Inefficiency in Food Industries of Iran

The food industries in Iran is widely recognized as a ‘sunrise industry’, with a huge potential for uplifting the agricultural economy, creating large scale processed food manufacturing and food chain facilities and resulting in the generation of employment and export earnings. Due to the importance of Food Industries in Iran this paper estimated and investigated the inefficiency in this industry. The stochastic frontier approach is applied. The result showed that the measure of the average technical inefficiency of the Iranian food industries was 31%. In other words, the food industries of Iran are only 69% technically efficient. The important factors that affect on efficiency in food industries of Iran are Education (ED), skilled (SK), specialization (SP) and workers insurance (IN). All the factors have the expected significance values and are consistent with theory.