Measuring the technical efficiency of milk production in Punjab: Frontier production function approach

An effort has been made to examine the technical efficiency in milk production and the determinants thereof for 80 dairy farmers, selected from Ludhiana and Patiala districts of Punjab state. The total number of milch animals on small, medium, and large farms was 2.71, 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 85.0 and 15.0 percent 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 7.50 and Rs 10.51, respectively on the respective farms with an overall average of Rs 7.92. The farmers intended to realize 77.30 percent of the technical abilities and potential for improvement in technical efficiency in milk production was 21.3 percent. This implies that dairy farmers could enhance the milk production by 21.30 percent with existing level of technology and resources. The technical efficiency of dairy farmers determined by age of farmers, land holding, price of milk received by the farmers and training were found to be positive and 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, and new technologies in milk production to attain maximum milk production and thus achieve more benefits. Besides, strong and effective linkage of farms to market could provide incentives towards increasing their efficiency in milk production. Dairy farmers can gain considerable higher profits by increasing the efficiency in their operations.