COW MILK PRODUCTION EFFICIENCY, COMMERCIALIZATION AND ITS IMPACT ON HOUSEHOLD FOOD SECURITY: THE CASE OF WEST HARARGHE ZONE, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

Livestock plays a vital role in the livelihood of many people in Ethiopia. However, a number of challenges hindered the development of the dairy sector along with its commercialization. This study examines production efficiency commercialization and its impact on food security of cow milk producers using a cross-sectional data obtained from 385 randomly and proportionately selected sampled households from West Hararghe Zone, Oromia National Regional State of Ethiopia. The collected data were analyzed using descriptive statistics and econometric models including Stochastic frontier, two limit Tobit, Binary Logit, Generalized Propensity Score, and Seemingly Unrelated Regression model. The estimated gamma parameter (γ) for production function was 0.806, indicating that about 81% of the variation in the output of milk among the farmers is due to their technical inefficiencies. The mean technical, allocative and economic efficiency scores were found to be 76, 57 and 41 percent, respectively. This indicated that there exist considerable inefficiencies in milk production in the study area. The Tobit model result indicated that extension contacts, farm size and ownership of cross breed cow has positively and significantly affected technical, allocative and economic efficiencies, and sex of household head and market information was also found significantly and positively influence allocative and economic efficiencies. Technical and allocative efficiency was positively and significantly influenced by education, while technical efficiency was positively affected by livestock owned and negatively influenced by and age, distance to water source. The mean commercialization index for the sample households was 0.432 which shows that on average a household sold 43.2% of the milk produced during the survey period. The farm households’ milk commercialization level was positively and significantly influenced by ownership of cross breed, cooperative membership, access to market information and quantity of milk produce and it was negatively and significantly influenced by household size and distance to nearest market. The survey results also revealed that about (65.9%) of the sampled households were food insecure and (34.1%) were food secure. In addition, the mean energy available per AE for the surveyed respondents was 1786.8 Kcal. Food security of the farm households was positively and significantly influenced by ownership of cross breed cow, quantity milk produced, access to supplementary xvi feed, access to credit, and income from cash crops and it was negatively and significantly influenced by household size and distance to market. The Generalized Propensity Score model result indicated that commercialization has a positive and significant impact on food security of the smallholder milk producers, Moreover, the simultaneous estimation result showed that there existed a positive relationship among commercialization, efficiency and food security. Based on the findings, the study suggests that different stakeholders should target strengthening the availability of formal and informal education, promoting and empowering females, strengthen policies on improving rural family planning, strengthening the existing extension package program, strengthening farmer cooperatives to strengthen knowledge sharing among farmers, enhancing farmers resource endowment, promoting improved breed varieties policies aimed at reducing the transaction costs of accessing markets, working on rural institution capacity building, encouraging value addition and market linkages among diverse market players, disease control, access to secure markets and establishing information sources will increase both production efficiency and commercialization of milk producers which could result in improvement in food securities of the farmers.