Determinants of technical efficiency in dry zone dairy farming systems of Sri Lanka

Abstract

Introduction

Dairy sector is a vital part of Sri Lanka’s rural economy, providing income, employment, and nutrition. Beyond supplying high-quality protein and essential nutrients, livestock also acts as a “living bank” for smallholders, offering financial security in times of hardship. Despite this socio-economic importance, sector’s overall contribution to GDP remains modest: agriculture accounted for 8.3% in 2023, with animal production at just 0.8%. With 77% of the population living in rural areas, dairy remains critical for livelihoods.

Sri Lanka’s livestock population includes 1.57 million cattle & 0.47 million buffaloes, of which only 37% are milking animals. In 2023, domestic output totaled 370.32 million liters, but the country still imported over 50 million kg of milk powder at a cost of Rs. 63 billion. Productivity is limited by poor feed, breeding, management, & veterinary services, particularly in the Dry Zone, which holds 79% of livestock yet produces only half the milk. Addressing technical efficiency here is crucial for boosting productivity and rural welfare.