Factors influencing the efficiency of cocoa farms: A study to increase income in rural Indonesia.

Effendy Effendy,Rustam Abdul Rauf,Muhammad Basir-Cyio,M Fardhal Pratama,Mahfudz Mahfudz,Made Antara,Muhardi Muhardi,Majid Soleimani-Damaneh

doi:10.1371/journal.pone.0214569

Abstract

Indonesia is the fifth largest cocoa-producing country in the world, and an increase in cocoa farming efficiency can help farmers to increase their per capita income and reduce poverty in rural areas of this country. This research evaluated the efficiency of Indonesian cocoa farms using a non-parametric approach. The results revealed that the majority of cocoa farms are operated relatively inefficiently. The average technical and allocative efficiencies (0.82 and 0.46, respectively) of these cocoa farms demonstrated that there is potential for improvement. The potential cost reductions range from 36 to 76%, with an average of 60%, if farmers practice efficiently. The technical and allocative efficiencies and cocoa farm economies are affected by the use of quality seeds, organic fertilizers, frequency of extension and training of farm managers, access to bank credit and the market, the participation of women, and the farm manager’s gender. An increase in the output would increase farmers’ income and reduce poverty in rural areas. This research suggests that the availability of extension and training provided to farmers as well as support for women farmer groups should be increased. Credit programs are also important for cocoa farmers, so policymakers should develop programs that make production credit more accessible for farmers, especially through cooperatives and banks.

Highlights

Agriculture plays an important role in the reduction of poverty and starvation in Asia [1]
The objectives of this research were to evaluate the efficiency of cocoa farms and to suggest some priority areas for policy interventions designed to increase the efficiency of cocoa production, which, in turn, could increase income and reduce poverty in rural Indonesia
The contribution of women constituted 40% of the total labor input, and farms that were managed by women totaled 36%, demonstrating that women’s role in cocoa farms is substantial

Summary

Introduction

Agriculture plays an important role in the reduction of poverty and starvation in Asia [1]. It helps to reduce poverty by generating employment and income [2]. Poverty eradication is currently the main objective in Indonesia. To realize this goal, cocoa farms have become a priority area [3]. Indonesia is the fifth largest cocoa producer in the world, after Cote d’Ivoire, Ghana, Ecuador, and Nigeria. In Asia and Oceania, Indonesia is ranked as the highest producer of cocoa, with an annual production of approximately 240,000 tonnes (source: ICCO 2018), followed by Papua New Guinea, which has an annual production of only approximately 40,000 tonnes [4]

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Conclusion