Performance analysis of primary wood producers in British Columbia using data envelopment analysis

Abstract

Despite its importance, performance assessment of the Canadian primary wood products sector has received little attention in the academic literature and business practices. In this research a nonparametric technique, called data envelopment analysis (DEA), was used to evaluate the performance of sawmills in British Columbia in 2002. Individual mills were inspected using different DEA models to capture their technical, scale, and aggregate efficiencies. Log consumption and labor utilization were considered as the inputs and lumber and chip production as the outputs of these models. Although British Columbia sawmills enjoyed high scale efficiency, only 7% of them were aggregately efficient. The results showed possible efficiency improvements by increasing the production and decreasing the labor usage. Post-hoc analyses with two nonparametric statistical tests, median quartile and Kruskal–Wallis, revealed that the average efficiency of sawmills in different British Columbia forest regions varied significantly; however, the number of operating days had no effect on technical efficiency of sawmills at a 5% significance level.