1. Technical Efficiency in Milk Production of the Dual- Purpose Cattle System in El Salvador during Dry and Rainy Seasons Presenter: Angel A. Duron B. Co-Author: Wen-Chi Huang, Ph.D. June 20, 2011

2. 2 Focus of the study Figure 2. El Salvador’s map, location of the study. Dairy industry profile: 59,914 cattle farms 1.04 million cattle 60 to 70% of the herd is dual-purpose system (DPCS) 589.5 million liters annual milk 79% of the milk is produced by DPCS farms 81.9 kg milk per capita consumption in 2006 Dual-purpose cattle system (DPCS) use crossbred animal to produce milk and meat. (Ortega et al., 2007)

3. Literature review 3 Developing countries will increase 2.9% in consumption by 2020. (Delgado, 2000) Dual-purpose technical efficiency was conducted in Venezuela by Ortega et al., 2007. DPCS are pasture-based Central America milk production is 40% lower in dry season. (Lentes et al., 2010)

4. 4 Objective of the study: To estimate the DPCS farm performance using the technical efficiency and the determinants for rainy and dry seasons

5. Methodology The one-step stochastic production frontier (SPF) (FRONT4.1 Australia). Data from the village San Juan de la Cruz, Morazán-El Salvador – 26 farmers in the rainy season of 2009 – 22 farmers in the dry season of 2010 5

6. ItemMeanSDMinMax Rainy season (N=26) Daily milk (L)45.337.97.5157.5 Cows in lactation (n)9.36.9230.0 Total cows (n)21.615.8464.0 Milk/cow/day (L)4.91.92.911 Family labor.50.401.5 Hired labor0.250.380.01.0 Land (Ha)13.411.422.842.5 Improved pasture (Ha)3.14.60.021.0 Dry season (N=22) Daily milk (L)46.342.87.7153.0 Cows in lactation (n)7.86.81.030.0 Total cows (n)20.717.33.075.0 Milk/cow/day (L)6.22.32.510.6 Family labor0.590.4301.0 Hired labor0.640.560.02.0 Feed value $/month705.5542.8125.62136.6 concentrate kg/month1242.21279.9181.45080.2 6 Table 1. Descriptive statistics of output, inputs, and socioeconomic variables in San Juan de la Cruz. In dry season: - The village had a lower daily gross milk production (-159L) - Less number of lactating cows (-69) - Less number of farmers milking (-4). Input & output: The input were extrapolated to 6 months equivalent Farm milk or milk product sold for 6 months

7. Rainy seasonDry season Variable N=26 N=22 Frontier CoefficientSECoefficientSE Constant -0.451***0.146 -0.3460.408 Total cows 0.947**0.426 -0.267**0.146 Labor 0.8290.729 0.392**0.218 Farm land (Ha)/forage ($) 1 0.1110.351 0.550**0.313 Inefficient model Constant 0.1280.462 0.935*0.558 Improved pasture (Ha) -0.1870.936 Silage 0.434*0.280 Straw 0.495*0.330 Milk/cow/day (L) -0.982**0.521 -0.1830.394 Farm size (cows) 0.1580.677 Family labor ratio 0.348***0.119 -0.962***0.138 Age 0.623***0.232 0.706***0.232 Education (years) -0.7210.602 -0.1870.833 Selling milk 0.355**0.146 0.720*0.509 Processing milk -0.227**0.102 0.206*0.149 Selling out -0.282**0.129 -0.457***0.112 σ 2 0.417***0.100 0.3140.994 γ 0.674***0.104 0.773***0.286 Log likelihood -0.233 -0.192 *10% level of significance; **5% level of significance; ***1% level of significance 1 Farm land account for rainy season and forage for dry season Table 2. Production frontier estimates. 7

8. TE interval % Farm (n) Rainy season Dry season 0-4972 50-591 60-6962 70-7952 80-8942 90-100314 average65%84% Table 3. Technical efficiency (TE) in rainy and dry seasons. 8 dry season: -Milk per cow-day 7L and 4.6L -Monthly income US$1301 & US$270 -Monthly income-cow US$104.1 & US$45 rainy season: -Milk per cow-day 6.9L & 3.1L -Cows per hectare 2 cows & 1.7cows -Monthly income US$1513 & US$195 -Income/cow/month US$ 81 & US$35 Efficient vrs. Inefficient Dry season: - Total cow 32 & 16.5 - Labor 1.4 & 1.1 - Feed US$ 1081.6 & US$461 - Milk production 82.4 L & 24.2L Rainy season: - Total cow 38 & 11.8 - Labor 1 & 0.6 - Farm land 24 ha & 7.8 - Milk production 97 L & 13.8 L

9. Discussion 9 The DPCS farmers from San Juan de la Cruz seems to intentionally have a higher calving rate for rainy season and a lower in dry season (total cows was 0.95 and -0.27 in rainy and dry season; p <.05). The higher TE in dry season shows DPCS farmers ability to upgrade farm operation efficiency. The best efficient farms in the rainy and the dry seasons are the benchmark farms.

10. 10 The total cows input had positive effect on gross milk sell for rainy season. In dry season, total cows, labor, and feed value were significant and positive effect except for total cows which had a negative sign effect on production. DPCS TE was on average 65 and 84% in rainy and dry seasons, thus efficiency could be improved by 35 and 16%, respectively. Conclusions

11. Thank for your attention 11