Development of Livestock Farming System and Technical Efficiency: A Case Study on Pig Production in Vietnam

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Pork is the most consumed meat in the world and is dominantly produced in Asian countries. Numerous studies analyze pig production efficiency under alternative farm sizes which are classified by the number of pigs. While this classification does not reveal the development of farming systems, this study develops a new typology for pig farming systems: industrial farms (IFs) and traditional farms (TFs). This study describes the specific characteristics of these systems, analyzes their technical efficiency (TE), and investigates the TE’s determinants. By surveying 246 pig farms in Vietnam, we found that housing systems, feeding modes, and contract farming are the key points to distinguish IFs from TFs. Results of data envelopment analysis show that TEs of IFs and TFs are 73.8% and 65.7%, respectively, meaning that their input costs of them could reduce by 26.2% and 34.3%, accordingly, without any decreases in the outputs. In addition, analysis of scale efficiency indicates that IFs operate nearer their optimal scales than TFs do. This finding suggests the potential for TFs to increase their TE by adjusting their production scale in the long run. For short–run solutions, using Tobit models, we analyze the TE’s determinants under variable return to scale within each farming system. Various determinants were investigated, of which land rent and ratio of the manure treatment area to pigpen area substantially reduce TE of IFs, while farm–prepared feed significantly increases TE of TFs. These findings imply the need to research less–occupying manure treatment plants for IFs and lower feed prices for TFs through promoting domestic feed production and self–made feed that utilizes food waste and agricultural by–products.

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