Analysing the sources of inefficiency in the Malaysian dairy supply chain

Nurul Aisyah Binti Mohd Suhaimi

Research output: Thesisinternal PhD, WU


The demand for dairy products in the Asian region (including Malaysia), has doubled over the past decade. Despite its growth in recent years, milk production remains insufficient to meet domestic demand, as Malaysia’s consumption of fresh milk is also increasing. This situation requires an improvement in the dairy supply chain. The overall objective of thesis was to analyse the sources of inefficiency in the Malaysian dairy supply chain. This thesis first measures input-specific technical inefficiency for two production systems of dairy farms using multidirectional efficiency analysis and then explains the determinants of technical inefficiency. Next, this thesis investigates which factors influence dairy farmers’ selection of milk marketing channels in Malaysia using transaction cost approach. Furthermore, this thesis measures the technical, allocative and scale efficiency of the state owned enterprise called the Dairy Industry Service Centre and determines the factors associating these efficiencies. Finally, this thesis investigates the causal relationship and price transmission in the market between farmers, the Dairy Industry Service Centre and retailers in the fresh milk supply chain. Finding shows there are differences in the inefficiency score across inputs and between production systems. Intensive system generally have lowest managerial and program inefficiency scores. Finding also shows transaction cost variables are associated with the marketing channel choice by dairy farmers. The result also reveals that farmer socioeconomics factors and farm characteristics are associated with the marketing channel choice. Furthermore, the result shows that Dairy Industry Service Centre have higher technical efficiency scores than allocative efficiency scores indicating that Dairy Industry Service Centre perform relatively well in term of using all resources, but perform less well when choosing the proper input mix given their respective prices. With respect to price transmission analysis, outcomes show that retail prices affect farm and Dairy Industry Service Centre prices in the Malaysian dairy sector in the short run. Results also suggest there is no long-term cointegration relationship among these three prices.

Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Wageningen University
  • Oude Lansink, Alfons, Promotor
  • de Mey, Yann, Co-promotor
Award date5 Nov 2018
Place of PublicationWageningen
Print ISBNs9789463433495
Publication statusPublished - 2018


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