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Profit efficiency of small- and medium-scale maize milling enterprises in South Africa

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  • Orefi Abu
  • Johann Kirsten

Abstract

Despite the reported large margins between producer prices for maize and retail prices for maize meal and the fact that maize meal is a staple food for most of the South African population, there have been only limited investments in small- and medium-scale maize milling in South Africa since the deregulation of the maize markets. The apparent failure of small- and medium-scale maize millers to emerge and compete effectively in the maize milling industry in South Africa raises questions about their scale and level of efficiency. Against this background, this paper analyses the profit efficiency of these enterprises, using a translog stochastic profit frontier model. Findings from the profit efficiency analysis show an average profit efficiency score of 80.6 per cent for the small-scale mills and 87.4 per cent for the medium-scale mills. There is therefore a significant unexplored potential in these categories of mills.

Suggested Citation

  • Orefi Abu & Johann Kirsten, 2009. "Profit efficiency of small- and medium-scale maize milling enterprises in South Africa," Development Southern Africa, Taylor & Francis Journals, vol. 26(3), pages 353-368.
  • Handle: RePEc:taf:deveza:v:26:y:2009:i:3:p:353-368
    DOI: 10.1080/03768350903086663
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    References listed on IDEAS

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    1. Traub, Lulama Ndibongo & Jayne, Thomas S., 2006. "Opportunities to Improve Household Food Security Through Promoting Informal Maize Marketing Channels: Experience from Eastern Cape Province, South Africa," Food Security International Development Working Papers 54568, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    2. Abdulai, Awudu & Huffman, Wallace, 1998. "An Examination of Profit Inefficiency of Rice Farmers in Northern Ghana," Staff General Research Papers Archive 1380, Iowa State University, Department of Economics.
    3. Traub, Lulama Ndibongo & Jayne, Thomas S., 2004. "The Effects of Market Reform on Maize Marketing Margins in South Africa," Food Security International Development Working Papers 54570, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    4. Haddad, Mona, 1993. "How trade liberalization affected productivity in Morocco," Policy Research Working Paper Series 1096, The World Bank.
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    Cited by:

    1. Temesgen Tadesse Deressa, 2011. "Effects of climatic conditions and agro-ecological settings on the productive efficiencies of small-holder farmers in Ethopia," Working Papers 223, Economic Research Southern Africa.
    2. Mugabe, Douglas & Etienne, Xiaoli L., 2016. "How Efficient Is Maize Production among Smallholder Farmers in Zimbabwe?," 2016 Annual Meeting, July 31-August 2, 2016, Boston, Massachusetts 235938, Agricultural and Applied Economics Association.

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