Are Andean Dairy Farms Losing Their Efficiency?

(1) Background: Ecuador is the fourth largest milk producer in Latin America, where ap-proximately 80% of production originates from small family farms located in the Andean region. Despite their socioeconomic importance, these farms face challenges related to low technical efficiency. While there are specific studies on efficiency in dairy systems from other regions, a knowledge gap persists regarding the temporal evolution of technical efficiency (TE) in Ecuadorian Andean dairy farms, especially during crisis periods such as the COVID-19 pandemic. The objective of this study was to evaluate the evolution of TE of family dairy farms in the Ecuadorian Andean region during the period 2018–2024 and to analyze the impact of the pandemic on said efficiency. (2) Methods: Data Envelopment Analysis (DEA) with input orientation and bootstrap simulation was employed to estimate TE, using data from a representative sample that included between 2370 and 2987 farms per year (approximately 25% of the national database of the Ministry of Agriculture and Livestock). Farms were selected based on the availability of complete information on key variables: number of milking cows, area dedicated to forage, family and hired labor (annual hours), and total annual milk production. Statistical analysis included ANOVA to compare mean TE values between years, post-hoc tests to identify specific differences between periods, and the identification of factors related to the TE. (3) Results: The mean TE of Andean dairy farms increased significantly from 0.37 in 2018 to 0.44 in 2024 (p < 0.10), evidencing sustained improvement, although the mean is still distant from the efficiency frontier. The analysis revealed a notable decrease in TE during 2020–2021, coinciding with the period of greatest impact of the COVID-19 pandemic, followed by progressive recovery in subsequent years. The TE distribution showed that between 70% and 75% of farms remained below 0.50 throughout the analyzed period, while only 8–12% achieved levels above 0.70. The main sources of technical inefficiency identified were relative excesses of labor and forage area in relation to milk production obtained. When compared with international studies, Ecuadorian farms present TE levels substantially lower than those reported in the European Union (>0.80) and similar to or slightly lower than those found in Turkey (0.61–0.71). (4) Conclusions: Family dairy farms in the Ecuadorian Andean region operate with technical efficiency levels considerably below their potential and international standards, suggesting substantial scope for improvement through the optimization of productive resource use, particularly labor and land. The COVID-19 pandemic impacted the sector’s efficiency negatively but temporarily, demonstrating resilience and recovery capacity. These findings are relevant to the design of public policies and technical assistance programs aimed at sustainable intensification of family dairy production in the Andes, with an emphasis on improving labor productivity and the efficient use of forage area.