Labour and Diversification. An Efficiency Analysis of Cattle and Sheep Farms in Scotland

This analysis uses FADN data and Data Envelopment Analysis to estimate how efficient Scottish cattle and sheep farms are in their use of labour to deliver diversification outputs. Results show a strong difference between how efficiently paid and unpaid labour are used for creation of both diversification and livestock outputs, with unpaid labour scores consistently higher than paid labour scores. The efficiency of unpaid labour in creation of traditional livestock products as compared to diversification is, as expected, lower. Both paid and unpaid labour are more efficiently used on sheep farms than cattle farms to produce livestock outputs. It is less surprising that, compared to all other inputs, the use of unpaid labour is the most efficient for creation of diversification outputs, than it is the fact that unpaid labour is still highly efficient for creation of traditional livestock products, e.g., higher than land area and paid labour.