Factors affecting the technical efficiency of dairy farms in Kosovo

Abstract

A possible accession into the World Trade Organization (WTO) and an expected membership in the European Union raise significant opportunities and challenges for the agricultural sector in Kosovo. As a result of these changes, the sector will have to improve efficiency and competitiveness. This research is motivated by the need to understand better the forces that drive competitiveness in the Kosovo dairy sector. This study estimates the technical efficiency (TE) of 243 dairy farms in Kosovo and relates TE variation to farm size and other primary determinants of TE. A stochastic frontier production function is estimated using a two-stage procedure. Results reveal that concentrate feed intake, land use per cow, and the number of days cows had been kept on pasture have statistically significant impacts on milk productivity per cow. The mean technical efficiency of dairy farms was estimated at 0.72. The major determinants that increase efficiency are breed improvement, intensification of corn production on the farm, improving concentrate feed intake, and using free-range production systems. Given the results from the technical efficiency analysis, it is crucial for the Government of Kosovo to redesign their dairy policy-specifically their grant investment schemes-and target assistance on improving national herd genetics, promoting free range systems and expanding area planted in corn.

Technical Efficiency Estimation of Dairy Farming in Kosovo

“…Thus, it may be inferred that a Serbian farm having 15 to 30 cows can produce a low of 67,530 and a high of 135,060 litres of milk. In Kosovo, farms with a number of dairy cows greater than 15 appear to be more efficient (Bajrami et al, 2017). From our sample, dairy farms in the 25 th and 75 th percentiles can produce a low of 30,312 to a high of 87,942 litres of milk, respectively.…”

“…Nevertheless, the Kosovo dairy industry is facing diverse challenges (in addition to imports) that may inhibit its growth. The main challenges facing the industry range from poor milk quality, low productivity and efficiency (Bajrami et al, 2017) to gender imbalance in dairy farming. One source of low milk production efficiency in Kosovo can be attributed to the disproportionate use of feed materials.…”

“…However, few reports and studies have looked at the efficiency of milk production while considering feed materials in Kosovo. For example, one study found that the mean technical efficiency (TE) of Kosovar dairy farms was estimated at 0.72 (on a scale of 0 to 1.00) with the potential to increase further technical efficiency (Bajrami et al, 2017). In the same study it was recommended for the government of Kosovo to improve their dairy policy.…”

Technical Efficiency of Dairy Farms in Central Kosovo

“…(Shkodra, 2020), measured the profitability of dairy farms in Central Kosovo -beneficiaries of direct payments for milk quality, and found that mid-size farms (10-25 heads) and large farms (25< heads) tend to have higher profitability than small farms (1-10 heads). (Bajrami et al, 2017), found that in national level dairy farms in Kosovo scored 0.72 (on a scale 0-1.00) of Technical Efficiency. While in another study conducted by (Musliu et al, 2019), dairy farms in Kosovo had better results of TE, 0.95.…”

Do coupled subsidies increase milk productivity, land use, herd size and income? Evidence from Kosovo

“…During the post-war period, dairy farmers in Kosovo faced the challenges posed by small-scale dairy farms, characterized by low milk productivity, traditional breed genetics, poor feeding, poor hygiene and breeding conditions and fragmented land use. These challenges caused low efficiency (Bajrami et al, 2017) even though the dairy sector was heavily subsidised from 2009 to 2016, mainly by direct payment schemes from the government (Figure 1).…”