Evaluation of Technical Efficiency of Dairy Farms in Embu County, Kenya

Dairy farming in Kenya is a major economic activity accounting for 3.5% of the national GDP and contributes to household incomes, food and employment. However, despite Kenya’s long dairy farming history spanning about 100 years, favourable climatic conditions and a 3.5 million national herd, its milk per capita consumption is low (76.7 kg)  and export quantities (milk) remain negligible. These observations raised the question of the performance of the farms, particularly their level of technical efficiency. This study evaluated the technical efficiency of dairy cow farms in Embu county of Kenya, using the stochastic frontier approach. Data were randomly collected from 96 farms. The sample size was determined using the Cochran’s (1977) formula. Data were analyzed using the SPSS and Frontier 4.1 c computer softwares. Stochastic frontier production function was estimated using the maximum likelihood estimation technique. The farms were characterized and their technical efficiencies estimated. Results revealed that the number of lactating cows and the amounts of roughages, concentrates, and mineral supplements were the major variables influencing milk output. The dairy animals received inadequate nutrients. The animals kept exceeded the farm’s carrying capacity. The mean farm technical efficiency was 85.5%, implying that milk production could be increased by 14.5% through better use of available resources, given the current state of technology without extra cost. The milk production model coefficient was 1.33. It was recommended that farmers specialize in one agricultural enterprise (dairy or crop farming) resulting from the small land sizes owned. Those choosing dairying, require shifting from the Friesians and Ayrshires to the smaller dairy breeds such as Jerseys. The policy makers require coming up with regulations that encourage enterprise specialization and discourage continued sub-division of agricultural land.