Estimation of input efficiency for deciduous fruit industry in South Africa

The threat of natural resource depletion has intensified the need for a better understanding of input efficiency for policy, a subject that has received minimal attention at fruit industry level. The existing empirical evidence is largely limited to output-oriented technical efficiency, thus ignoring the critical types of efficiency from input perspective. The paper estimates three types of input efficiency for deciduous fruit industry in South Africa using non-parametric index approach. Panel data covering stone and pome fruits sectors in this industry were obtained from key industry statistics reports published by Hortgro. The analysis revealed that the entire industry was input inefficient with scale inefficiency consistently larger than technical and mix inefficiencies. Variations in the estimates of input efficiency were observed in stone and pome fruit sectors, as well as among individual fruit types. The industry also witnessed fluctuations in annual estimates for the three types of input efficiency throughout the study period, indicating the influence of policy and shocks. Overall, the findings suggest that redressing scale inefficiency is far more crucial compared to mix and technical efficiency, and one way to achieve this is through expanding the area under cultivation while maintaining optimum input combination. In addition, the industry should foster mechanisms for learning-capacity, innovation as well as mitigation against input-output price inflation. Future studies should identify specific drivers of each type of input inefficiency for the industry and its sectors.