Efficiency of the Dairy Farms: A Study from Azores (Portugal)

Abstract

Azores dairy represents 30% of Portuguese production. The farms are dominated by family nature and a relevant part of them are an exclusive source of the producer's income. Nowadays, the milk production has some problems due to the falling prices of milk on the producer and the European milk quotes abolishment. This situation requires the assessment of the Azorean dairy farms efficiency as a way to rationalize the use of the factors of production for the milk production. The aim of this research is to estimate the Technical Efficiency (TE) in two different groups of farms, of which the used criteria were to earn incomes exclusively from farm (Full-Time Farmer, FTF) or to have another complementary source of income (Partial-Time Farmer, PTF). The farms database was provided by a farmers' association and the Data Envelopment Analysis (DEA) was chosen for modelling TE estimation. The main findings show the inexistence of substantial differences in the farms performance with or without complementary sources of income (0.679 for PTF and 0.689 for FTF). However, the most efficient farms are related with the main source of income.