Financial viability of commercial dairy farms established under the third phase of the dairy-cattle importation project in Sri Lanka

The financial viability of dairy farms, established under the third phase of the Dairy-Cattle Importation Project in Sri Lanka, is assessed in this study. The data were obtained from a primary survey. The results of the Stochastic Frontier Approach revealed that the mean technical efficiency of farms was 44.9%. The average milk production of these farms was found to be lower than the expected production and the average cost of production of milk was higher than the average farm-gate price. Even though the financial performance of medium-scale farms was marginally better than the small-scale and large-scale farms, the difference was not statistically significant. The study indicates the need and the potential to improve the production efficiency of dairy farms established under the Dairy Cattle Importation Project to make them financially viable.