An application of data envelopment analysis (DEA) in Azores dairy farms

Abstract

This research measures the Azores dairy farms' technical efficiency by applying a non-parametric efficiency analysis to a panel data of 122 dairy farms from the Azores, Portugal, for 1996. The analysis used DEA with constant and variable returns to scale models, with an input-oriented model approach. Two outputs (milk production and subsidies) and three inputs (agricultural area, number of dairy cows and variable and fixed cost) were considered relevant. The results suggest that the average technical efficiency is very low (66.4%) compared with published research data, and only a few (7%) dairy farms were found to be efficient.