DETERMINANTS OF PROFIT EFFICIENCY OF SMALLHOLDER DAIRY PRODUCTION SYSTEMS IN GULU CITY AND GULU DISTRICT, UGANDA
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Date
2024-01
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Gulu University
Abstract
Dairy production systems in Uganda are still plagued by yield gaps, post-harvest losses, inadequate coordination, and ineffective marketing strategies. This has resulted in inefficiency and low productivity, even though this sector has been strategically invested in to increase income and food security. The study estimated profit efficiency, characterized dairy production systems, and determined the factors influencing profit efficiency. The maximum likelihood process was used in conjunction with a one-step stochastic profit frontier approach to estimate the profit efficiency and causes of profit inefficiency for 191 smallholder dairy farmers. Results show that the profit efficiency of smallholder dairy production systems is driven by land size, vet cost, costs of feed, cost of equipment, and the cost of labor. Findings further indicate that the inefficiency of smallholder dairy production systems is driven by age, years of experience, family size, gender, marital status, access to extension service, access to credit, group membership, and Friesian breed type. The study thus urges the development of labor-saving technology, the provision of farmers with inexpensive local feed, and the enhancement of extension services. The disparities in profit efficiencies among dairy production systems necessitate bench marking among top performers and intervention tailored to those systems.
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Keywords
Dairy, smallholder, stochastic frontier Approach, Profit efficiency, Production systems, Gross margin, Return on investment