IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2020-06-12.html
   My bibliography  Save this article

The Determinants of Technical Efficiency of Oil Palm Smallholders in Indonesia

Author

Listed:
  • Firna Varina

    (Department of Agribusiness, Graha Karya School of Agriculture, Jl. Gajah Mada Muara Bulian, Indonesia,)

  • Sri Hartoyo

    (Department of Economic, Faculty of Economics and Management, IPB University, Indonesia,)

  • Nunung Kusnadi

    (Department of Agribusiness, Faculty of Economics and Management, IPB University, Indonesia.)

  • Amzul Rifin

    (Department of Agribusiness, Faculty of Economics and Management, IPB University, Indonesia.)

Abstract

The main objective of the present study is to analyze the technical efficiency (TE) and evaluate its determinant in smallholder oil palm farming in Indonesia. The stochastic frontier analysis was applied to 20,409 selected oil palm farmers from the results of the 2014 Estate Cultivation Household Survey (ST2013 SKB) conducted by BPS-Statistics Indonesia. The results showed that all the input variables had a positive influence on oil palm production along with existing inefficiencies among heterogeneous smallholder farmers. They also indicated that the mean level of the TE among oil palm smallholders was 0.6694. Furthermore, variables such as farmer age, education, type of farmer, and location of the farm had positive and significant effects on TE. Therefore, the development policies in the oil palm smallholder sector might focus on promoting education and facilitate the accessibility of farmers to extension services by giving guidance on farming management based on environmentally friendly principles to improve production regarding land expansion.

Suggested Citation

  • Firna Varina & Sri Hartoyo & Nunung Kusnadi & Amzul Rifin, 2020. "The Determinants of Technical Efficiency of Oil Palm Smallholders in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 10(6), pages 89-93.
    • Handle: RePEc:eco:journ1:2020-06-12
    as

    Download full text from publisher

    File URL: https://www.econjournals.com/index.php/ijefi/article/download/10594/pdf
    Download Restriction: no
    File URL: https://www.econjournals.com/index.php/ijefi/article/view/10594/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vo Hung Son, Tran & Coelli, Tim & Fleming, Euan, 1993. "Analysis of the technical efficiency of state rubber farms in Vietnam," Agricultural Economics, Blackwell, vol. 9(3), pages 183-201, September.
    2. Hasnah & Fleming, Euan & Coelli, Tim, 2004. "Assessing the performance of a nucleus estate and smallholder scheme for oil palm production in West Sumatra: a stochastic frontier analysis," Agricultural Systems, Elsevier, vol. 79(1), pages 17-30, January.
    3. Ofori-Bah, Adeline & Asafu-Adjaye, John, 2011. "Scope economies and technical efficiency of cocoa agroforesty systems in Ghana," Ecological Economics, Elsevier, vol. 70(8), pages 1508-1518, June.
    4. Jules Ngango & Seung Gyu Kim, 2019. "Assessment of Technical Efficiency and Its Potential Determinants among Small-Scale Coffee Farmers in Rwanda," Agriculture, MDPI, vol. 9(7), pages 1-12, July.
    5. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    6. Michael Euler & Stefan Schwarze & Hermanto Siregar & Matin Qaim, 2016. "Oil Palm Expansion among Smallholder Farmers in Sumatra, Indonesia," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(3), pages 658-676, September.
    7. Euler, Michael & Hoffmann, Munir P. & Fathoni, Zakky & Schwarze, Stefan, 2016. "Exploring yield gaps in smallholder oil palm production systems in eastern Sumatra, Indonesia," Agricultural Systems, Elsevier, vol. 146(C), pages 111-119.
    8. Jelsma, Idsert & Woittiez, Lotte S. & Ollivier, Jean & Dharmawan, Arya Hadi, 2019. "Do wealthy farmers implement better agricultural practices? An assessment of implementation of Good Agricultural Practices among different types of independent oil palm smallholders in Riau, Indonesia," Agricultural Systems, Elsevier, vol. 170(C), pages 63-76.
    9. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    10. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    11. Jelsma, Idsert & Schoneveld, G.C. & Zoomers, Annelies & van Westen, A.C.M., 2017. "Unpacking Indonesia’s independent oil palm smallholders: An actor-disaggregated approach to identifying environmental and social performance challenges," Land Use Policy, Elsevier, vol. 69(C), pages 281-297.
    12. Ngango, Jules & Lee, Jungmyung & Kim, Seung Gyu, 2019. "Determinants of technical efficiency among small-scale coffee farmers in Rwanda," 2019 Annual Meeting, July 21-23, Atlanta, Georgia 291139, Agricultural and Applied Economics Association.
    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. Birara Endalew & Adugnaw Anteneh & Kassahun Tasie, 2022. "Technical Efficiency of Teff Production Among Smallholder Farmers: Beta Regression Approach," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(2), pages 1076-1096, April.
    2. Coelli, Tim J., 1995. "Recent Developments In Frontier Modelling And Efficiency Measurement," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 39(3), pages 1-27, December.
    3. Higuchi, Angie & Coq-Huelva, Daniel & Vasco, Cristian & Alfalla-Luque, Rafaela & Maehara, Rocío, 2023. "An evidence-based relationship between technical assistance and productivity in cocoa from Tocache, Peru," Revista de Economia e Sociologia Rural (RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 61(1), January.
    4. Markose Chekol Zewdie & Michele Moretti & Daregot Berihun Tenessa & Zemen Ayalew Ayele & Jan Nyssen & Enyew Adgo Tsegaye & Amare Sewnet Minale & Steven Van Passel, 2021. "Agricultural Technical Efficiency of Smallholder Farmers in Ethiopia: A Stochastic Frontier Approach," Land, MDPI, vol. 10(3), pages 1-17, March.
    5. Hai-Dang Nguyen & Thanh Ngo & Tu DQ Le & Huong Ho & Hai T.H. Nguyen, 2019. "The Role of Knowledge in Sustainable Agriculture: Evidence from Rice Farms’ Technical Efficiency in Hanoi, Vietnam," Sustainability, MDPI, vol. 11(9), pages 1-10, April.
    6. Ofori-Bah, Adeline & Asafu-Adjaye, John, 2011. "Scope economies and technical efficiency of cocoa agroforesty systems in Ghana," Ecological Economics, Elsevier, vol. 70(8), pages 1508-1518, June.
    7. Holtkamp, A.M. & Brummer, B., 2018. "Environmental efficiency of smallholder rubber production," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277518, International Association of Agricultural Economists.
    8. Anita Rosli & Alias Radam & Khalid Abdul Rahim & Amin Mahir Abdullah, 2020. "Technical Efficiency among Pepper Farmers in Sarawak, Malaysia: A Stochastic Frontier Analysis," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(3), pages 729-739, October.
    9. Susaeta, Andres & Sancewich, Brian & Adams, Damian & Moreno, Paulo C., 2019. "Ecosystem Services Production Efficiency of Longleaf Pine Under Changing Weather Conditions," Ecological Economics, Elsevier, vol. 156(C), pages 24-34.
    10. Neumann, Kathleen & Verburg, Peter H. & Stehfest, Elke & Müller, Christoph, 2010. "The yield gap of global grain production: A spatial analysis," Agricultural Systems, Elsevier, vol. 103(5), pages 316-326, June.
    11. Tijani, A.A., 2006. "Analysis of the technical efficiency of rice farms in Ijesha Land of Osun State, Nigeria," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 45(2), pages 1-10, June.
    12. 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.
    13. António Afonso & Ana Patricia Montes & José M. Domínguez, 2024. "Measuring Tax Burden Efficiency in OECD Countries: An International Comparison," CESifo Working Paper Series 11333, CESifo.
    14. Khanal, Aditya & Koirala, Krishna & Regmi, Madhav, 2016. "Do Financial Constraints Affect Production Efficiency in Drought Prone Areas? A Case from Indonesian Rice Growers," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 230087, Southern Agricultural Economics Association.
    15. Dhehibi, Boubaker & Lachaal, Lassaad & Elloumi, Mohamed & Messaoud, Emna B., 2007. "Measurement and Sources of Technical Inefficiency in the Tunisian Citrus Growing Sector," 103rd Seminar, April 23-25, 2007, Barcelona, Spain 9391, European Association of Agricultural Economists.
    16. Gangopadhyay, Partha & Jain, Siddharth & Bakry, Walid, 2022. "In search of a rational foundation for the massive IT boom in the Australian banking industry: Can the IT boom really drive relationship banking?," International Review of Financial Analysis, Elsevier, vol. 82(C).
    17. Alfonso Flores-Lagunes & William C. Horrace & Kurt E. Schnier, 2007. "Identifying technically efficient fishing vessels: a non-empty, minimal subset approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(4), pages 729-745.
    18. George E. Battese & D. S. Prasada Rao, 2002. "Technology Gap, Efficiency, and a Stochastic Metafrontier Function," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 1(2), pages 87-93, August.
    19. Sandrine Kablan & Ouidad Yousfi, 2015. "Performance of Islamic Banks across the World: An Empirical Analysis over the Period 2001-2008," International Journal of Empirical Finance, Research Academy of Social Sciences, vol. 4(1), pages 27-46.
    20. Goyal, S.K. & Suhag, K.S. & Pandey, U.K., 2006. "An Estimation of Technical Efficiency of Paddy Farmers in Haryana State of India," Indian Journal of Agricultural Economics, Indian Society of Agricultural Economics, vol. 61(1), pages 1-15.

    More about this item

    Keywords

    smallholder; stochastic frontier; technical efficiency;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

    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:eco:journ1:2020-06-12. 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: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    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.