Dairy productivity growth, efficiency change and technological progress in Victoria

The research in this paper considers the question of the possible sources of total factor productivity (TFP) change in the Victorian dairy sector between 2007–08 and 2010–11. The analysis explores the components of TFP growth for a sample of dairy enterprises in Victoria using farm monitor data collected by the Department of Primary Industries Victoria (DPI). Specifically, the research considers the contributions of technological progress and technical efficiency changes to TFP growth using the Malmquist index based on a decomposition of TFP change. The productivity estimates are compared to financial measures of farm performance and to qualitative farm performance assessments made by DPI field staff.