The Economic Performance of Indonesian Rice-based Agribusiness
Abstract: Inefficiency is one
of major causes of low performance in Indonesian rice production. This study
measures the technical efficiency of
rice production in five Indonesian regions and examines its determining
factors. A stochastic frontier production function is used to reflect best
practice production given certain levels of input use with equal amounts of
technology. Unbalanced panel data on input-output rice production consisting of
358 farm operation in 2003, 2008 and 2013 are employed for estimating frontier
production functions. The results indicate that variation in rice production
across the five main regions is due primarily to variation in technical
efficiency. Sources of variation within technical inefficiency include
household characteristics, composition of labour and tractor use. Of the five
regions investigated, rice production on Java is the most efficient. Technical
efficiency of rice production increases over time in all five regions but
remains low overall. This study concludes that there is considerable room for
productivity improvements in Indonesian rice-based agribusiness through
increases in technical efficiency.
Keywords: farm level panel
data, rice agribusiness, stochastic production frontier, technical efficiency
Author: Joko Mariyono
Journal Code: jpadministrasinegaragg140049