Efficiency Measurement of Malaysia’s Palm Oil Refineries Applying Two-Stage Production Systems With Shared Inputs ByDEA
Keywords:
Data envelopment analysis (DEA), efficiency, resource sharing, palm oil refinery, market shareAbstract
This study investigates the changes in the efficiency of Malaysia’s palm oil refineries which based on trade theories it could be the source of decrease in Malaysia’s Processed Palm Oil (PPO) market share from 76% in 1996 to 54% in 2009 in the international market. The efficiency of palm oil refineries is evaluated by Data Envelopment Analysis (DEA). The structure of the production process of palm oil refineries can be divided into two, refining and fractionation, stages with input resource sharing. Therefore, this study applies the additive two-stage DEA model. According to the results, the inefficiency of refineries is related mostly to the refining stage while the efficiency rate in the fractionation stage is rather high. Furthermore, the results show that the efficiency rate of palm oil refineries has decreased from 99.4% in year 1996 to
91% in 2009 while it is Granger cause of reduction in Malaysia’s PPO market share in the world.
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