Factors affecting production efficiency of smallholder dairy producers in Choma and Monze Districts

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Ikabongo, Ikabongo
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University of Zambia
Understanding the factors affecting smallholder dairy farmers' production efficiency is essential to having a vibrant competitive dairy sector. To investigate some of the causes of inefficiency, a study on technical efficiency was carried out in southern province. This study uses data from Center for Applied Research and Policy Analysis (CARPA), Data Envelopment Analysis (DEA) and Tobit regression analysis to measure and identify the factors influencing technical efficiency in 420 dairy farms, located in Choma and Monze district. One output (milk in litres) and three input types (cows, labour, land, and feed) were used to calculate the efficiency scores for each farm. A two-stage analysis was conducted to measure and explain the efficiency scores. In the first stage, the efficiency scores were measured using the DEA approach which was implemented with a linear programming method. The efficiency indices ranged from 0.02 through to 1 while average technical efficiency was at 17 percent. Of the 420 farms, only 11 farms (2.62 percent) were fully efficient with unity efficiency scores. About 75 percent of the farms have efficiency scores below 0.25. Thus, three quarters of the dairy farms could expand dairy production by at least 75 percent from the current level without any increase in the level of the inputs. In the second stage, a Tobit regression model was used to explain the efficiency scores by relating then to a range of explanatory variables. Empirical results from the regression analysis showed that the number of cows owned was statistically significant and positively influenced technical efficiency, whereas Socio-economic factors (such as sex of household head), and farm level factors (such as training and labour) were also statistically significant though influenced technical efficiency negatively.
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Dairy Farming-Zambia , Milk trade-Zambia