An economic analysis of performance and efficiency in dairy farming

Abstract

Dairy farming plays a crucial role in enhancing rural livelihoods, nutritional security and farm income in India. Improvement in the performance and efficiency of dairy enterprises is essential for ensuring their economic sustainability, particularly in the context of rising input costs and resource constraints. The present study aims to examine the performance and economic efficiency of dairy farming at the farm level. The analysis is based on primary data collected from sample dairy farmers through a structured survey, covering information on herd size, input use, costs, milk yield, and returns. Standard cost and return analysis was employed to assess the economic performance of dairy farms, while efficiency measures such as technical, allocative, and economic efficiency were estimated using appropriate frontier or ratio-based techniques. The results reveal significant variation in milk productivity, cost of production, and profitability across different farm size categories. Feed and fodder costs emerged as the major component of total production cost, followed by labour expenses. Efficiency analysis indicates that considerable scope exists for improving resource use efficiency, particularly among small and marginal dairy farmers. Factors such as herd size, access to veterinary services, adoption of improved feeding practices, and management skills were found to significantly influence the efficiency levels of dairy farms. The study concludes that enhancing managerial efficiency, promoting scientific dairy practices, and improving access to extension and institutional support can substantially improve the performance and economic efficiency of dairy farming. The findings provide useful policy insights for strengthening the dairy sector and promoting sustainable income growth among rural households.