PRODUCTION AND MARKETING EFFICIENCY OF DAIRY FARMS IN HIGHLAND OF ETHIOPIA- AN ECONOMIC ANALYSIS

Abstract

Ethiopia has the largest livestock population in Africa but the contribution of this resource to the economy is limited and yet the country is in poverty. Dairy development has a big role for the contribution of income generation and employment. Demand for dairy products seems to exceed supply in the country in general and the study area in particular. Hence, the situation of dairy production and marketing issues is needs to be discussed and analyzed. This paper is based on a research study among 168 dairy farms (85 cross breed and 83 local breed) in a town (Mekelle) of northern Ethiopia. A two stage stratified random sampling procedure was used to select the specific farm households. Farms owning 1-3, 4-10 and greater than 10 dairy cows were classified as small, medium and large farms, respectively and only small and medium size farms were considered for further data collection. In this study an attempt has been made to evaluate the efficiency of inputs use, assess profitability and analyze the efficiency differentials of modern (cross breed) and traditional (local breed) dairy farms. Cobb-Douglas production, cost-benefit and break-even ratios are employed to assess