The production activities of sugar factories in Turkey and Malmquist total factor productivity analysis

In this study, total factor productivity (TFP) with variance in its components as well as the technical efficiency levels of 25 active sugar factories in Turkey are surveyed via Data Envelopment Analysis (DEA) and Malmquist Total Factor Productivity method using the panel data from Turkish Sugar Factories Corporation’s annual activity reports. The aim of the study is to determine the comparative production performances of active sugar factories in Turkey, which would guide both government policies about the sector and the factory managements in the decision making process about issues such as production, growth and profit/cost analysis. It is found that sugar factories in Turkey show increase in TFP stemming from technological improvement in general. Although there is an increase in TFP and technical efficiency, it is nowhere near the one in technological efficiency. Considering the fact that variance in technical efficiency is set by scale efficiency and pure efficiency, the ability of production in optimal scales is found to be low imposing a more congruent use of already possessed production factors. These results put forward the need for increase in competitive capacity and resource management for the sugar factories in Turkey. Key words: Sugar factories, efficiency, productivity, data envelopmant analysis, Malmquist index.