Evaluating Technical Efficiency of Turkish Sugar Production in Pre and Post Privatization Periods

The sugar production sector of Turkey has undergone a large-scale privatization in 2018. Since then, 10 out of 33 sugar factories have been privatized. The objective of this research is to investigate the effects of the privatization on the technical efficiency of the sugar factories. For this purpose, the data of 31 factories operating in different parts of the country are utilized. We evaluate the efficiency before and after privatization in two periods: pre-privatization (September 2017-August 2018) and after-privatization (August 2018-September 2019) using Data Envelopment Analysis, Malmquist Productivity Index and DEA by Sequential Exclusion of Alternatives methods. First, while results derived from all models reveal a technical efficiency decline among factories in general, the privatized factories stand out as the only subset that experience an increase in technical efficiency for the period analysed. Secondly, the benchmarks for the inefficient factories are identified in the short term and the long term using ‘DEA by Sequential Exclusion of Alternatives’ to assist improvement decisions. Finally, the research presents some methodological insights on the application of the ‘DEA by Sequential Exclusion of Alternatives’ approach by experimenting with changing parameters that have the potential to aid future applications.