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Nonparametric analysis of technical, pure technical, and scale efficiencies for food crop production in East Java, Indonesia

  • Llewelyn, Richard V.
  • Williams, Jeffery R.

Non parametric analysis of technical efficiency for irrigated farms in the Madiun regency in the west-central part of East Java, Indonesia is conducted using linear programming techniques. This procedure allows the relative technical efficiency for each farm to be determined and for inefficiencies to be decomposed into pure technical inefficiency and scale inefficiency and does not require restrictions or assumptions regarding functional form to be placed on the data. Farmers in Madiun generally are efficient relative to each other. Farmers operating inefficiently do so more often because of scale inefficiencies rather than pure technical inefficiencies. A rna jority of the farms operate in the region of decreasing returns to scale rather than increasing returns to scale. Farmer age, the level of diversification of cropping activities, and high school education were found to be related to technical efficiency in the rainy season under irrigated conditions. Other socioeconomic factors were not statistically significant. The results imply that inefficient farms use excessive levels of inputs, particularly nitrogen fertilizer. This is perhaps due to the lingering effects of past input subsidization policies, particularly of fertilizers, in Indonesia, or to risk-reducing behavior. The results also imply that current government policies to encourage diversification of cropping practices in Java may lead to greater technical inefficiencies in production. In addition, extension education targeted to younger farmers with low levels of formal education would improve efficiency.

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File URL: http://purl.umn.edu/174008
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Article provided by International Association of Agricultural Economists in its journal Agricultural Economics of Agricultural Economists.

Volume (Year): 15 (1996)
Issue (Month): 2 (November)
Pages:

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Handle: RePEc:ags:iaaeaj:174008
Contact details of provider: Web page: http://www.iaae-agecon.org/
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  1. Byerlee, Derek R., 1987. "Maintaining the Momentum in Post-Green Revolution Agriculture: A Micro-Level Perspective from Asia," Food Security International Development Papers 54061, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  2. Hanoch, Giora & Rothschild, Michael, 1972. "Testing the Assumptions of Production Theory: A Nonparametric Approach," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 256-75, March-Apr.
  3. Banker, Rajiv D & Maindiratta, Ajay, 1988. "Nonparametric Analysis of Technical and Allocative Efficiencies in Production," Econometrica, Econometric Society, vol. 56(6), pages 1315-32, November.
  4. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-98, October.
  5. Azhar, Rauf A, 1991. "Education and Technical Efficiency during the Green Revolution in Pakistan," Economic Development and Cultural Change, University of Chicago Press, vol. 39(3), pages 651-65, April.
  6. Varian, Hal R, 1984. "The Nonparametric Approach to Production Analysis," Econometrica, Econometric Society, vol. 52(3), pages 579-97, May.
  7. Chavas, Jean-Paul & Aliber, Michael, 1993. "An Analysis Of Economic Efficiency In Agriculture: A Nonparametric Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), July.
  8. RAUF A AzHAR, 1988. "Education and Technical Efficie," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 27(4), pages 687-697.
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