Technical efficiency and technological gap of New Zealand dairy farms: a stochastic meta-frontier model

The New Zealand North and South Island dairy farms differ in terms of climate, soil type and farming history. Using stochastic frontier models, an unbalanced panel of 1,294 dairy farms for the period between 1998/99 and 2006/07 is employed to test the hypothesis that the two regions share the same technology (The New Zealand dairy season runs from 1 June to 31 May each year). Results indicate heterogeneity in production technology across farms located in different islands. A meta-frontier model proposed by Battese et al. (J Product Anal 21:91-103, 2004) and O'Donnell et al. (Empir Econ 34:231-255, 2008) is therefore used to calculate the technological gap and compare on-farm technical efficiency.