Analysis Of Factors Affecting The Technical Efficiency Of Smallholder Dairy Farmers In Njombe District

Mbehoma, Peternus M. (2013) Analysis Of Factors Affecting The Technical Efficiency Of Smallholder Dairy Farmers In Njombe District. Masters thesis, The Open University of Tanzania.

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Abstract

This study was conducted in nine dairy cattle keeping villages of Njombe District Council (NDC) with the overall objective of estimating Technical Efficiency (TE) and analyzing factors influencing Technical Inefficiency (TI) of smallholder dairy farmers. Cobb-Douglas stochastic frontier production function in which the parameters for the production frontier and for the inefficiency model were estimated jointly using the maximum likelihood technique on cross section data of 81 smallholder dairy farmers. The estimated TE ranged from 13% to 99% with a mean of 45.46% and SD of 24.113%. Analysis of TE results revealed that majority of respondents (61.7%) had TE below 50%. The implication of these findings is that majority of the respondents were technically inefficient and that the value of dairy production could be increased by 54.54% through better allocation and use of available resources. In addition, it was found that TI of smallholder dairy farmers is positively related to farmer’s age, gender, education level, experience, selling to processor, membership in dairy production and marketing group, off farm income and dairy herd size and negatively related to farmer’s marital status, use of hired labour, dairy training, extension contact and selling on credit. It is suggested that any policies that would attract young and married people to enter or remain into dairy production business would lead to improved TE in smallholder dairy production. TE could improve more if such policies are directed at attracting and encouraging more women to participate in business, implemented in areas where off farm employment opportunities are limited, more farm labour are available and selling is done on credit to reliable buyer allowing timely lump sum payments.

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