Assessing Cost Savings in Agricultural Transformation and Processing Industries: Emphasis on Two Approaches of Labor Experience and Production Learning

Document Type : Research Paper

Authors

Assistant professor, Department of Economics, payamenoor university, Tehran, Iran

Abstract

Agricultural transformation and processing industries have strategic importance in providing the consumption needs and the food chain of society. This is one of the most important industrial groups effective in the economic growth of developing countries. The experience of the world’s countries shows that the learning process with the knowledge development and training of a creative workforce affects the sectors of the economy’s cost structure. Therefore, the purpose of this study was to evaluate cost savings in agricultural processing industries with two different learning-by-doing and production-learning approaches. To meet this end, the data of 18 food processing industries for 2002-2020 and The Panel Autoregressive Distributed Lag and Error Correction methods were used. The results indicate that economies of scale have been realized in the short and long terms. So all sub-sectors operate at the optimal scale level. In addition, production learning with a rate of 0.83 and a high adjustment speed towards long-term equilibrium had a significant role in reducing the average cost. On the other hand, the results of workforce cost savings indicated that whiles the scale economies were constant workforce cost savings in long term is more than in the short term period. Also, in each period 44.6% of the learning-by-doing gap between the short and long-balance decreases. Overall doubling accumulation production led to a 32% decrease in average cost and reduced about 20% in the cost per unit labor force compared to its previous level. Therefore, it is recommended to identify effective resources in the realization of learning, the growth of technology-oriented start-ups, and the improvement of the skills and abilities of the different layers of employees in this sector through training, holding workshops, and non-academic courses.

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Main Subjects

References

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Agricultural Economics
Volume 17, Issue 2 - Serial Number 2
August 2023
Pages 105-130

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