Measuring the Technical Efficiency of Milk Production in Punjab: Frontier Production Function Approach

Abstract

An effort has been made to examine the technical efficiency in milk production and the determinants thereof for different categories of 80 dairy farmers selected from Ludhiana and Patiala districts of Punjab state. The total number of milch animals on small medium and large farms were 2.70, 4.73 and 12.79, respectively with an overall average of 5.12 milch animals.  Overall, of the total costs, variable costs and fixed costs accounted for 84.4 and 15.2% respectively. The net returns were observed to be Rs 22568.9, Rs 81784.2 and Rs 340827.5 per farm in case of small, medium and large dairy units, respectively. The net returns per litre of milk were estimated to be Rs. 3.65, Rs. 7.49 and Rs.10.50 respectively on the respective farms with an overall average of Rs. 7.92. The results of mean technical efficiency indices of milk production indicates that the large dairy farmers (mean efficiency of 89.71) were most efficient in comparison to small and medium dairy farmers. The potential for technical efficiency improvement of milk production in terms of reducing milk production costs was higher for small farms (18.04%) in comparison to medium (9.32%) and large farms (8.86%). The technical efficiency of dairy farmers determined by farmer's level of education, herd size, price of milk received by the farmers and training were found to be significant. The study indicated that dairy farmers should be trained on a regular basis for appropriate feeding practices, rearing optimal herd size with quality animals, balanced nutrition and new technologies in milk production to attain maximum milk production and thus achieve more benefits. The policy should be advocated particularly to the small dairy farms as they are less efficient in terms of managing their farms efficiently.