Abstract
This study assesses technical efficiency and possible sources of inefficiency of independent smallholder oil palm production in Indonesia with stochastic frontier approach. The result show all the input variables is positively affect the oil palm production and exhibit decreasing returns to scale . The farmers have mean technical efficiency (TE) values 0.6541, however about 53 % farmers have TE above 0.70. Factors such as age of farmer, education, extension services, member of farmer group, land ownership and funding sources have a positive and significant effect on technical efficiency. It is suggested that by improving factors such as input used, education level, technical assistance on farming practice and accessibility to credit facilities should be increase the productivity and technical efficiency of oil palm production. The farmers who have plant over 30 years old, which the TE and productivity are the lowest values, should be thinking about replanting
Highlights
Indonesia's entire oil palm land (BPS 2019).The Indonesian government has been more than 2.6 million households developing oil palm as a driver of depend on this commodity (Ditjenbun, economic development in rural areas for 2018)
Xi is the farmer's ability to manage their farms. input variable vector; β corresponds to the this study will describe the parameter vector to be estimated; vi is a characteristics of independent oil palm noise effect that cannot be controlled by smallholders and analyze the technical the farmers and is assumed to be efficiency of independent oil palm independent and identically distributed smallholders in Indonesia
The transcendental logarithmic (TL) model was, and u3= 17-25 modified to accommodate a value of 0 on years and u4= > 25 years (exceed farmers according to the Battese (1997) the economic life of oil palm)
Summary
The Indonesian government has been more than 2.6 million households developing oil palm as a driver of depend on this commodity (Ditjenbun, economic development in rural areas for 2018) Went on a large scale, which initially independent oil palm farmers will become involved smallholders with contractual key players for developing the Indonesian ties to large state-owned companies. It oil palm industry in the future. Efficiency analysis of production to help formulate policies for the development of where Yi is the output of the i-th farmer independent oil palm smallholders, and f(Xi, ) represents the corresponding especially in increasing smallholders' production function. Xi is the farmer's ability to manage their farms. input variable vector; β corresponds to the this study will describe the parameter vector to be estimated; vi is a characteristics of independent oil palm noise effect that cannot be controlled by smallholders and analyze the technical the farmers and is assumed to be efficiency of independent oil palm independent and identically distributed smallholders in Indonesia
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