The primary aim of this paper is to assess the output loss due to inefficient management of sugar industry in Sudan. An industrial firm is scale inefficient if there is under utilization of production inputs. In this paper we employed nonparametric Data Envelopment Analysis to estimate scale efficiency of the major sugar producers in Sudan: Kenana sugar company and Sudan sugar company manufacturers: Sennar, Assalaya, New Halfa and Al-Ganied. The finding of the paper indicate Kenana and Al-Genied manufacturers exhibit constant return to scale, whereas the other three sugar manufacturers of SSC: Sennar, Assalaya and New Halfa exhibit increasing return to scale. Increasing return to scale implies inefficient utilization of available input mix. The average output loss due to scale inefficiency for Sudan sugar company during the periods 2009, 2010, 2011 and 2012 are respectively 6%, 12%, 14% and 16% of the benchmark company output level of Kenana. This result implies that for Sudan sugar company to increase its efficiency level, it needs to manage cane production in Assalaya, Sennar and New Halfa projects on commercial basis, as is the case in Al-Genied, by renting the agriculture land with its infrastructure to private firms to produce sugar cane on commercial basis.
Keywords: Efficiency, Technical efficiency, DEA, Sugar industry, Sudan.
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