The Production Efficiency on Edible Birds’ Nest: The Case Study in Gua Musang and Johor Bahru, Malaysia

Abstract

This study was commissioned to determine efficient swiftlet houses. The research draws attention to the fact that seventy percent of swiftlet houses in Malaysia failed to produce Edible Birdnest (EBN) efficiently even though the number of swiftlet houses increases every year due to highly demanded of EBN and encouragement from government. This industry has recorded an Economic Transformation Programme (ETP) as the government sees this industry can generate income for the Malaysian economy. By knowing the efficient swiftlet houses, it is then can be a benchmark to inefficient swiftlet houses. The production efficiency is necessary to step toward increasing the supply of EBN in order to fulfill the market demand. Thus, Data Envelopment Analysis (DEA) was used to model efficiencies. This paper also performs a series of parametric and non-parametric univariate test (Mann-Whitney and Kruskal Walls) to assess the difference in the efficiency and productivity of swiftlet ranching. This study was conducted in Gua Musang and Johor Bahru, Malaysia. Results of data analysed show that the inefficiency of swiftlet houses in both districts come from the scale inefficiency. Even both districts have scale inefficiency, however, the scale inefficiency in Gua Musang is higher compared to Johor Bahru. Most of the ranchers in Gua Musang and Johor Bahru experience increasing economies of scale (IRS) due to being at less than the optimum size. This study recommended that swiftlet houses in Gua Musang must operate at the correct scale of operations. Gua Musang has a high potential to expand the EBN productivity more advanced due to environmental factors such as the abundance of forests, rivers and oil palm estates that attract more population of swiftlet in Gua Musang.