Economic Efficiency of Smallholder Dairy Farmers in Swaziland: An Application of the Profit Function

Abstract

The purpose of the study was to analyse the economic efficiency of smallholder dairy farmers in Swaziland. Specifically, the study sought to describe the socio-economic characteristics of dairy farmers in Swaziland. The smallholder farmers are classified into: smallholder farmers, medium-scale farmers, and large-scale dairy farmers. The specific objectives of the study were to: estimate the economic efficiency of smallholder dairy farmers in Swaziland; identify factors affecting the economic efficiency of smallholder dairy farmers; and determine the profitability of the smallholder dairy enterprise. This was a descriptive and quantitative survey and the target population was all smallholder dairy farmers registered with the Swaziland Dairy Board (N = 444). A purposive and random sampling techniques was used to select the respondents (n = 111). Three methods of data analysis were used, namely; descriptive statistics, econometric analysis (Stochastic Profit Frontier Function) and gross margin analysis. The mean level of Economic Efficiency (EE) for the famers was 79.8%. The farm’s location, pasture size, soil fertility, water availability, the farmer’s years of experience in dairy farming, membership to dairy farmers’ association and training on dairy farming are factors that influenced the level of EE for smallholder dairy farmers in Swaziland. The smallholder dairy farmers were economically efficient. The institutional factors, socioeconomic and farm characteristics do affect the level of EE among smallholder dairy farmers. The dairy farming enterprise is a profitable enterprise.