Measurement of Technical Efficiency and Production Risk in Zabol Dairy Farms

The main objective of this paper was to determine technical efficiency by using stochastic frontier analysis (SFA) and data envelopment analysis (DEA) methods and also to estimate the influence of applied inputs on the production risk among Zabol dairy farms. To this aim, data were collected by questionnaire for the years 2012-2013. The results showed that the mean technical efficiency of dairy farms was 0.74 percent as revealed by the SFA method and were 0.55 and 0.63 as suggested by the DEA method under constant return to scale (CRS) and variable return to scale (VRS) assumptions, respectively. In addition, there was a direct and significant relationship between the used bran, number of cattle, and the amount of output. The estimation of technical inefficiency showed that there was a negative and significant relationship between dairy farmers’ age and membership in cooperatives with technical inefficiency. The results of production function risk showed that participation in training classes reduced production risk, whereas membership in cooperatives increased production risk. The study carried the implication that training of the optimal use of inputs and application of proper management could improve the efficiency of dairy farms.