This paper seeks to examine the impact of various socio‐economic factors on the viability of sugar production by focusing on the technical efficiency of farm performance.
The examination is undertaken by empirically estimating the random coefficient production frontier using farm level data. The paper uses Fiji as a case study.
In general, farmers produced 25 per cent less than their potential output. Among the farm inputs, land (labour) was the most (least) efficiently used input. Empirical evidence also suggests that large‐scale farming should be seriously considered by amalgamating land leases. Lastly, sugar reform can be successful with the use of appropriate best farming techniques to improve cane yield, and if there is successful expansion of sugar‐related products.
This is the first attempt to estimate the random coefficient frontier model that enables the examination of overall technical efficiency of the farm as well as input‐specific technical efficiency for improved policy formulation.
