An Analysis of Technical Efficiency of Poultry Farming Industry in Nepal

Abstract

The commercial poultry is growing rapidly. It is essential to achieve highest possible output to increase productivity and profit. The goal of the study is to estimate the technical efficiency of the poultry industry and its distribution spatially across the districts. The study utilizes Cobb-Douglas model to defined the structure of the production model and its error term is assumed to follow exponential distribution. Thereafter, using maximum likelihood estimator, Stochastic Frontier Method is applied to data obtained from Nepal Commercial Poultry Survey 2015 (CBS, 2016). The technical efficiency and inefficiency estimated using Jondrow et al., (1982) method at 90.51 percent and 10.26 percent respectively. However, only 41.24% of the compound error were explained by the technical inefficiency. Further disaggregation of technical efficiency by districts shows its homogenous distribution across different districts.