Abstract:
Despite the reported large margins between producer prices for maize and retail prices for
maize meal and the fact that maize meal is a staple food for most of the South African
population, there have been only limited investments in small and medium scale maize
milling in South Africa since the deregulation of the maize markets. The apparent failure of small and medium scale maize millers to emerge and compete effectively in the maize milling industry in South Africa raises questions about their scale and level of efficiency. Against this
background, this paper analyses the profit efficiency of these enterprises, using a translog
stochastic profit frontier model. Findings from the profit efficiency analysis show an average
profit efficiency score of 80.6 per cent for the small-scale and 87.4 per cent for the mediumscale
mills. There is therefore a significant unexplored potential in these categories of mills.
