Abstract
Indonesia’s palm oil plantation is dominated by three actors. Among three actors, the productivity of smallholder farmers has the lowest productivity. This study aims to analyze the value of technical efficiency and factors affecting the technical inefficiency of palm oil plantations in Indonesia by using the stochastic frontier analysis based on the translog production function. The data used in this study are taken from the Central Statistics Agency (Agricultural Business Household Income Survey) in 2013. The number of samples used was 14,367 farmers. The results revealed that the average value of technical efficiency (58.32%) is still far to reach its optimal, showing that there is still to increase in the efficiency of palm oil plantations in Indonesia. The production function suggests that increasing the number of trees can help to increase the number of outputs. To enhance the technical efficiency, education, age, planting system, seed quality, extension service, and plasma farmer are the significant factors.
Highlights
Technical efficiency is influenced by several factors
Ariyanto et al stated that age and the extension services have strongly effect on the technical efficiency of smallholder farmers in West Kalimantan, Indonesia[7]
Ismiasih examined the technical efficiency of palm oil plantation in West Kalimantan and the result showed that the value of technical efficiency is moderate and still need to improve the e fficiency[20]
Summary
Technical efficiency is influenced by several factors. Varina et al examined the effects of many factors on the technical efficiency of oil palm plantation, including the age of the farmers, education, extension s ervices[4]. The result showed that age, education and extension service significantly affect the technical efficiency. The source of the seed and extension services effect on the technical efficiency of palm oil farmers in Jambi Province in Indonesia with the average efficiency value of 66%, showing that it is still need to improve the efficiency[10]. The technical efficiency of palm oil cultivation analyzed in Riau province in Indonesia, implying that farmers group, extension program, education level, and farm diversification are the important factors to increase p roductivity[18]. Ismiasih examined the technical efficiency of palm oil plantation in West Kalimantan and the result showed that the value of technical efficiency is moderate and still need to improve the e fficiency[20]. This paper aims to analyze the technical efficiency and factors affecting the technical inefficiency of palm oil plantations in Indonesia using the stochastic frontier approach (SFA). This paper proceeds as follows material and method in “Materials and methods” section, results and discussion presented in “Results and discussion” section, and the end of research in last section
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