Browsing by Author "Van der Merwe, Johannes Stephanus"

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    Estimating the efficiency effects of farm mergers : an ex-ante application of data envelopment analysis
    (Stellenbosch : Stellenbosch University, 2019-12) Van der Merwe, Johannes Stephanus; Hoffmann, Willem H.; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Agricultural Economics.
    ENGLISH SUMMARY : The main aim of this thesis is to measure the expected effects of farm level resource pooling mergers on the technical efficiency of farm businesses. The non-parametric efficiency measurement approach of Data Envelopment Analysis (DEA) is used to measure the slack-based efficiency of diversified crop-livestock farms in the North West province of South Africa. Since the non-parametric nature of DEA requires no assumption about the sample distribution, the bootstrap procedure is used to estimate the actual sampling distribution. Tenure and livestock diversification are identified as variables that may influence the efficiency level of these farms. Regression analysis is used to determine the statistical significance and the extent of the correlation between each of these two factors and farm efficiency. Three independent merger cases are simulated that each involve pooling the production resources of two independent farm businesses. The merger analysis methodology allows the calculation of the potential efficiency gain or loss that a merger may bring about. It also enables us to distinguish between three effects that, when combined, produce the overall potential efficiency effect. The learning effect represents the effect that learning best practices from each other may have on the efficiency of a merged entity. The harmony effect represents the potential efficiency gain attainable through reallocating production processes to a division of another farm business that have a lower marginal cost associated with its production. The scale effect represents the potential efficiency advantages or dis-advantages that operating at a larger scale may bring to the table of a merged entity. The significance of this thesis lies in its ability to illustrate the adequacy of the merger analysis methodology to generate quantifiable estimates of the expected efficiency effects of farm level resource pooling mergers without the need to actually take place.