TECHNICAL EFFICIENCY OF DAIRY FARMS IN ETHIOPIA: THE CASE OF SEBETA TOWN AND SELECTED SUB- CITIES OF ADDIS ABABA

Abstract

The purpose of the study was to analysis the technical efficiency of dairy farm milk producers on sampled area which located in Sebeta town and the sub cities of Addis Ababa town two woreda administrative neighbors to Sebeta. A sample of 530 target population was selected using purposive and random sampling techniques and among these 100 were sampled households were selected randomly using probability proportionality size following a simplified formula provided by Yamane (Yamane, 1967). Data were analyzed using the Stochastic Frontier Production Function (SFPF) to estimate the level of technical, efficiency of the dairy milk producers. Both primary and secondary data were collected and the data was analyzed using descriptive statistic and econometric analyzing method. The results of the model showed that two of the input variables in the production function: i.e. herd size and labor man-day’s had a positive significant effect on technical efficiency level of dairy milk productivity. The result of the efficiency scores indicates that the mean of technical efficiency was found to be close 83.60%. The estimation of the Tobit regression model showed that age, education level, of farm owner, training service and marketing facility, were found to be statistically significant in explaining the variation in the level of technical efficiency of the dairy farm milk producers in the study area.