Technical Efficiency in the Chilean Agribusiness Sector – a Stochastic Meta-Frontier Approach

The Chilean economy is strongly export-oriented, which is also true for the Chilean agribusiness industry. This paper investigates the technical efficiency of the Chilean food processing industry between 2001 and 2007. We use a dataset from the 2,471 of firms in food processing industry. The observations are from the ‘Annual National Industrial Survey’. A stochastic meta-frontier approach is used in order to analyse the drivers of technical efficiency. We include variables capturing the effects of labour-quality, the extent of export orientation and the impact of paid subsidies to the agribusiness firms. Raw materials and labour have to largest impact on the output, but with a different input-intensity for the different agribusiness sectors. We could show that technical efficiency is different in the different agribusiness sectors and that some sectors (the bakery and the grain & mill sector) are using a more productive technology than the other sectors. Potential impacts on structural change in the Chilean food processing industry are discussed. The paper also shows, that exporting firms in the agribusiness industries can be described as more dynamic, achieving either a higher technical efficiency or a higher technological change.