Comparative analysis of technical efficiency between organic and non-organic rice farming in North Sumatera Indonesia

Abstract

Non-organic farming will deteriorate the land and decrease the total factor productivity, which may result to higher production cost and low crop yield in the long run. However, Indonesian government initiative to become less dependent on non-organic rice farming by encouraging farmer to plant organic rice seems unsuccessful. Nevertheless, the most rice consumed in Indonesia is from non-organic farming. This study uses data envelopment analysis (DEA) based on non-parametric approach to measure technical, allocative and economic efficiency. This study found that pesticide and irrigation is underutilized, but fertilizer and labor are being overutilized. Even though most farmer are technically efficient, better efficient input allocation can improve the efficiency. Organic rice farming is less efficient than non-organic farming due to its low crop yield. Farmer with longer education background tend to be less efficient and more inclination toward planting organic rice.