IDEAS home Printed from
   My bibliography  Save this article

Measuring and explaining technical efficiency of dairy farms: a case study of smallholder farms in East Africa



This article measures and explains the technical efficiency (TE) of 371 dairy farms located in 17 districts in East African countries. Three output and 10 input types were used to calculate the efficiency score for each farm. A two-stage analysis was conducted to measure and explain the efficiency scores. Firstly, the efficiency scores were measured by a data envelopment analysis (DEA) approach, which was implemented using a linear programming (LP) method. About 18 per cent of the farms were fully productive, each with an efficiency score of unity, which means this group is currently operating on the production possibility frontier. About 32 per cent of the farms had efficiency scores below 0.25, which means that about a third of the dairy farms would need to expand their dairy production by at least 75 per cent from the current level without any increase in the level of inputs. Secondly, a fractional regression method was used to explain the efficiency scores by relating them to a range of explanatory variables. The findings indicate that technology adoption factors, such as the existence of improved breeds, and feed and fodder innovations (e.g., growing legumes), have positive and statistically significant effects on the level of efficiency. Similarly, zero-grazing seems to have positive and highly significant effects. As far as marketing variables are concerned, selling milk to individual consumers or organisations seems to contribute positively and more significantly to dairy efficiency than other marketing outlets such as traders or chilling plants. Membership of a dairy cooperative has a positive effect but is not statistically significant.

Suggested Citation

  • A. Gelan & B.W. Muriithi, 2012. "Measuring and explaining technical efficiency of dairy farms: a case study of smallholder farms in East Africa," Agrekon, Taylor & Francis Journals, vol. 51(2), pages 53-74.
  • Handle: RePEc:taf:ragrxx:v:51:y:2012:i:2:p:53-74
    DOI: 10.1080/03031853.2012.695140

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    1. Esmeralda Ramalho & Joaquim Ramalho & Pedro Henriques, 2010. "Fractional regression models for second stage DEA efficiency analyses," Journal of Productivity Analysis, Springer, vol. 34(3), pages 239-255, December.
    2. O'Donnell, Christopher J. & Coelli, Timothy J., 2005. "A Bayesian approach to imposing curvature on distance functions," Journal of Econometrics, Elsevier, vol. 126(2), pages 493-523, June.
    3. Papke, Leslie E. & Wooldridge, Jeffrey M., 2008. "Panel data methods for fractional response variables with an application to test pass rates," Journal of Econometrics, Elsevier, vol. 145(1-2), pages 121-133, July.
    4. Guy Nkamleu, 2004. "Productivity Growth, Technical Progress and Efficiency Change in African Agriculture," African Development Review, African Development Bank, vol. 16(1), pages 203-222.
    5. Tim Coelli & Gholamreza Hajargasht & C.A. Knox Lovell, 2008. "Econometric Estimation of an Input Distance Function in a System of Equations," CEPA Working Papers Series WP012008, School of Economics, University of Queensland, Australia.
    6. Resti, Andrea, 1997. "Evaluating the cost-efficiency of the Italian Banking System: What can be learned from the joint application of parametric and non-parametric techniques," Journal of Banking & Finance, Elsevier, vol. 21(2), pages 221-250, February.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Msangi, Haji Athumani, 2017. "Examining The Inverse Relationship Between Farm Size And Efficiency In Tanzanian Agriculture," Research Theses 276448, Collaborative Masters Program in Agricultural and Applied Economics.
    2. Gelan, Ayele & Muriithi, Beatrice W., 2015. "Examining Returns to Scale in Smallholder Dairy Farms in East Africa," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 54(3), pages 1-23, September.
    3. Rahman, Sanzidur & Awerije, Brodrick O., 2014. "Marketing efficiency of cassava products in Delta State, Nigeria: A stochastic profit frontier approach," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 4(1), October.
    4. Bardhan, D. & Sharma, M.L., 2012. "Determinants and Implications of Smallholder Participation in Dairy Co-operatives: Evidence from Uttarakhand State of India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 67(4), pages 1-20.
    5. Awerije, Brodrick O. & Rahman, Sanzidur, 2014. "Profitability and efficiency of cassava production at the farm-level in Delta Stae, Nigeria," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 3(4), pages 1-9.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ragrxx:v:51:y:2012:i:2:p:53-74. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.