Estimation of technical efficiency of dairy farms in central zone of Tigray National Regional State

This paper was conducted to estimate technical efficiency in milk production of dairy farmers in central zone of Tigray National Regional State using stochastic frontier production function approach. Cross-sectional data collected from 163 dairy farmer households was used in the analysis. The result shows that the average technical efficiency of sampled dairy farmer households is about 63.7%. It also shows that labor input by households and average amount of daily cost of crop residue/byproduct do not influence amount of milk produced when stochastic frontier and inefficiency effects are estimated in combination. The estimates of coefficients of other explanatory variables of stochastic frontier production function (i.e. number of lactating cows, average daily cost of purchased supplements, average daily health/veterinary expenditure and average amount of water consumed daily) are found to influence amount of milk produced positively. From the explanatory variables incorporated in inefficiency model sex of household head, extension contact and households off farm income do not influence inefficiency of dairy farmer households while age of household head, years of education of the household head and cattle size are found to influence inefficiency of dairy farmer households negatively. Age squared of household head and household sizes influence inefficiency of dairy farmer households positively. Thus, it can be concluded that by improving dairy farmers' access to education, family planning program and improving bureaucratic environment in providing extension services it is possible to increase amount of milk produced.