Total factor productivity and sources of growth in the sheep and beef farm in New Zealand 1973-74 to 1990-91 : a thesis presented in partial fulfilment of the requirements for the degree of Master in Agricultural Economics at Massey University

Abstract

This study examined the productivity of the average sheep and beef farm in New Zealand during the period from 1973-1974 to 1990-1991. The Tomqvist quantity index method was used to construct the aggregate indices for inputs utilized and outputs produced on the farm. Total factor productivity was calculated as the ratio of the total output index to the total input index. Results of the study indicated an annual rate of growth of 1.6 percent in the productivity of the average sheep and beef farm in New Zealand. This originated from the combined effect of a 1.4 percent annual increase in total output and a 0.21 percent annual decrease in input usage. Farmer terms of trade during the study period has declined by 4.7 percent per year. Returns to costs ratio has. likewise, declined by 3.1 percent annually. An attempt was made to determine the sources of growth in the output of the farm using regression analysis. The explanatory variables considered included a climate factor, fertilizer subsidy, output assistance and a trend variable. It was determined that the trend variable was the only significant explanatory variable for the growth in TFP of the average sheep and beef farm. It was. thus, concluded that the growth in output of the average sheep and beef farm during the period from 1973-1974 to 1990-1991 has been caused by factors other than the climate, fertilizer subsidy and output assistance.