An investigation of technical efficiency in the industrial fattening calves farms of Markazi province

This study aims to investigate the technical efficiency of production factors in the industrial fattening calves’ farms in Markazi province with emphasis on risk management. For this purpose, technical efficiency was determined using Corrected Ordinary Least Squares (COLS) method and Timmer measure, and also relationship of studied variables were examined by statistical tests. Meanwhile, coefficient of variation measure was applied for risk measurement. The necessary data was completed through completion of questionnaire with direct interview from 102 farms in three capacity groups included small, medium and large from 7 townships of Markazi province, which were selected by appropriate stratified sampling method in the year 2012. The results showed that the mean technical efficiency for all studied farms was equal to 49/2 percent, which indicates that the farms have a moderate technical efficiency and they don’t optimally utilize production inputs. Khomein, Komijan and Zarand townships had the highest mean technical efficiency between all townships of the province, respectively. Meanwhile, there was 55 percent difference in technical efficiency between the highest and lowest technically efficient farms. The estimation of production function revealed that the highest production elasticity was belonged to labour, feed and active capacity inputs, respectively. The results also indicated that there was not significant relationship between active capacity of farms and technical efficiency (p>0.05). On the other hand, the study of coefficient of variation in price and live weight in the end of fattening indicated that the price risk was more as compared to production risk. Meanwhile, there was no significant relationship between livestock insurance and net income per head of fattening calves with technical efficiency, which are shown that the livestock insurance is not necessarily effective for risk management.