Determination of Factors Affecting Technical Efficiency

Smallholder dairy farming is practiced in Rwanda aiming at generating income and nutrients in households; however, the efficiency in smallholder dairy farming is highly disputed. This study examined factors affecting the technical efficiency of smallholder dairy farmers in Nyanza District with estimation of the marginal gross profit of smallholder dairy production. Stratified random sampling was adopted to determine the respondents. Primary data were drawn from 110 smallholder farmers using structured questionnaires. Non-parametric approach, Gross margin, and Stochastic Frontier were employed. The results revealed that socio-economic factors and institutional factors directly affect the technical efficiency of smallholder dairy production. The result also indicated that the average gross profit margin per farmer per cow per year of 72.57 USD was very low. The study will help the government and smallholder dairy farmers in organizing themselves in groups for bulk purchases of inputs during high season this will end up reducing unnecessary cost of transporting and price increase of inputs during low season hence increasing milk production.