production performance of sugar factories. Productivity represents the ratio of output to the input of the production process; on the other hand, efficiency is the ratio of the output acquired in some period to the maximum output acquired using the most ideal techniques. The quality and the amount of the output and input used in performance measurement also affect the decision maker performance. Consequently, it is crucial to deal with decision making units considering all the data. Production performance is accepted to be on the increase as the productivity and efficiency ratios acquired from output and input values. Although there are several ways of measuring efficiency, Data Envelopment Analysis is the most commonly used one. DEA using mathematical programming is used to measure comparative productivity. It classifies companies as “efficient” and “not efficient” according to the already determined production limit of decision making unit which uses the best techniques. As for total factor productivity, it is derived from the multiplication of variance in technology and technical efficiency. The components of variance in technical efficiency consist of the variance in pure efficiency and scale efficiency. Malmquist index is the most commonly used index to measure total factor productivity and variance in its components.

This study in which total factor productivity with its components and technical efficiency levels of 25 public sugar factories in Turkey are measured via Data Envelopment Analysis and Malmquist TFP index firstly focuses on sugar production and sugar factories. Next the study introduces Data Envelopment Analysis and Malmquist TFP index in addition to related data set. Lastly, the production efficiency of sugar factories in Turkey is analyzed with CCR output oriented model, DEA and TFP index.

Sugar factor?es ?n Turkey

Approximately   350.000    farmers  grow  sugar  beets  in 350.000 – 500.000  hectares of cultivation areas (Konyal?

and Gaytanc?o?lu, 2012).Technology made use in sugar production in Turkey does not show any particular difference from the developed countries’ except for automation and scale size. Attempts to build a sugar factory in Turkey began in 1923. U?ak Sugar Factory, foundation of which was laid in 1925 was commissioned in 1926 along with Alpullu Sugar Factory in which the first sugar production took place. Reaching the total number of four after the commissioning of Eski?ehir (1933) and Turhal (1934), the sugar factories were merged under the title of Turkish Sugar Factories Corporation (TSFC) in 1935. The corporation which has 70% lot in total sugar production has continued to operate with 25 sugar factories ever since. Today, 33 sugar factories operate in Turkey, 25 of which belong to the government, 6 to Pankobirlik and 2 to private organizations (SPO, 2001) Figure 1. 

Acting upon the principles of profitability and productivity, TSFC is responsible from sugar production, sales, import/export and pricing out associated products. Aside from that, TSFC also provides necessary tools and means to its factories as well as offering fertilizers, seeds and pesticides to sugar beet farmers (SPO, 2001). Among 25 factories Malatya, Erzincan, Elaz?? and Elbistan Sugar factories in Portfolio B and Kastamonu, K?r?ehir, Yozgat, Turhal, Çorum ve Çar?amba Sugar Factories in Portfolio C are approved to be corporatized by Republic of Turkey Prime Ministry Privatization Administration on 29.11.2011 for 922.000.000$ fee (http://www.oib.gov.tr/program/ uygulamalar/ 2007_uygulamalar/ihalesi_tamam_imza_asamasindakiler.htm, on 09.07.2012). In this study, production efficiency and total factor productivity comparison of sugar factories in Turkey are made for 25 sugar factories in Table 1 

belonging to TSFC (http://www.turkseker.gov.tr/ sekerfabrikalari.aspx on 09.07.2012).

Between 2001 and 2011, the most sugar (white sugar equivalents) producing countries were Brazil with 35.5 million tons, India with 23.9 million tons, EU with 14.5 million  tons  and  China  with  10.6  million tons. In 2010-2011 saccharose based white sugar production in the world per capita per annum is 21 kg. In Turkey, two types of sugar production takes place starch based sugar production and saccharose based sugar production. As for saccharose based, beet sugar is produced while for starch based glucose syrup, isoglucose (high fructose corn syrup- HFCS) and crystal fructose are produced. Beet sugar production and domestic sales in Turkey were 2 million 531 thousand and 2 million 159 thousand tons in 2009-2010 marketing year; 2 million 262 thousand tons and 1 million 768 thousand tons in 2010-2011 marketing year. Turkey’s share in world beet sugar production has been 8% since 2010-2011.