Technical efficiency analysis of Fiji's sugar industry: An application of the stochastic frontier production function approach

Abstract

Small developing countries have for long acquired significant benefits through preferential trading arrangements. However, these benefits have led to a proliferation of inefficient industries in the recipient countries. With the recent changes in the GAIT, these inefficient industries may close and thus lead to major economic and social problems in the recipient countries. This paper utilizes the frontier production function approach to examine the efficiency status of Fiji's sugar industry. The analysis reveals that a significant level of inefficiency exists at the farm level of Fiji's sugar industry. Some of the factors that were found to effect the level of efficiency are farming status, land class and ethnicity. These factors are then used to derive policy implications.