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Measuring Cost Efficiency in Smallholder Dairy Farms: Empirical Evidence from Northeast Thailand

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Author Info
Lapar, Ma. Lucila A.
Garcia, Alexis
Aditto, Satit
Suriya, Patcharee
Abstract

This paper investigates smallholder dairy competitiveness from estimates of a translog cost frontier using data from 130 smallholder dairy farms in six provinces of Northeast Thailand. Cost efficiency estimates indicate that there is significant scope for improving cost efficiency in smallholder dairy farms in Northeast Thailand, and costs can be reduced by 26 percent on average. The empirical results also strongly suggest that smaller farms are more cost efficient than larger ones within this sample of smallholder dairy farms. Proper herd management for maintaining an optimal milking cows-herd size ratio coupled with yield-enhancing technologies can enhance cost efficiency. Feed technology options that can potentially reduce costs while maintaining yield levels may also have potential for doing so but the empirical evidence on this is weak, suggesting a gap between technology dissemination and successful adoption. Further validation may be needed towards adjustment in the technology to suit the varying circumstances and resources of smallholder dairy systems. Innovations for strengthening extension modalities and their delivery systems may also need to be explored to enhance the long-term viability of smallholder dairy systems.

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Publisher Info
Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19514.

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Date of creation: 2005
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Handle: RePEc:ags:aaea05:19514

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Related research
Keywords: cost efficiency; smallholder dairy; feed technology innovations; Farm Management;

References listed on IDEAS
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  1. Forsund, Finn R. & Lovell, C. A. Knox & Schmidt, Peter, 1980. "A survey of frontier production functions and of their relationship to efficiency measurement," Journal of Econometrics, Elsevier, vol. 13(1), pages 5-25, May. [Downloadable!] (restricted)
  2. Schmidt, Peter & Knox Lovell, C. A., 1979. "Estimating technical and allocative inefficiency relative to stochastic production and cost frontiers," Journal of Econometrics, Elsevier, vol. 9(3), pages 343-366, February. [Downloadable!] (restricted)
  3. Kumbhakar, Subal C & Ghosh, Soumendra & McGuckin, J Thomas, 1991. "A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(3), pages 279-86, July.
  4. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
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