Assessing technical efficiency and its determinants for dairy cattle farms in northern Algeria: The two-step DEA-Tobit approach

Abstract

The purpose of this paper is to analyze the technical efficiency of dairy cattle farms in Tizi Ouzou region as one of the main dairy basins in Algeria. To do so, a two-step analysis was applied. First, Data Envelopment Analysis (DEA) was used to quantify the technical efficiency of dairy cattle farms. In the second step, a Tobit model to examine factors affecting farms’ technical efficiency is used. The analysis used cross-sectional data collected from 146 dairy cattle farmers. The study found that the average technical efficiency under VRS assumption is relatively high, suggesting that farms can reduce their inputs by an average of 17% while maintaining the same level of output. The study also highlights the crucial role that agricultural advisory system and traditional insemination play in enhancing technical efficiency. In this region, where cattle breeding is traditionally practiced on a small scale, increasing herd size can result in reduced performance. The study also recommended that agricultural policies should be adapted to local specificities and that a more supportive strategy should be adopted for small-scale family dairy farms instead of promoting the large farm model.