Abstract:
This study aimed at determining the technical and cost efficiencies of dairy cow farms in Embu and Meru
counties of Kenya, as indicators of milk access potential. Data were collected from 135 randomly sampled
farms in 2010. The sample size was determined using the Cochran’s (1977) formula. Data were collected using
semi-structured questionnaires, after which they were entered into the excel spreadsheets and
edited.Stochastic frontier production and cost functions were estimated using the maximum likelihood
estimation (MLE) technique. Results revealed that the number of lactating cows and the amounts of
roughages, concentrates, and mineral supplements were the major factors influencing milk output, while the
prices of roughages and labour caused most variation in the production cost. The mean farmers’ technical and
cost efficiency indices were 0.837 and 1.044, respectively. The function coefficient of the production model
was 2.11. These results implied that milk production could be increased by 16.3% through better use of
available resources given the current state of technology without extra cost, while the cost of milk production
could be decreased by about 4.4% without decreasing output. It was concluded that optimization of farm
efficiencies while taking advantage of economies of scale through increased production inputs could be part of
short-term measures to address the challenges facing smallholder dairy farming. The researchers require
identifying inefficiency determinants and ensuring stakeholder involvement in the process to enhance
adoption of the outputs. The policy makers should discourage sub-division of agricultural land while
concurrently promoting enterprise specialization, support approaches to make feed concentrates, mineral
supplements and chaff-cutters affordable, and emphasize on the reduction in cost of production.
