Technical efficiency of local dairy milk processing in Kwara State, North Central, Nigeria

Abstract

This study examined the profitability and technical efficiency of local dairy milk processing in Kwara State using budgetary analysis and stochastic frontier model. Data set for the study was obtained through a randomly selected one hundred nomadic households in the state. The results of the budgetary analysis showed that local dairy milk processing was profitable in the study area with a net farm income of N683.25 per day. Results of the stochastic frontier efficiency model revealed the percentage efficiency to be 50-95 per cent with a mean of 76 per cent. The level of education of the nomadic household heads, the household size, as well as the years of experience in milk processing significantly reduced the inefficiency of local dairy milk processing in the study area. Improvement in the level of education of the milk processors will have positive implication on their technical efficiency.

Keywords: Technical efficiency, costs and returns, local milk processing, nomadic households, stochastic frontier model.