Measuring the Impact of Extreme Weather Phenomena on Total Factor Productivity of General Cropping Farms in East Anglia

Measuring the Impact of Extreme Weather Phenomena on Total Factor Productivity of General Cropping Farms in East Anglia

Yiorgos Gadanakis (School of Agriculture, Policy and Development, University of Reading, Reading, UK) and Francisco Jose Areal (University of Reading, Reading, UK)
DOI: 10.4018/IJFBMBM.2018010101


One of the main challenges of climate change on agriculture in UK is how to adapt to the potential changes to the availability of water. Changes in rainfall distribution may potentially lead to an increase in drought frequency, magnitude and duration. In this research a Data Envelopment Analysis (DEA) and a Malmquist Index (MI) are combined with a double bootstrap methodology to measure changes in Total Factor Productivity of general cropping farms in East Anglia. More specifically, the DEA technique was used to measure the year by year efficiency score for the farms in the sample and the MI and its components used to derive information on productivity over time. Data for the input – output models was obtained from the Farm Business Survey. Climate change is taken into consideration by using data for water cost as a proxy indicator of water consumption per farm. Results reveal changes in total, technical and scale efficiency and provide information on how the 2011 drought affect the TFP of the farms in the sample.
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Measurements of Total Factor Productivity (TFP) growth have been widely used in agriculture as a quantitative economic instrument to evaluate production performance of farming systems in subsequent periods (Melfou, Theocharopoulos, & Papanagiotou, 2013). The decomposition of TFP into the efficiency and technical index components and the observation of the trends in consecutive years contribute to the design of targeted policies aiming to improve agricultural productivity and sustainable development.

Two of the most important challenges for the future growth of agricultural systems globally are climate change and increased food demand. Global food demand is likely to increase by 70% by 2050 due to both population growth and changes in consumption patterns (Foresight Report, 2011). On the other hand, the impacts of climate change may vary globally and at a national level both in magnitude and nature (positive and negative effects) (Falloon & Betts, 2010).

Changes in rainfall and temperature may have a significant impact on agricultural production for the UK and hence they may influence the way that crops develop, grow and yield (Knox, Morris, & Hess, 2010; Murphy et al., 2009). Furthermore, there may also be indirect impacts such as the increased risk and spread of pests and diseases and the suitability of land for agricultural production, especially in parts of East Anglia due to saltwater intrusion and flooding from sea level rise (Knox et al., 2010).

Recent extreme weather phenomena in the UK during the period of 2007-2013, such as the floods of 2007, the drought periods of 2010 and 2011, and the subsequent floods of 2012 and 2013, had an impact on TFP recorded by the Department for the Environment, Food and Rural Affairs (Defra). Specifically, TFP in 2007 was at its lowest level during the aforementioned period (98.2) and fell by 2.9% for the period 2011-2012 (98.7) reaching the levels of 2007. According to Defra (2013), the main reasons for the variation in TFP estimates between years are factors outside the control of farmers such as extreme weather phenomena and disease outbreaks.

In the case of the East Anglian River Basin Catchment (EARBC), increased temperatures and reduced precipitation have direct impacts on the hydrological structure of the area (Defra, 2009; Environment Agency, 2008, 2011) due to increased water abstraction rates for agriculture and decreased water availability. Consequently, both climate change and the reduction in hydrological resources may affect the growth of TFP in the EARBC. Any desire for a secure food supply, efficient management of natural resources, and resilience to more frequent extreme weather phenomena requires the development of adaptation strategies for farmers and for prioritising the need for the sustainable intensification (SI) of agriculture (FAO, 2011; Foresight Report, 2011). Firbank, Elliott, Drake, Cao, and Gooday (2013) define SI at farm level as the process of increasing agricultural production per unit of input whilst at the same time ensuring that environmental pressures generated at a farm level are minimised. Thus, the main priority under the framework of SI is the increase in productivity of farming systems. In addition, according to Gadanakis, Bennett, Park, and Areal (2015), SI can be perceived as the trade-off between production efficiency and environmental efficiency and hence evaluated with the use of an eco-efficiency indicator.

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