The Efficiency of Swine Farms before and after the Foot-and-Mouth Disease Outbreak in Taiwan – The Case of a Panel of Bookkeeping Hog Farms
Date Issued
2010
Date
2010
Author(s)
Juang, Jeng-Wang
Abstract
The swine industry is the most important livestock industry in Taiwan for generating prosperity and stabilization of the rural economy. However, suffering from heavy losses of the foot-and-mouth disease in March, 1997. The swine farmers lost their overseas market. Furthermore, competition from imports after the entry of the World Trade Organization in 2002 and the international grain price surge in 2006 have intensified the pressure faced by the swine farmers. The swine industry in Taiwan has to strive for a slim chance of survival in such a difficult environment through structural adjustment in economies of scale and efficiency improvement.
This study selects a panel of bookkeeping hog farms in the bookkeeping system collected by the Animal Technology Institute Taiwan during 1995~2008 as the sample. The technical and cost efficiency are measured by using stochastic frontier analysis (SFA). The exogenous environment affecting productive efficiencies are also analyzed simultaneously. At the end, swine producers’ potential for reducing cost through improving efficiency is also examined. Under the specification of variable returns to scale (VRS), the empirical results show that the mean technical and economic efficiency scores are 0.833, 0.828 respectively before foot-and-mouth disease, and 0.847,0.837 respectively after the disease. The production efficiency before foot-and –mouth disease is lower than it after the disease. And the quantity of the production is expanded on a large scale after the disease, too. The analysis of firm-specific factors affecting productive efficiency indicates that the farms located on the southwest of Taiwan, and the swine farmers’ education levels for college and high school get strong and significantly negative effect in the efficiency levels. On the other hand, farms producing feeder pigs and hogs are more efficient than those producing market hogs and farms self-preparing or mixed feeding are more efficient than those purchased feeding after the disease. Based on these results, the sample producers would be able to reduce their actual costs by 18.7 % before foot-and –mouth disease, and by 19 % after the disease by operating at the efficient frontier. Therefore, reducing input quantity, adjusting resources deployment, and saving production cost are the main conclusions of this study. All of them are the urgent matters for the pig farms.
Subjects
a panel of bookkeeping hog farms
efficiency analysis
stochastic frontier analysis
arametric approach
the foot-and-mouth disease
SDGs
Type
thesis
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