The sources of total factor productivity growth, changes in technical efficiency and the threshold effects of herd size on the productivity of New Zealand dairy farms : A thesis submitted in partial fulfilment of the requirements for the Degree of Doctor of Philosophy at Lincoln University

Abstract

Many studies have been carried out to analyse dairy farms’ production performance but, for New Zealand, only a limited number have gone beyond the technical efficiency (TE) component of farm productivity. The current study aims to: (1) analyse the regional total factor productivity (TFP) growth and the role of different components, i.e. technological progress, technical efficiency change, and scale effect change in increasing TFP; (2) assess the regional differences in technical efficiency (TE) and the technological gap; and (3) investigate the threshold effects of herd size on the productivity of New Zealand dairy farms. The data for the TFP and TE analysis are unbalanced farm-level panel data from the 2004-05 to 2019-20 seasons, for 2,001 farms and 9,943 observations from the DairyNZ surveys. Farms are grouped into three regions: Region 1 (Northland and West Coast-Tasman); Region 2 (Waikato, Bay of Plenty, Taranaki and Lower North Island); and Region 3 (Marlborough-Canterbury, Otago-Southland). Stochastic frontier models are used to estimate the production functions for three different regions and to calculate the TFP growth. The results indicate heterogeneity in the different areas so a state-of-the-art stochastic meta-frontier approach is used to estimate TEs and technological gap ratios (TGRs). For the threshold analysis, the study uses balanced panel data from the 2015-16 season to the 2019-20 season (1,770 observations). The results suggest that there are different effects of herd size on productivity, and the significance of other inputs and farm-specific variables are evaluated. This study provides empirical evidence of the relative importance of the various components of TFP growth and distinct TE scores in different regions, and provides empirical evidence of the threshold effects of herd size on dairy farms’ productivity.