ECONOMIC EFFICIENCY OF BROILER FARMS IN VOJVODINA REGION

Abstract

Measurement of the efficiency of agricultural production is very important issue especially in developing countries. The major problem of the broiler production in Vojvodina region is low level of productivity and inefficiency in resource allocation and utilization. The objective of this study was to measure the economic efficiency of broiler farms using a nonparametric approach, Data Envelopment Analysis (DEA) which is used to quantify economic efficiencies of broiler farms in Vojvodina region by determining which farms are located on the production frontier and which are not. Data Envelopment Analysis method, one of new methods of operations research, is used very successfully in the last several years for assessing relative efficiency of organizational units having multiple inputs to produce multiple outputs. It was originated by Charnes, Cooper and Rhodes in 1978. It is an efficiency estimation technique but it can be used for solving many problems of management such as ranking Decision Making Units (DMU). DEA develops a function whose form is determined by most efficient producers and indentifies a “frontier” on which the relative performance of all utilities in the sample can be compared: DEA benchmarks firms only against the best producers. Furthermore, in order to fulfill the objective of the study, the authors were analyzing the performance of the broiler farms in Vojvodina region, their economic efficiencies. Data were collected from 30 broiler farms from which the input-output data were collected by using a structured questionnaire. The multiple-input, single-output production units (the broiler farms) were evaluated with the individual farms being referred to as individual Decision Making Unit (DMU). For the purpose of efficiency analysis, output (y) were aggregated into one category namely, gross margin of the broiler farms, and inputs were aggregated into five categories, namely, feed, day-old chickens, productivity, used energy and capital. Analyzed broiler farms were classified into three categories according to their production capacities. The first category included farms with production capacity between 5000 birds and 10000 birds per production cycle. The second category included farms with capacity of more than 10000 and less that 30000 birds per production cycle and the third category included farms with capacity of more than 30000 birds per production cycle.