Technical efficiency in smallholder dairy farming and its implication for sustainability strategies: Evidence from West Java, Indonesia

Improving the technical efficiency (TE) of smallholder dairy farms is critical for advancing productivity and supporting the long-term sustainability of Indonesia’s dairy sector. This study evaluates the TE of smallholder dairy farms and its key determinants using panel data from 2017 to 2021, applying a stochastic frontier production function to estimate efficiency levels and identify key factors. The results show a decline in average TE from 0.67 in 2017 to 0.61 in 2021, with only 2.68% of farms classified as efficient by 2021. Milk production was significantly influenced by male family labor, hired labor, concentrate and forage feed, mineral supplementation, barn assets, grassland area, and the number of lactating cows. Determinants of inefficiency included the age of the household head, herd size, and capital source, with older farmers and smaller herds associated with higher inefficiency levels. The decline in TE was further exacerbated by external disruptions, particularly the COVID-19 pandemic, which increased production costs and disrupted input supply chains. Addressing these inefficiencies through targeted interventions, such as improving access to quality inputs, encouraging herd expansion, and enhancing financial and technical support, can improve productivity and strengthen the resilience of smallholder dairy farming systems. These findings provide actionable insights for policymakers and stakeholders aiming to enhance efficiency and sustainability in Indonesia’s dairy sector and other smallholder-dominated systems globally.