Measuring Efficiencies of Dairy Buffalo Farms in the Philippines Using Data Envelopment Analysis

Abstract

This study aimed to measure the efficiency scores of 75 dairy buffalo farms in the province of Nueva Ecija, Central Luzon, Philippines, using an input-oriented, variable-return-to-scale Data Envelopment Analysis (DEA) model. The farmer-informants or decision-making units (DMUs) were categorized as smallholders, family modules, and semi-commercial in operations. Personal interviews using structured questionnaires were done to gather various information on the socio-economic and management practices of the DMUs. Output in the form of volume and value of milk produced and inputs such as quantities and costs of biologics, feeds, forage, and labor were also collected and evaluated among individual DMUs. The efficiency scores were computed using PIM-DEA software, which identified fully efficient DMUs lying on the frontier line (scores of 1.0) and those enveloped by it (inefficient DMUs with scores of less than 1.0). The overall mean Technical Efficiency (TE), Allocative Efficiency (AE), and Economic Efficiency (EE) scores among the DMUs were 0.80, 0.81, and 0.65, respectively. Most of the inefficient DMUs were in the smallholder category. In sum, smallholder DMUs classified under low and moderate TE clusters should reduce their inputs by 53.31% and 40.01%, respectively, to become fully efficient. Likewise, higher lambda values among efficient peer DMUs indicate the best practice frontiers that the inefficient peer DMUs can benchmark with. Extension and advisory services can help promote the best management practices of the frontiers to improve the TE, AE, and EE of the inefficient DMUs.