid‐Term Review of the CAP sought to refocus the EUs farm support policy to foster a more competitive and market‐orientated agricultural sector. The foundation of this reform comprised the introduction of decoupled payments to farmers, replacing the EUs previous system of supports that were directly linked to production of designated crops and livestock. This paper explores the effect of coupled payments and their subsequent replacement by decoupled support, on the technical efficiency of specialist beef farms in Ireland. Given the high reliance of beef farmers in Ireland on CAP payments, the decoupling of payments has been especially important for the sector. A stochastic production frontier is estimated using a panel dataset comprising detailed accountancy data for Irish beef farms between the years 2000 and 2013. Our results indicate that technical efficiency in the beef farming sector has been consistently poor, with an average efficiency score of only 0.53 during the period analysed. However, we found that direct income received in the form of coupled payments had a positive impact on farm efficiency, and that this positive effect was maintained after their replacement with decoupled income support.