Technical Efficiency and Its Determinant Factors of Dairy Farms under Membership of Different Scales of Cooperative in Bogor District, West Java

Abstract

The purpose of this study was to measure the technical efficiency and its determinant factors of dairy farms in the District of Bogor, West Java, under two difference scales of cooperative membership. A total of 80 dairy farmers was selected by purposive random sampling. These farmers were categorized into two groups consist of 40 dairy farmers each, which represented membership of two different scales of cooperative, i.e. KPS Bogor (large-scale/Group I) and KUD Giri Tani (small-scale/Group II). Data related to dairy farms during a year was collected by direct interviews using questionnaires. The Cobb-Douglas stochastic frontier analysis using the singlestage estimation procedure was employed. The study revealed that the technical efficiency of dairy farms in both groups of farmers lies below the potential level of technical efficiency. Around 75% of surveyed farmers in Group I attained technical efficiency of 81-90% category, while this in Group II was only 25% of sampled farmers. Thus, Group I and II had a median TE of 93.8 and 66.7%, respectively. The result indicates that the output per farm still can be increased with existing technology without incurring any additional production costs. Three statistically significant factors associated with variation in milk production were lactating cow, labor, and capital which had a positive impact on production efficiency. Among the inefficiency factors, the coefficients of education, and forage feed land had negative signs and significant irrespective of the groups of farmers. The other variables had mixed effects on the efficiency of dairy farms in each group.