Economics of technical efficiency in white honey production: Using stochastic frontier production function.

ABSTRACT

This study estimates and compares technical efficiency levels among beekeeping projects with various production capacities using a sample drawn from Fayoum Governorate in Egypt. The study also compares among beekeeping's most important economic indicators, estimates the optimum production amount, and investigates why technical efficiency in Egyptian beekeeping is declining. We conclude that the average cost to produce one ton of honey decreases when production capacity increases. Furthermore, the average total, net return, and return on investment of one Egyptian pound increases when production capacity increases. Moreover, the results of a stochastic frontier production function indicate an increased return to scale. Finally, the results of maximum likelihood estimation show that technical inefficiency helps explain the deviation of actual from optimal production amounts.