Profit efficiency of small- and medium-scale maize milling enterprises in South Africa

Figures & data

Table 1: Distribution of surveyed mills by province

Province	Number of mills recorded	Number of millers interviewed	Percentage of millers interviewed
North West	39	25	64.1
Mpumalanga	23	9	39.1
Free State	60	12	20
Limpopo	27	14	51.8
Total	139	60	43.2

Table 2: Characteristics of small- and medium-scale maize mills in South Africa (%)

Characteristic	Small-scale mills (n = 36)	Medium-scale mills (n = 18)
Miller's education^a
No formal education	1 (2.8)	0 (0.0)
Primary school	1 (2.8)	0 (0.0)
Grade 12	21 (58.3)	8 (44.4)
Diploma	6 (16.7)	2 (11.1)
Bachelor's degree	4 (11.1)	3 (16.7)
Postgraduate	3 (8.3)	5 (27.8)
Age of mill
1–9 years	19 (52.8)	7 (38.9)
10–19 years	8 (22.2)	4 (22.2)
20 years and above	9 (25)	7 (38.9)
Types of maize meal
Super	4 (11.1)	0 (0.0)
Special	14 (38.9)	5 (27.8)
Sifted	6 (16.7)	0 (0.0)
Super and special	2 (5.6)	10 (55.6)
Super and sifted	1 (2.8)	1 (5.6)
Special and sifted	9 (25)	1 (5.6)
Combinations of all types of maize meal	0 (0.0)	1 (5.6)
Province
North West	14 (38.9)	7 (38.9)
Mpumalanga	4 (11.1)	5 (27.8)
Free State	11 (30.6)	3 (16.7)
Limpopo	7 (19.4)	3 (16.7)
Note: Data presented as number (percentages) of mills surveyed.
^aEducation is measured by an index ranging from 0 to 5 (0 = no formal education, 1 = primary school, 2 = Grade 12, 3 = diploma, 4 = bachelor's degree, 5 = postgraduate degree).

Table 3: Summary statistics of variables used in the profit function analysis for the surveyed small- and medium-scale maize mills in South Africa

Variable	Small-scale mills				Medium-scale mills
	Mean	SD	Min	Max	Mean	SD	Min	Max
Profit/tonne of maize meal produced (Rand)	458.6	241.7	132.9	952.8	715.6	455.5	155.8	1539.7
Maize costs (mzcost)/tonne (Rand)	816.8	96.0	700	1099.5	843.6	141.1	700	1250
Labour (labcost)/tonne of maize meal produced (Rand)	67.3	60.8	6.9	281.3	56.9	101.2	3.8	455
Other costs (othcost)/tonne of maize meal produced (Rand)	247.1	82.2	119.4	453.7	215.0	91.5	24.2	350.4
Capital/tonne of maize meal produced (Rand)	35.1	34.8	1.9	136.6	20.8	26.7	1.3	115.1
Education^a	2.6	1.1	0	5	3.3	1.3	2	5
Mill size (milling capacity) (tonnes/day)	11.5	5.4	1.9	24	51.7	25.1	25.2	96
Age of mill (years)	15.8	18.3	2	76	19.3	19.5	1	66
LP (dummy: 1 if located in Limpopo, 0 otherwise)	0.3	0.5	0	1	0.2	0.4	0	1
NW (dummy: 1 if located in North West, 0 otherwise)	0.4	0.5	0	1	0.4	0.5	0	1
MP (dummy: 1 if located in Mpumalanga, 0 otherwise)	0.1	0.3	0	1	0.3	0.5	0	1
FS (dummy: 1 if located in Free State, 0 otherwise)	0.2	0.4	0	1	0.2	0.4	0	1
SD, standard deviation; Min, minimum; Max, maximum; LP, Limpopo; NW, North West; MP, Mpumalanga; FS, Free State. ^aEducation is measured by an index varying from 0 to 5 (where 0=no formal education, 1=primary school, 2=Grade 12, 3=diploma, 4=bachelor's degree, and 5=postgraduate degree).

Table 4: Maximum likelihood estimates of the translog stochastic frontier profit function

Variable	Parameter	Small-scale mills			Medium-scale mills
		Coefficient	SE	t-ratio	Coefficient	SE	t-ratio
Stochastic frontier model
Constant	β0	–25.41	2.51	–10.12∗∗∗	5.16	1.50	3.44∗∗∗
Ln mzcost	β1	–4.48	2.76	–1.62∗	–22	1.49	–14.76∗∗∗
Ln labcost	β2	–1.27	0.53	–2.41∗∗	–0.62	1.31	–0.47
Ln othcost	β3	–14.7	1.71	–8.61∗∗∗	–13.7	1.16	–11.81∗∗∗
Ln capital	β4	2.06	0.39	5.36∗∗∗	0.93	0.30	3.20∗∗∗
Ln mzcost ∗ Ln mzcost	β5	–4.06	2.52	–1.61∗	–17.7	1.27	–13.93∗∗∗
Ln labcost ∗ Ln labcost	β6	–0.15	0.09	–1.67∗	–0.21	0.38	–0.55
Ln othcost ∗ Ln othcost	β7	–4.94	0.91	–5.43∗∗∗	–1.77	0.41	–4.32∗∗∗
Ln capital ∗ Ln capital	β8	–0.39	0.05	–7.80∗∗∗	–0.06	0.08	–0.75
Ln mzcost ∗ Ln labcost	β9	0.14	0.33	0.42	–4.85	0.28	–17.32∗∗∗
Ln mzcost ∗ Ln othcost	β10	–0.47	0.43	–1.09	8.41	0.43	19.56∗∗∗
Ln mzcost ∗ Ln capital	β11	–1.07	0.28	–3.82∗∗∗	0.50	0.16	3.13∗∗∗
Ln labcost ∗ Ln othcost	β12	–0.27	0.25	–1.10	1.89	0.29	6.52∗∗∗
Ln labcost ∗ Ln capital	β13	–0.001	0.06	–0.02	–0.22	0.14	–1.57∗
Ln othcost ∗ Ln capital	β14	0.92	0.17	5.41∗∗∗	–0.17	0.32	–0.53
Variance parameters
Sigma-squared	σ^2	0.057	0.029	1.97∗∗	0.004	0.005	0.80
Gamma	Γ	0.89	0.081	11∗∗∗	0.99	0.04	24.75∗∗∗
Log-likelihood function	LLF	20.32			39.73
SE, standard error. ∗∗∗Significant at 1% level, ∗∗significant at 5% level, ∗significant at 10% level.

Table 5: Distribution of profit efficiency of small- and medium-scale maize mills in South Africa

Efficiency range	Small-scale mills		Medium-scale mills
	Number	%	Number	%
0.20−0.70	8	22.2	2	11.1
0.71−0.80	5	13.9	5	27.8
0.81−0.90	3	8.3	1	5.6
0.91−1.00	20	55.6	10	55.6
Total	36	100	18	100
Mean efficiency (%)	80.6		87.4
Minimum (%)	28.3		64.9
Maximum (%)	98.1		99.8
Standard deviation	0.211		0.122

Table 6: Estimates of the determinants of profit inefficiency for small- and medium-scale maize mills

Variable	Parameter	Small-scale mills			Medium-scale mills
		Coefficient	SE	t-ratio	Coefficient	SE	t-ratio
Constant	δ0	–0.70	0.75	–0.93	0.39	0.47	0.83
Education	δ1	–0.02	0.07	–0.29	–0.017	0.003	–5.67∗∗∗
Mill size	δ2	0.05	0.04	1.25	–0.007	0.004	–1.75∗
Age of mill	δ3	0.005	0.004	1.25	–0.005	0.002	–2.50∗∗
Limpopo Province	δ4	1.51	1.51	0.99	0.12	0.45	0.27
North West	δ5	–0.09	0.57	–0.16	–0.11	0.045	–2.44∗∗
Mpumalanga	δ6	–1.23	0.64	–1.92∗∗	–0.31	0.46	–0.67
Free State	δ7	–0.52	0.62	–0.84	–0.10	0.46	–0.21
SE, standard error. ∗∗∗Significant at 1% level, ∗∗significant at 5% level, ∗significant at 10% level.

Table 7: Constraints facing small- and medium-scale maize mills in South Africa (%)^a

Constraint	Small-scale mills	Medium-scale mills
Credit	11.1	16.7
High maize price	50	50
High transport costs	61.1	55.6
Poor management	11.1	5.6
Fortification policy	22.2	16.7
Inadequate storage facilities	11.1	27.8
Lack of infrastructure	16.7	22.2
Lack of customers	13.9	11.1
Increasing numbers of competitors	52.8	44
Consumer preference for maize meal from large-scale mills	63.9	45
^aFigures do not add up to 100 due to multiple responses.