An application of data envelopment analysis to irrigated dairy farms in Northern Victoria, Australia

In this paper, data envelopment analysis (DEA) is used to assess the technical efficiency of a sample of irrigated dairy farms in Northern Victoria, Australia. It is proposed that DEA is a useful tool in helping to benchmark the dairy industry, which is continually striving to improve its productive efficiency. DEA takes a systems approach in that it takes account of the relationship between all inputs and outputs simultaneously. DEA yields a more consistent measure of efficiency than the more frequently reported partial indicators of farm efficiency. In addition, DEA yields a relative measure of efficiency and it identifies those inputs and/or outputs that are being under-utilised. From an extension perspective this is extremely useful information as it can assist in identifying industry best-practice.