Analysis of technical efficiency of milk-producing farms in Minas Gerais

Abstract

The objective of this study was to measure the technical and scale efficiencies of milk-producing farms in the state of Minas Gerais, considering different production levels, and also to identify the determining factors of their technical efficiency. The analyses were carried out using both Data Envelopment Analysis (DEA) and an econometric Tobit model. The data consisted of information collected in 2005 relating to 771 milk-producing farms. The results indicated that most of the farms exhibit technical inefficiency problems. Small farmers have the potential to expand their production and productivity, increasing technical efficiency, since they were performing with increasing returns to scale. The large farmers presented the best measures of technical efficiency, which is explained, partly, by factors such as access to rural credit, training and technical support.