Assessment of technical efficiency of open shed broiler farms: The case study of Khyber Pakhtunkhwa province Pakistan

Abstract

Efficient use of inputs is very essential for broiler farmers to get the maximum possible output for enhancing productivity and ultimately profit of the farm. This study estimated and assessed technical efficiency of broiler farms in district Charsadda of Khyber Paktunkhwa province, Pakistan. In order to achieve the aforesaid objective, multistage random sampling technique was used to collect data from 120 broiler farms. Parametric approach (Stochastic frontier) was employed for analysis of data. Contrary to non-parametric approach, parametric approach entangle modeling cost/production frontier using various econometric techniques. The underlying principle behind the parametric approaches such as Stochastic frontier approach is that it accounts for random error (factors outside the scope of the farmers which affect production cost) and separate the inefficiency component from it and make credible statistical inferences and also the parametric approach has not received any valid criticism since its introduction. Stochastic frontier production function of Cobb- Douglas type was utilized for the estimation. The function was estimated using Maximum Likelihood estimation technique. The results revealed that mean technical efficiency of broiler farms was 0.85 ranging from 0.61 to 0.99, implies that an average farm could produce 14% more output for given level of inputs if they become technically more efficient. The estimated coefficient of the number of day old chicks and feed were 0.45 and 0.21 and statistically significant at 1% and 5% level of significance, respectively. In technical inefficiency effect model, the estimated parameters of age, experience, credit, occupation and labor used were negative and statistically significant. It is suggested that according to the capacity of shed the broiler farms need to increase the number of day old chicks as wells as feed to enhance productivity. Provision of training facilities to the farmers, appropriate to rearing of broilers in open shed farms is a good option for efficient utilization of resources and enhancing efficiency. Provision of credit facilities to broiler farms on easy terms and conditions for purchase of day old chicks, feed, labors and other inputs involved in broiler farming will boost up broiler productivity and efficiency of farmers. Keywords: Broiler farms, Technical efficiency, Stochastic frontier analysis, Cobb-Douglas type production function, District charsadda, Pakistan