Technical Efficiency in Cow Milk Production: The Case of Babile District of Eastern Hararghe Zone, Oromia National Regional State, Ethiopia

Abstract

This study was aimed to examine the technical efficiency of cow milk production in the Babille district. Data were collected from 152 farmers those selected by randomly sampling technique and analysed using descriptive statistics and stochastic frontier production function. Accordingly, the return to scale (1.85) of the production function revealed that the farmers operated in the irrational zone of the production surface. The estimated gamma parameter (γ) for production function was 0.838, indicating that about 84%of the variation in the output of milk among the farmers differed due to their technical efficiencies. The estimated sampled household level technical efficiency ranged between 41 to 94% with a mean of 75.92%. It has been shown that farmers have potential to increase milk production by about 24% at the existing level of technological development. However, improvement in technical efficiency in milk production requires augmentation of feed and fodder resources as well as intervention with improved cow breed. There is a need for improving extension contact which had significant and positive impact on technical efficiency. The result also shows that rising age would lead to a decline in the efficiency means, and hence, the government policy should focus on ways to attract and encourage young people who are agile and aggressive in Dairy business.

Keywords: Babille district, Cow milk, stochastic frontier approach, Technical Efficiency