Measurement of Scale Efficiency in Dairy Farms: Data Envelopment Analysis (DEA) Approach

Bassam Aldeseit

Journal of Agricultural Science, 2013, vol. 5, issue 9, 37

Abstract: This study aimed at evaluating the performance of sampled dairy farms using farm level technical and scale input oriented efficiencies. To achieve the objective of the study Data Envelopment Analysis (DEA) was used to analyze data collected from 120 dairy farms in Jordan. Scale efficiency scores were estimated using constant return to scale and variable return to scale DEA models. The results revealed that the sampled farms were not operating at an optimal size. On average, the scale efficiency estimated at approximately 0.66, indicating scale-inefficiency under both constant returns to scale and variable returns to scale. This inefficiency indicates that the sampled dairy producers were overusing inputs to produce their level of output. To increase scale of operation dairy farmers in Jordan should increase the overall degree of technical efficiency. Extension services can assist in identifying the best management practices on how to improve farms technical efficiency.

Date: 2013
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