An empirical analysis of battambang agricultural cooperatives efficiency in Cambodia

Abstract

This study estimates the expediency of Technical Efficiency (TE), Allocative Efficiency (AE), Overall Efficiency (OE) and Scale Efficiency (SE) for 183 cooperatives in Battambang, Cambodia. Typically, each cooperative is well-organized vis-à-vis TE, AE, and OE correspondingly. The results of the study indicated that around 66.77%, 20.20%, and 13.11% of the cooperatives are functioning under the increasing, constant and decreasing return to scales, respectively. As a result, a cooperative tend to cut costs by concentrating on TE, AE, and OE instead of lowering costs. Furthermore, the study has introduced the ordinary least squares (OLS) model to examine the relationship between profitability ratios and performance measures, which indicates that return on assets and equity are linked to technical and distribution efficiency. The cooperatives could increase their profits by upsurging sales performance instead of improving technical performance. These results also confirm that cooperatives managers should give greater importance to the effective use of capital and labor by increasing agricultural output.