Abstract
This study measures the level of technical efficiency of smallholder cow milk producers using stochastic production approach of Cobb-Douglas production form and identified the possible cause for inefficiency in cow milk production using Tobit regression model. The data collected from 177 sample household randomly selected from pastoral and agropastoral Kebeles of Yabelo district. The result indicated the mean technical efficiency of cow milk producers of 71.42%. This means if producers are producing in fully efficient way, they can save on average 28.56% of their current input to produce their current output or increase their current milk output by 28.56% without additional inputs requirement. The gamma parameter, ℽ, was found to be 0.70 showing 70% of the deviation of actual output from potential output was due to technical inefficiency. Among the five inputs used, milk output was positively and significantly the function of labor, grazing land, and hay forage. The result of Tobit regression model shows that family size, size of livestock holding, extension contact, distance to veterinary clinic, distance to water positively and significantly contributed to inefficiency while age and education level of household head negatively and significantly affecting inefficiency of milk producers. Evidently intervention on access to water source, veterinary clinic, education, family planning and productivity oriented livestock holding will improve technical efficiency of cow milk producer of the study area. Keywords: Technical efficiency, stochastic production approach, Tobit regression, Yabello district. DOI: 10.7176/FSQM/99-01 Publication date: July 31 st 2020
Highlights
In Ethiopia, pastoralists and agro-pastoralists use 60% of the country’s land area (MoARD, 2005)
Enhancing production and productivity to sustain the growing demand for cow milk, understanding technical efficiency of milk producers found in this area is vital
The technical inefficiency determinants estimated showed age of household, family size, livestock ownership, distance to water, distance to veterinary clinic and distance to milk market was significant in determining inefficiency among the hypothesized determinant variables
Summary
In Ethiopia, pastoralists and agro-pastoralists use 60% of the country’s land area (MoARD, 2005). Despite relatively emerging market demand for milk from this area, productivity of livestock dairy is decreasing over time (Tache and Oba, 2010). Increasing dairy production and productivity has significant role in benefiting smallholder rural dairy producers in the dry areas of the country representing 65% of domestic milk output (FAO, 2011). Agricultural outputs can be increased by developing and adopting new technologies, by decreasing cost of inputs or by improving management practices. Low diffusion and adoption of new technology at farm level is among the problem facing dairy production in the country (Azage et al, 2013). Enhancing production and productivity to sustain the growing demand for cow milk, understanding technical efficiency of milk producers found in this area is vital. There is scanty empirical evidence on technical efficiency of milk producers in Ethiopia in Borana Zone. This study intended to contribute to technical efficiency literature of milk producers in quantifying the level of technical efficiency for cow milk producers of Yabelo district in Borana zone
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