A stochastic frontier analysis of technical efficiency of fish cage culture in Peninsular Malaysia

Cage culture plays an important role in achieving higher output and generating more export earnings in Malaysia. However, the cost of fingerlings, feed and labour have increased substantially for cage culture in the coastal areas in Peninsular Malaysia. This paper uses farm level data gathered from Manjung, Perak and Kota Tinggi, Johor to investigate the technical efficiency of brackish water fish cage culture using the stochastic frontier approach. The technical efficiency was estimated and specifically the factors affecting technical inefficiencies of fish cage culture system in Malaysia was investigated. On average, 37 percent of the sampled fish cage farms are technically efficient. The results suggest very high degrees of technical inefficiency exist among the cage culturists. This implies that great potential exists to increase fish production through improved efficiency in cage culture management in Peninsular Malaysia. The results indicate that farmers obtained grouper fingerlings from other neighboring countries due to scarcity of fingerlings from wild sources. The cost of feeding for grouper (Epinephelus fuscoguttatus) requires relatively higher costs compared to seabass (Lates calcarifer) production in cage farms in the study areas. Initiatives to undertake extension programmes at the farm level are needed to help cage culturists in utilizing their resources more efficiently in order to substantially enhance their fish production.