Technical and environmental efficiency of hog production in China – A stochastic frontier production function analysis

Changing Structure and Sustainable Development for China’s Hog Sector

“…The mean technical efficiency level is around 90% or more for hog farmers across groups, implying that there is still some room left for improving the hog sector's outputs by improving farmers' technical efficiencies, which is in line with the results presented by Zhou et al [4]. Unfortunately, the technical efficiency, with respect to each group cannot be compared because of differentiated frontiers across groups.…”

“…The primal system approach includes the production function and the first-order conditions of cost minimization, and the use of the Cobb-Douglas (C-D) production function was algebraically equivalent to the cost system. Although translog production function is widely used in productivity analysis due to its flexible attributes such as variable returns to scale and variable elasticity of substitution [1,4], it is not possible to derive the algebraic expressions for the input demand function, with or without inefficiency in the primal system approach, which are used to break down the production costs into technical and allocative inefficiency costs [24]. The primal system approach can be described as consisting of the following steps:…”

“…Fortunately, China's hog sector has experienced structural changes, developing from backyard operations to specialized farms in the past decade [1,[4][5][6], and a new operational structure is forming. More specifically, in 2002, hog farms with fewer than 50 animals (or heads) made up 99% of all China's hog farms and slaughtered 72.8% of the total hog numbers.…”

“…The ongoing structural changes in the hog industry are creating a situation whereby backyard farms dominate the farm count, but specialized farms account for the bulk of hog production. Structural changes may cause negative impacts on environmental aspects, such as the increased risk of livestock diseases, the prevalence of antibiotic usage, and the local pollution of water bodies [4]. However, this study will mainly address the societal and economic aspects of these changes.…”

“…Yu [11] argued that backyard dairy farms were less productive than specialized farms because their higher technical efficiency could not compensate for the low technology. Xiao et al [1] found that technical progress and increasing technical efficiency [4] of hog farms accompanied ongoing structural changes. Rae et al [8] revealed that when compared with specialized and commercial farms, backyard farms achieved lower total factor productivity and technical progress, but had a higher technical efficiency through the use of new panel data.…”