Technical Efficiency Estimates For The Kwazulu-Natal Midlands Dairy Industry

T S Mkhabela

Studies in Economics and Econometrics, 2006, vol. 30, issue 1, 129-146

Abstract: Since none of the production frontier models used in empirical analyses of production efficiency is without its limitations, it is very important to make a careful choice of model. The different types of production frontier models all have their strengths and weaknesses.Findings of previous studies on sensitivity of technical efficiency estimates by different methods are mixed thus more research comparing technical efficiency measurements from alternative models is needed in order to determine the robustness of estimates from a particular model. The present study analysed the extent to which DEA, econometric stochastic production frontier and the statistical deterministic frontier differ from one another in measuring technical efficiency using the KwaZulu-Natal midlands dairy industry.The general findings from this study indicate that estimates of technical efficiencies of individual dairy farms, and therefore the mean technical efficiency of the KZN dairy industry, are sensitive to the choice of production frontier estimation method.

Date: 2006
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DOI: 10.1080/10800379.2006.12106403

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