Abstract

Productivity of shallot in central Java as an area production center has a declining trend from 2013-to 2018. One way to increase productivity is through technical efficiency. However, to increase productivity, the probability of production risk will also be higher. Contract farming is one way to increase productivity and overcome production risks in shallot farming. The objectives of this study were to analyze the effect of contract farming on technical efficiency and perception of risks production between contract and non-contract farmers. Secondary data was used in this study. The research sample consisted of 1.508 (10 contract farmers and 1.498 non-contract farmers) shallot farmers in Central Java. The data were analyzed using the stochastic frontier method to see technical efficiency, and the Likert scale to see farmers' perceptions of production risk. The analysis shows that contract farming affected decreasing efficiency. Meanwhile, there is no difference between both farmers in perceptions of the risk of pest and disease attacks. Meanwhile, contract farmers’ perception of the risk of climate change was greater in decreasing production than non-contract farmers. Management efforts by both contract and non-contract farmers to overcome pests and plant diseases are no different. They both prefer chemical methods to overcome pest and disease plant attacks.

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