Technical efficiency in milk production in underdeveloped production environment of India*

The study was undertaken in Kumaon division of Uttarakhand state of India with the objective of estimating technical efficiency in milk production across different herd-size category households and factors influencing it. Total of 60 farm households having representation from different herd-size categories drawn from six randomly selected villages of plain and hilly regions of the division constituted the ultimate sampling units of the study. Stochastic frontier production function analysis was used to estimate the technical efficiency in milk production. Multivariate regression equations were fitted taking technical efficiency index as the regressand to identify the factors significantly influencing technical efficiency in milk production. The study revealed that variation in output across farms in the study area was due to difference in their technical efficiency levels. However, it was interesting to note that smallholder producers were more technically efficient in milk production than their larger counterparts, especially in the plains. Apart from herd size, intensity of market participation had significant and positive impact on technical efficiency in the plains. This provides definite indication that increasing the level of commercialization of dairy farms would have beneficial impact on their production efficiency.