Farming activities are often financed using debt, yet empirical studies investigating the relationship between farm debt structure and performance are still rare. Using a 10 year unbalanced panel of Broadacre farms in Western Australia, we relate the impact of long-term debt, short-term debt and tax liability on farm performance measured by input-oriented technical efficiency and return on assets. We find farm technical efficiency is positively related to short-term debt, tax liability and capital investment, but negatively related to off-farm income generating activities. Long-term debt has no effect on production efficiency and return on assets. These results are robust to both parametric and nonparametric methods of estimation.
