Technical Efficiency of Dairy Farms: A Stochastic Frontier Application on Dairy Farms in Jordan

The present study was conducted to determine the level of technical efficiency of dairy producing farms in Jordan by applying the stochastic production frontier (SPF) methodology. Technical efficiency estimates were generated for 100 dairy farms in Jordan. The results of the study indicated that technical efficiency of milk production by most of dairy farms in Jordan is low. The mean technical efficiency was estimated to be only 39.5% for the sampled dairy farms. This means that an average farm in the sample could in principle increase its level of milk production by 60.5% using the current input quantities. The results also implies that the dairy farms in Jordan are producing milk to only about 40% of the potential frontier production levels of this industry, implying that the production is about 60% below the frontier due to technical inefficiency. To enhance farm efficiency there is a need to improve farmers’ access to extension services. The need to involve farmers more in the extension process itself should be encouraged.