Estimation of Technical, Allocative, and Economic Efficiencies for Smallholder Broiler Producers in South Africa

Abstract

The prevailing economic conditions as a result of COVID-19, climate change, and the Russia–Ukraine conflict, have led to renewed global interest in the efficiency of the agricultural sector. As a result of this, we investigated the efficiencies of 64 broiler producers in three districts covering the North West and Limpopo provinces in South Africa from 2019 to 2022, using a two-stage data envelopment analysis method with input orientation. The results show that producers operate on the upper bounds toward efficiency, but room for improvement still exists at 10%, 20%, and 28% on technical, allocative, and cost efficiencies. This indicates that inputs can still be reduced without changing the level of output and that the input combination is incompatible with cost minimization. Consequently, only 13%, 8%, and 4% of the sampled broiler producers exhibited technical, allocative, and cost efficiencies, respectively; the majority were women. The Vhembe, Capricorn, and Dr. Kenneth Kaunda (DRKK) districts had vastly different scores for each efficiency type, indicating that their differences in resource endowments, technology, and climate, necessitate the formulation of district-specific policies. The mortality rate, heating costs, and investments in health emerged as significant efficiency determinants. Overall, the findings provide insights into refocusing the country’s poultry sector in light of current shocks and the notable aspirations of the poultry master plan.