Technical inefficiency, cost frontiers and learning-by-doing in Norwegian farming of juvenile salmonids

For an industry's total competitiveness, it is important how the suppliers perform. In this respect, efficiency improvement in smolt production is highly important for the Norwegian salmon industry. Smolt is one of the key input factors in salmon farming. After feed, it makes up for the highest cost share. The objective of this research was to analyze the efficiency in Norwegian production of juvenile salmonids from 1988-2012. A special interest in this research was to investigate how the age of the firm affects the technological efficiency. This econometric analysis is undertaken in a stochastic cost frontier framework. The results indicate that significant technical inefficiency is present in smolt production, and that there exist productivity differences between regions. Furthermore, there seems to be a learning-by-doing effect in juvenile production because older firms perform slightly better than the new ones with respect to technical efficiency.