An application of Data Envelopment Analysis (DEA) to Evaluate Economic Efficiency of Poultry Farms in Bangladesh

Abstract

This study estimates the technical, allocative and economic efficiency obtained from the Data Envelopment Analysis (DEA) approach using farm level survey data to a sample of 100 poultry farmers in Bangladesh for the year 2007. The results from the DEA approach show that there is substantial technical, allocative and economic inefficiency in poultry production in Bangladesh. The results of the study reveal that under constant return to scale (CRS) and variable returns to scale (VRS) specification, on average, the farms technical, allocative and economic efficiencies were 88%, 70%, 62% and 89%, 73%, 66% respectively. Thus the results indicate that efficiency scores vary substantially across the sampled farms. To explain some of these variations, the efficiency scores were regressed on the farm’s human capital variables such as farmer’s age, education, main occupation, family members, experience, training received, total farm size and poultry farm size, using a Tobit analysis. The results from the both CRS & VRS approaches indicate that efficiency is significantly influenced by some of the farm’s socio-economic factors. This research finding is valuable for policy makers since it may help to guide policies towards increased efficiency.