Factors Affecting Technical Efficiency of Urban Dairy Farming: The Case of Nekemte City, Oromia, Ethiopia

Urban Dairy farming is a vital sector in Ethiopia, contributing to urban food security and rural livelihoods. However, inefficiencies in resource use and management practices often limit productivity of the sector. Therefore, this study was intended to measure and identify factors affecting technical efficiency of dairy farmers in Nekemte City.

Data was collected from both primary and secondary sources. Primary data was collected from 135 sample dairy farm business owners. For data analysis, descriptive statistics, stochastic frontier analysis (SFA) was used to model the production function and identify inputs driving milk output and a Tobit regression model assessed the impact of managerial factors on technical efficiency.

The SFA results revealed that concentrate feed and fodder were statistically significant inputs influencing milk production. The Tobit regression model further showed that training, education, and work experience of farm owners/managers significantly explained variations in technical efficiency. To improve dairy productivity in Nekemte City, government and non-governmental institutions should prioritize training programs to enhance farmers’ skills in feed management and modern practices. Strengthening access to education and promoting institutional support, such as subsidies for high-quality feed, could reduce inefficiencies and optimize resource use.