Assessing input efficiencies of specialised milk farms in the EU by using a non-radial DEA approach

Context

The reduced utilisation of inputs in milk production holds significant importance from both sustainability and profitability perspectives.

Aim

This study examines the efficiencies of each input separately utilised in specialised milk farms across the European Union (EU) countries and explores the factors that influence input efficiencies by using non-radial data envelopment analysis (DEA) model with Russell measure method.

Methods

Data from the dairy report of the EU milk-specialised farms compiled by the European Commission (EC) and the Farm Accountancy Data Network (FADN) covering the period from 2013 to 2020 were analysed. The study employed a DEA model to assess efficiency, with a focus on energy, labour, dairy cows, homegrown feed, purchased feed, and operating costs.

Key results

Ireland, Italy, Malta, and the Netherlands demonstrated full efficiency across various aspects of milk production, highlighting their exemplary performance in resource utilisation within the EU. Furthermore, the study identified significant potential for efficiency improvements across the EU countries, with potential reductions ranging from 48.8% to 65.616% in various input usage categories.

Conclusions

The analysis underscored the importance of improving input efficiency to enhance competitiveness in the dairy sector.

Implications

As milk prices and economic performance improve, specialised milk farms tend to become more efficient in managing operating expenses. However, expanding the land area for forage may lead to diminishing returns in resource efficiency, indicating complex interactions and trade-offs affecting input efficiency.