Epsilon Archive for Student Projects

Abstract

Pig production is one of the most important agricultural sub-sectors in the Republic of Macedonia, with a long tradition of production and a constant level of consumption. Starting from the farms, the livestock is sold on the market for consumption as fresh pork and for use in the processing industry and slaughterhouses for production of meat and different meat products.

In recent years the country has experienced a continuous decline of the number of pig farms and pork supply. There are many reasons for this: high feed costs, small land area available for production, traditional technology and equipment used to perform the activities, lack of education of farmers and increased utilization of inputs for pork meat production. In order to increase the profitability and to be more competitive in the market, the farmer has to focus more on the production efficiency and sustainability of the sector. This study aims to analyse the (technical) efficiency of production activities of pig farms in the Republic of Macedonia.

The empirical approach is based on collecting quantitative data through a questionnaire and establishing direct interviews with farmers. Pig farm data are analysed by using Data Envelopment Analysis (DEA) model. It estimates technical efficiency of production where the level of used inputs and produced outputs are the main subjects of analysis. Analysis give explanation of the efficiency from input-oriented and output-oriented perspectives by comparing the larger and smaller pig farms in the country.

The results show difference between constant and variable return to scale. Technical efficiency analysed from the aspect of constant return to scale is always lower and average technical efficiency is 75%. According to the variable return to scale, average technical efficiency from input perspective is 90%, and from output perspective is 87%. The ratio between constant and variable return to scale gives average scale efficiency.

However, technical efficiency does not depend on the input-output relationship only, but also, environmental and manager factors influence it as well. Accordingly, there is a difference between big and small pig farms in terms of the location, accessibility and size of the economic yard. The education of managers depends on the use of new technology of production that positively influences the increase of the number of obtained piglets per sow, and the decrease of the mortality and consumption of feed for kilogram growth.