IDEAS home Printed from https://ideas.repec.org/a/ags/veagro/347640.html

Taking a deeper look at the Priority of Agricultural Industry Efficiency through the Use of Data Envelopment Approach

Author

Listed:
  • Harya, Gyska Indah
  • Kuswanto
  • Asmara, Rosihan
  • Ibrahim, Jabal Tarik
  • Maulidah, Silvana
  • Budiwitjaksono, Gideon Setyo

Abstract

The research aims to analyze the technical efficiency of the chocolate industry, which has outstanding performance in producing chocolate products in East Java, Indonesia. The research sample includes all small and large-scale chocolate industries in East Java, with 42 Decision Making Units (DMUs). Efficiency research uses Data Envelopment Analysis (DEA), which is usually used in agricultural production research. However, in this research, DEA was used to analyze the efficiency of the chocolate industry making this concept as an empirical novelty. The analysis results show that there are industries operating at the Constant Returns to Scale (CRS) level (0.971), with a percentage of 66.67%, consisting of 28 DMUs, and the Variable Returns to Scale (VRS) level (0.992), with a percentage of 85.71%, which is represented by 36 DMUs. The Technical Efficiency (TE) is categorized as full technical efficiency at 85.72%, with a high category at 14.28%, and no DMUs fall under the moderate and low categories. This indicates that the allocation of inputs in each DMU is significantly different. Six DMUs require improvement in the distribution of industrial capital and raw materials input to achieve full efficiency category by making decisions based on the DMU's recommendations as a reference (benchmarks). This article concludes that industrial efficiency is a priority for the establishment of a business to achieve its goals easily. When the industry can control the quality and quantity of its products, it can be highly beneficial. The policy implications required for this case research to maintain and improve the efficiency of the chocolate industry in East Java, Indonesia, are for industries to prioritize joint management, increase the scale of operations, increase production frequency, expand innovative chocolate processing technology, prioritize product quality, and be able to penetrate export markets.

Suggested Citation

  • Harya, Gyska Indah & Kuswanto & Asmara, Rosihan & Ibrahim, Jabal Tarik & Maulidah, Silvana & Budiwitjaksono, Gideon Setyo, 2024. "Taking a deeper look at the Priority of Agricultural Industry Efficiency through the Use of Data Envelopment Approach," Agroalimentaria Journal - Revista Agroalimentaria, Centro de Investigaciones Agroalimentarias, Facultad de Ciencias Económicas y Sociales, Universidad de los Andes, vol. 29(57), January.
    • Handle: RePEc:ags:veagro:347640
    DOI: 10.22004/ag.econ.347640
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/347640/files/Articulo_7_Harya-et-al_R57.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.347640?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Timothy J. Coelli & D.S. Prasada Rao & Christopher J. O’Donnell & George E. Battese, 2005. "An Introduction to Efficiency and Productivity Analysis," Springer Books, Springer, edition 0, number 978-0-387-25895-9, January.
    2. Marcus Wagner & Nguyen Van Phu & Théophile Azomahou & Walter Wehrmeyer, 2002. "The relationship between the environmental and economic performance of firms: an empirical analysis of the European paper industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 9(3), pages 133-146, September.
    3. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Returns to scale and damages to scale under natural and managerial disposability: Strategy, efficiency and competitiveness of petroleum firms," Energy Economics, Elsevier, vol. 34(3), pages 645-662.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hosseinzadeh, Ahmad & Smyth, Russell & Valadkhani, Abbas & Le, Viet, 2016. "Analyzing the efficiency performance of major Australian mining companies using bootstrap data envelopment analysis," Economic Modelling, Elsevier, vol. 57(C), pages 26-35.
    2. Veneranda Vedastus Lufano & Dr. Gabriel Kirori & Dr. Rose Mugiira, 2023. "Efficiency Analysis of the Food and Beverage Industry in Tanzania: A Comparative Analysis," International Journal of Economics, IPRJB, vol. 8(2), pages 19-32.
    3. repec:ags:cfcp15:344277 is not listed on IDEAS
    4. Assaf, A. George & Barros, Carlos Pestana & Managi, Shunsuke, 2011. "Cost efficiency of Japanese steam power generation companies: A Bayesian comparison of random and fixed frontier models," Applied Energy, Elsevier, vol. 88(4), pages 1441-1446, April.
    5. Luis Orea & Christian Growitsch & Tooraj Jamasb, 2012. "Using Supervised Environmental Composites in Production and Efficiency Analyses: An Application to Norwegian Electricity Networks," EWI Working Papers 2012-18, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    6. Lundgren, Tommy & Marklund, Per-Olov & Zhang, Shanshan, 2016. "Industrial energy demand and energy efficiency – Evidence from Sweden," Resource and Energy Economics, Elsevier, vol. 43(C), pages 130-152.
    7. Bazyli CZYZEWSKI & Adam MAJCHRZAK, 2017. "Economic size of farms and adjustments of the total factor productivity to the business cycle in Polish agriculture," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(2), pages 93-102.
    8. Jie Wu & Qingyuan Zhu & Junfei Chu & Liang Liang, 2015. "Two-Stage Network Structures with Undesirable Intermediate Outputs Reused: A DEA Based Approach," Computational Economics, Springer;Society for Computational Economics, vol. 46(3), pages 455-477, October.
    9. Xiaoting Liu & Jichang Dong & Kangxian Ji & Xiuting Li & Shijie Xu, 2022. "Investigating the ‘Short Pain’ and ‘Long Gain’ Effect of Environmental Regulation on Financial Performance: Evidence from Chinese Listed Polluting Firms," Sustainability, MDPI, vol. 14(4), pages 1-18, February.
    10. Scheierling, Susanne M. & Treguer, David O. & Booker, James F., 2015. "Water Productivity in Agriculture: Looking for Water in the Agricultural Productivity and Efficiency Literature," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205677, Agricultural and Applied Economics Association.
    11. Andrew S. J. Smith & Jan-Eric Nilsson & Ivan Ridderstedt & Oskar Johansson, 2023. "Efficiency measurement in the tendering of road surface renewal contracts," Journal of Productivity Analysis, Springer, vol. 60(2), pages 189-202, October.
    12. Naphtal, Habiyaremye & Emily, Ouma Awuor & Nadhem, Mtimet & Gideon, Obare Aiko, 2023. "Profit efficiency and farm productivity: Implications for adoption of dairy best practices among milk producers in Rwanda," 2023 Seventh AAAE/60th AEASA Conference, September 18-21, 2023, Durban, South Africa 365968, African Association of Agricultural Economists (AAAE).
    13. Valentin Zelenyuk, 2023. "Productivity analysis: roots, foundations, trends and perspectives," Journal of Productivity Analysis, Springer, vol. 60(3), pages 229-247, December.
    14. Hirsch, Stefan & Barissoul, Ayoub & Möhring, Niklas & Koppenberg, Maximilian, 2024. "Market power, profitability and the decision to exit organic dairy farming in the EU," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344258, International Association of Agricultural Economists (IAAE).
    15. Marthinus C. Breitenbach & Victor Ngobeni & Goodness C. Aye, 2021. "Efficiency of Healthcare Systems in the First Wave of COVID-19 – A Technical Efficiency Analysis," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 3-21.
    16. Chen, Chien-Ming, 2013. "A critique of non-parametric efficiency analysis in energy economics studies," Energy Economics, Elsevier, vol. 38(C), pages 146-152.
    17. Daniel Kipruto Tuitoek & Clement Cheruiyot Tison & Lydia Jebichii, 2020. "Analysis of Technical Efficiency of Small Scale Tea Production in Nandi Hills – Nandi County: A Data Envelopment Analysis Approach," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 4(6), pages 149-163, June.
    18. Aldieri, Luigi & Gatto, Andrea & Vinci, Concetto Paolo, 2021. "Evaluation of energy resilience and adaptation policies: An energy efficiency analysis," Energy Policy, Elsevier, vol. 157(C).
    19. Malgorzata Guzowska & Magdalena Kotnis, 2024. "Analysis of the Dynamic of Effectiveness of City Halls’ Social Networking Sites in Poland as a Factor in Building an Efficient Public E-Services," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 1595-1611.
    20. Helmi Hammami & Thanh Ngo & David Tripe & Dinh-Tri Vo, 2022. "Ranking with a Euclidean common set of weights in data envelopment analysis: with application to the Eurozone banking sector," Annals of Operations Research, Springer, vol. 311(2), pages 675-694, April.
    21. J. Jorge-Moreno & Laura Gil Delgado & Víctor García Fernández & Silvia García Ventura & Laura Granado Méndez & Ainhoa Samaniego Moreno, 2024. "Efficiency analysis of penitentiary centers in Spain using radial and non-radial DEA and its determinants factors 2015–2020," European Journal of Law and Economics, Springer, vol. 58(1), pages 47-69, August.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:veagro:347640. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/ciulave.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.