Assessing dairy farming eco-efficiency in New Zealand: a two-stage data envelopment analysis

Abstract

The dairy industry is a significant contributor to the New Zealand economy. Improving dairy productivity while meeting appropriate environmental standards is necessary if the New Zealand economy is to grow sustainably. In this paper, a two-stage data envelopment analysis (DEA) technique was employed to assess the combined environmental and economic performance of dairy farms (i.e., eco-efficiency). A sample of 108 farms from a survey carried out in 2011-12 across all regions of New Zealand was used to analyse the eco-efficiency of dairy farms. Survey data on milk solid production was used to estimate economic performance, while data on greenhouse gas (GHG) emissions and nutrient leaching were used to estimate environmental performance. Other information in the survey such as geophysical characteristics and management practices that could indirectly affect the eco-efficiency of the dairy farms was also incorporated in the analysis. In the first stage of our analysis, an eco-efficiency score for each farm was estimated using directional distance function with restrictions in environmental outputs. In the second stage, the effect of the geophysical characteristics and management practices on the calculated eco-efficiency scores were then estimated using an integrated truncated regression and bootstrapping procedure. The results show that, on average, a reduction of 27% in environmental externalities was possible while maintaining the same level of output. GHG emissions, nitrogen leaching, and phosphorous loss were excessive and inefficient. Adopting irrigation and on-farm management practices (e.g., feedpad, in-shed feeding, and wintering-pad) improved efficiency. The few dairy farms located on hilly or sloped land were found to be less efficient than those on flat land. Environmental policies applied to dairy sector have the potential to reduce GHG emission, nitrogen leaching, and phosphorous loss by 3.45 million tonnes, 20,610 tonnes, and 366 tonnes, respectively.

Technical Efficiency of Cooperative and Non-Cooperative Dairies in Poland: Toward the First Link of the Supply Chain

“…The dairy sector's efficiency has been the subject of a number of studies worldwide. While many of them have addressed the question of efficiency at the farm level [28,[47][48][49][50][51][52][53][54][55][56][57][58][59][60][61][62][63][64][65], the problem of dairy efficiency seems to have received less attention.…”

Land use and water quality

“…The liquid is far more dilute thereby avoiding surplus N being applied to land and lost either as leachate or via denitrification to the atmosphere. Other papers examine the eco-efficiency of dairy systems in New Zealand and Uruguay (Darré et al 2021;Soliman and Djanibelkov 2021), and examine the use of actions to mitigate nutrients and sediment loss from land to water. This work asks what has been achieved over the last 20 years , informing what water quality would have looked look like if no action was taken.…”

Cows, cash and climate: Low stocking rates, high-performing cows, emissions and profitability across New Zealand farms

“…Anastasiadis and Kerr (2013) explored the relationship between GHG emissions and production using a simpler version of the same dataset. Other empirical literature employing cross-sectional farm-level data in New Zealand is scarce but includes Jiang andSharp (2014, 2015) and Soliman and Djanibekov (2018), who also use the NZMFD dataset. This paper expands on this research, using richer data and having a stronger focus on economic outcomes of direct concern to policy.…”

“…AgResearch ran these files through the more recent version of Overseer to provide the data we use in this paper.5 For more information on the NZMFD data, seeHenry et al (2017). For an application, seeSoliman and Djanibekov (2018).…”