ABSTRACT TITLE ASSESSMENT OF PROFITABILITY AND TECHNICAL EFYICIENCY OF SMALL SCALE DAIRY FARMERS IN MABALACAT, PAMPANGA AUTHOR ADVISER SCHO0L RACQUEL DIZON CANLAS JULIE L, AGUILAR, M.B.M PAMPANGA STATE AGRICULTURAL UNIVERSITY DEGREE BACHELOR OF SCIENCE IN AGRICULTURAL ECONOMICS YEAR COMPLETED JUNE 2023 This study was conducted to assess the profitability and technical efficiency of small-scale dairy farmers in Mabalacat City, Pampanga. The researcher used cost and return analysis to assess the profitability of the dairy farmers and compute the break-even point, return on investment, and cost per unit. The results show that there are 1,352.92 liters in revenue to cover its expenses, and if it generates more than the said BEP, then the firm is gaining profit. The ROI result in dairy farming is 150.49%, which means that for every peso invested in dairy farming, there are between one and 50 centavos in retur. The computed CPU is 32.60/liter, which ímplies that dairy farmers were gaining profit because they sell their milk at 81.67 minus the CPU of 32.60 per liter, which has a 49.07 return in profit. The researcher also used Stochastic Frontier Model for estimating the productivity and technical efficiency of dairy farmers which accurately captures the data than the other functional methods using the Cobb-Douglas Form (exponentíal distribution). The results show that seven (7) variables can positively affect the productivity of dairy farmers, specifically capital, labor cost, land rent or own, medication cost, number of dairy animals, number of bulls, and roughage. If one unit of each of these variables is added, there will be an increase in the productivity of dairy farmers. All these variables are highly significant. The inefficiency model has seven (7) negative signs, which implies that an addítional input will result an increase in technical efficiency regardless of their P>z value. There are nine out of 30 dairy farmers who are 100% technically efficient, indicating that they are the top-performing farmers. The most experienced problem that the dairy farmers encountered was the low price of milk, of which the majority was bought by middlemen. The possible solution is that there must be a specific selling price set to prevent consumers from buying dairy milk cheaper than its original price, especially from middlemen. Policymakers should adopt a strategy that climinates the interference of middlemen in pricing manipulation, particularly on milk, which does not limit dairy farmers from carning more despite the hard work they put into dairy farming.