Reasons for Variations in the Levels of Efficiency in Smallholder Dairy Milk Production in Sri Lanka: A Cross Sectional Data Analysis

In the light of poverty of dairy smallholders and the inability of the Sri Lankan dairy production sector to meet the national demand for dairy milk and milk products, this study looks into why there is a variation in the levels of efficiency achieved by farmers to highlight the policy measures to combat this issue. Using a production frontier, the average levels of efficiency was found to be very low at 52% relative to the most efficient farmer in the sample. This indicates that an efficiency gain of 48% can be achieved if this problem is properly addressed. Identified reasons for this high inefficiency is discussed in detail in this article. Findings suggest that a policy on development of smallholder dairy farming would essentially incorporate the development of veterinary services and knowledge transfer in the producing areas.

Keywords: Efficiency; Dairy smallholders

DOI: 10.4038/jfa.v1i2.1797

Journal of Food and Agriculture Vol.1(2) 2008 pp.30-39