Estimating Technical and Scale Efficiency of Broiler Chiken Units in Khuzestan Province

Providing food for people is one of the most important concerns of planners and policymakers in different communities. Protein is among the food needed for humans and lack of it in diet can lead to malnutrition and thus endanger human health. Parallel to population growth and changing consumption patterns towards more protein substances consumption, as well as the relative expensiveness of red meat in recent decades, poultry industry has been considered in Iran and in the world. Chicken meat is one of the most important sources of protein. Thus, reducing the cost as well as increasing its production can improve nutrition level and have an effective role in human health. It is assumed in economy that the producer's goal is to maximize profits. Producers of broiler chicken are no exception to this, and although they may pursue other goals, such as their own employment and their families, they seek to maximize the profits of their assets, like any other producer. Among the most important ways of achieving this goal are the proper use of production inputs as well as optimal scale production, which is used to determine the proximity of a decision maker unit to the optimal scale. Optimal scale refers to the amount of production in which the elasticity of scale equals one, and also there is a constant return to scale in production. Hence, it should be considered that scale efficiency measures average productivity while production takes place in optimal scale. If a firm exceeds the optimal scale, it has a decreasing return to scale, and if it runs at a level lower than the optimal scale, it will have an increasing return to scale. In agricultural economics, scale efficiency is usually nonparametric and is estimated in the framework of data envelopment analysis (DEA). Although many studies have attempted to estimate technical efficiency using parametric and nonparametric methods, scale efficiency is estimated exclusively in the framework of the nonparametric technique of data envelopment analysis. Ray (1998) presented a parametric method in which the scale efficiency is calculated by estimating a production function under the variable returns-to-scale hypothesis and from the estimated scale elasticity. Regarding the technical efficiency and scale efficiency of broiler and laying chicken breeding units, numerous studies have been conducted on the mentioned subject. But all of these studies, particularly in Iran, have used the data envelopment analysis method to measure the scale efficiency. In the present study, the scale efficiency of broiler chicken production units is calculated by parametric method through estimating the stochastic frontier function for the first time in Iran.

In this study, the parametric method of estimating the scale efficiency, first presented by Ray (1998), is used to calculate the scale efficiency of broiler chickens breeding units in Khuzestan province. First, the frontier production function introduced by Lovell and Schmidt (1977) and Miocene and Von den Berg (1977) is evaluated after comparing Cobb-Douglas and Translog functional forms in the framework of a translog production function. Initially, the technical efficiency of studied units is estimated by imposing the necessary assumptions and then, the scale elasticity of different production units is estimated and, the scale efficiency is computed through relation provided by Ray (1998).

Based on the results, the average age of the owners of the studied production units was 46.5 years, their average experience was 18 years and their average education level was 12 years. The average capacity of the investigated poultry was 21600 pieces, the average breeding period 4 times in each year, and the length of the breeding period was about 48 days. The calculation of the production elasticity showed that broiler chicken producers use labor, food, number of chicks and water inputs in the economic area of the production and medicine, electricity and fuel inputs in the third region of production. The average scale elasticity in the units under study was 1.12, indicating that the broiler chicken producers have an increasing return to scale on average. The average scale efficiency of broiler chicken breeding units was 72% and the average technical efficiency of the producers was 88%, indicating that there was the possibility of increasing technical efficiency up to 12% with existing technology on average. The results also demonstrated that the cities of Dezful and Behbahan with an average of 81% had the highest scale efficiency and the Ramhormoz city with an average efficiency of 60% had the lowest scale efficiency. In terms of technical efficiency, Baghmalek city with an average of 95% had the highest and Shadegan city with an average technical efficiency of 76% had the lowest technical efficiency among the studied cities.