Do the Cattle Farms of Iran Produce Economically Efficient or Not

The technical efficiencies of a sample of extensive Iranian cattle farms collected by Ministry of Agriculture were analyzed using a nonparametric Data Envelopment Analysis (DEA) model. Mean pure technical efficiency in a DEA model in which all variables were normalized with the number of cows was 0.79, indicating that there is ample potential for more efficient input utilization in cattle farming. The normalized measurement of variables captures the fact that most scale-inefficient farms (52%) are operating under decreasing returns to scale. This implies that even smaller farms have expanded to a size larger than is optimal relative to the number of cows in their herds. A comparison conducted in all region of Iran, Yazd and Khuzestan provinces were the most efficient and inefficient region of Iran in cattle farming, respectively. In an attempt to explain variation in efficiency scores, the study focuses on certain managerial practices often not accounted for. Results showed that dairy cattle are more efficient than beef cattle; also ANOVA test revealed that the choices of Holstein breed and herd with more than 200 cows have a positive significant impact on the efficiency level of cattle farms.