Sources of technical inefficiency of smallholder farmers in milk production in Ethiopia
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This paper estimates technical inefficiency in milk production of smallholder dairy
farmers in the highlands of Ethiopia and identifies factors associated with the
observed inefficiency using a stochastic frontier production function approach. The
analysis utilizes cross-section data collected from 1277 farmers. The result indicates
a mean technical efficiency of 55%, suggesting sizeable technical inefficiency in milk
production. The results further show that household wealth, education level and
access to markets and institutions are the main drivers of technical efficiency in
dairy production. Evidently by improving smallholder access to market and
institutions as well as investing on adult education, it is possible to bring
considerable gain in milk production.