Abstract:
The dairy sector is a fundamental component of the rural economy in Sri Lanka.
However, production in the Dry Zone is hampered by low productivity and suboptimal
resource allocation. This study was conducted to evaluate the factors influencing the
technical efficiency of dairy production across diverse farming systems in the Dry Zone
and to identify potential productivity improvements within existing resource
constraints. Primary data were gathered from a sample of 215 dairy farmers, selected
through a stratified random sampling technique across the Kurunegala, Anuradhapura,
Hambantota, and Jaffna districts, encompassing intensive, semi-intensive, and
extensive management systems. A stochastic frontier production function, employing
the Cobb–Douglas functional form, was utilised to estimate technical efficiency, while
an inefficiency effects model was applied to determine the impact of farmer-specific
characteristics. The results demonstrate that the mean technical efficiency of dairy
farming in the Dry Zone is 0.60, indicating that milk output could be increased by
approximately 40% through the enhanced utilization of current inputs. Key farm-level
determinants of milk production included the number of milking animals, the quantity
of concentrate feed, pasture availability, frequency of water supply, and the provision
of cattle sheds. The dairy sector was predominantly managed by male farmers (93%),
with 77% of respondents aged 30–60 years. While 82% had education only up to the
G.C.E. (O/L) level, more than 60% possessed over 15 years of dairy farming
experience. Furthermore, farmer experience and participation in training
programmes were found to significantly decrease technical inefficiency. District
variations were evident, with higher efficiency levels recorded in Kurunegala and
Anuradhapura compared to Hambantota and Jaffna, where extensive management
practices are more common. These findings suggest that prioritizing herd
optimization, ensuring consistent feeding and water access, and strengthening
extension services are vital for enhancing productivity. Improving technical efficiency
can reduce production costs, raise farm incomes, and support national objectives for
dairy self-sufficiency.
