Vol. 12, Special Issue 8 (2023)

Author(s):
S Parthasharathi, C Velavan, A Rohini, PM Shanmugam and M Prahadeeswaran

Abstract:
Coir is an important natural fibre produced from the coconut. The coir processing firms provide both employment and entrepreneurial opportunities in the Western Zone of Tamil Nadu. In recent years coir processing firms faced many challenges in the domestic and export. In this context the present study aimed to measure the technical efficiency of coir processing firms. The primary data was collected from 50 modernized and semi-modernized coir processing firms. A stochastic frontier analysis was used to analyze the cost efficiency of the coir processing firms. The Benefit-Cost (BC) ratio revealed better the profitability of modernized firms, with a ratio of (1.28), compared to semi-modernized firms (1.01). It implied that the better profitability of the modernized firms compared to semi-modernized firms was mainly due to advancements in technologies like auto feeders, conveyors and producing two or more by-products. For technical efficiency, estimated variance parameters (γ) for modernized and semi-modernized coir processing firms were 0.94 and 0.95, respectively. This indicates that 94 percent and 95 percent of the output variation can be attributed to the firm’s practices. The mean efficiency of the modernized firm was 94.27 percent and for semi-modernized firm was 84.03 percent. It is concluded from the study that modernized firms were comparatively more efficient and profitable than semi-modernized firms. Hence, semi-modernized firms have to upgrade their technology to become profitable.