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Examining Returns to Scale in Smallholder Dairy Farms in East Africa

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  • Gelan, Ayele
  • Muriithi, Beatrice W.

Abstract

The study examined returns to scale in 371 dairy farms sampled from different districts in East Africa. First, data envelopment analysis (DEA) was applied to obtain three types of returns to scale – constant returns (CRS), variable returns (VRS) and increasing returns to scale (IRS). This revealed that 80 percent of the farms were scale inefficient. We find inverse relationship between scale efficiency and their size (measured in tropical livestock units), implying that the prevailing farm inefficiencies were not due to their small size but other farm resource constraints. Second, econo-metric analysis was conducted to explain differences among the farms across the three cases of returns to scale. Zero-grazing emerged as the most important determinant of farm efficiency. The scale efficiency based model fits the data better than the alternative CRS and VRS based econometric models.

Suggested Citation

  • 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.
    • Handle: RePEc:ags:qjiage:225952
    DOI: 10.22004/ag.econ.225952
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    2. Amolo Elvis Juma Amolo, PhD & Charles Mallans Rambo, PhD, 2021. "Stakeholders’ Empowerment and Implementation of Dairy Farming Projects in Muhoroni Sub-County, Kisumu County, Kenya," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 8(8), pages 141-146, August.
    3. Sirak Bahta & Amos Omore & Darek Baker & Iheanacho Okike & Berhanu Gebremedhin & Francis Wanyoike, 2021. "An Analysis of Technical Efficiency in the Presence of Developments Toward Commercialization: Evidence from Tanzania’s Milk Producers," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(3), pages 502-525, June.

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