Technical efficiency of the gillnet fishery in Da Nang, Vietnam : an application of a stochastic production frontier

Abstract

This study investigates the level and determinants of technical efficiency for a sample of gilnnet fishing vessels operating in Da Nang in 2009 by using a stochastic production frontier, which involved the simultaneous estimation of a translog stochastic frontier model and a model for vessel-specific technical inefficiencies. Furthermore, the other important determinants of this fleet were also examined such as the output elasticities, marginal productivities of inputs, and returns to scale. The data on per-month average variable costs and revenues, number of gillnet sheets, vessel size, engine power, vessel age, number of net-contributors, experience and education levels of the fishermen, and vessel ownership were used in the production frontier analysis. The empirical results suggest that the effects of technical inefficiencies were found to be considerably significant in explaining the differences in individual vessel efficiencies. The mean technical efficiency for the sample vessels is estimated to be a relatively low, 0.76, implying that this fleet has potential to improve the productivity at least in the short-run, given the availabilities of their technology and resource conditions. The analysis also demonstrates that engine power, vessel size, net-contributors, and owner-operated vessels were found to impact positively on vessel efficiency, although the vessel-size and owner-operator effects were insignificant. Whereas, vessel age has a strong negative effect on technical efficiency, and it may seem strange when this analysis suggests that the experience and education level of fishermen also has a negative side as well, even if the effect of fishermen’s education level was found to be insignificant.