Technical efficiency of cage fish farming in Peninsular Malaysia: a stochastic frontier production approach

Abstract

The study estimates technical efficiency and investigates the factors affecting the technical inefficiency of cage fish farming in Peninsular Malaysia. The study employs the stochastic frontier function to estimate a production frontier and technical inefficiency model. The data were collected using standard structured questionnaires completed by sample cage fish farmers in the study area. The result reveals an estimated mean technical efficiency score of 0.79, implying that the sample fish farmers are operating 21% below the production frontier and thus, there is room for improvement. The production function involves the use of one output and four inputs, which are stocking density, feed, labour and other relevant production costs. The coefficients of all the inputs have positive signs and statistically significant impacts on the output. The output elasticity associated with stocking density is the highest (0.634), followed by feed (0.317). The null hypotheses that the technical inefficiency effects are absent from the model and that the combined exogenous variables do not influence inefficiency are strongly rejected. The individual's null hypotheses of no age effect, no experience effect, no education effect, no species effect, no extension services effect, no workshop attended effect and no diseases effect on technical inefficiency are all rejected at different levels of statistical significance.