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Does Access to Modern Marketing Channels Improve Dairy Enterprises’ Efficiency? A Case Study of Punjab, Pakistan

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  • Sana Sadaf

    ()

  • Khalid Riaz

    ()
    (Department of Management Sciences, COMSATS Institute of Information Technology, Islamabad, Pakistan.)

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    Abstract

    The main objective of this study is to investigate how access to modern marketing channels impacts the efficiency of dairy enterprises. Using data on dairy farms in central Punjab (Sargodha), we carry out a nonparametric data envelopment analysis to measure their technical and scale efficiencies. The results show that, for the sample dairy enterprises, the mean technical efficiency under variable returns to scale was 0.89 while scale efficiency was 0.94. The results of a follow-on regression analysis support the hypothesis that the access to modern marketing channels, where payment for fresh milk is based on measured milk quality (fat content), improved efficiency. We find that efficiency is positively affected by the size of dairy operations, and negatively by the size of operational land area. Moreover, dairy enterprises with smaller herds tend to operate at a suboptimal scale, possibly due to credit and/or land constraints.

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    Bibliographic Info

    Article provided by Department of Economics, The Lahore School of Economics in its journal Lahore Journal of Economics.

    Volume (Year): 17 (2012)
    Issue (Month): 1 (Jan-June)
    Pages: 63-82

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    Handle: RePEc:lje:journl:v:17:y:2012:i:1:p:63-82

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    Keywords: Dairy; marketing; Punjab; Pakistan.;

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    1. Abid A. Burki & Mushtaq A. Khan, 2008. "Milk Supply Chain and Efficiency of Smallholder Dairy Producers in Pakistan," Microeconomics Working Papers 22252, East Asian Bureau of Economic Research.
    2. Rios, Ana R. & Shively, Gerald E., 2005. "Farm size and nonparametric efficiency measurements for coffee farms in Vietnam," 2005 Annual meeting, July 24-27, Providence, RI 19159, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Finn Førsund & Nikias Sarafoglou, 2002. "On the Origins of Data Envelopment Analysis," Journal of Productivity Analysis, Springer, vol. 17(1), pages 23-40, January.
    4. Tim Coelli & Sanzidur Rahman & Colin Thirtle, 2002. "Technical, Allocative, Cost and Scale Efficiencies in Bangladesh Rice Cultivation: A Non-parametric Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 607-626.
    5. Dhungana, Basanta R. & Nuthall, Peter L. & Nartea, Gilbert V., 2004. "Measuring the economic inefficiency of Nepalese rice farms using data envelopment analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), June.
    6. Basanta R. Dhungana & Peter L. Nuthall & Gilbert V. Nartea, 2004. "Measuring the economic inefficiency of Nepalese rice farms using data envelopment analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(2), pages 347-369, 06.
    7. Wossink, Ada & Denaux, Zulal S., 2006. "Environmental and cost efficiency of pesticide use in transgenic and conventional cotton production," Agricultural Systems, Elsevier, vol. 90(1-3), pages 312-328, October.
    8. Jaforullah, Mohammad & Whiteman, John, 1999. "Scale efficiency in the New Zealand dairy industry: a non-parametric approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(4), December.
    9. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
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