Production factors, technical, and economic efficiency of soybean (Glycine max L. Merr.) farming in Indonesia

Abstract

Most soybean farming in Indonesia is still performed conventionally. Farmers are less interested in cultivating soybeans because the production yields are relatively small. This research aims to determine the factors influencing production, production inefficiency of soybean, and the technical efficiency (TE) and economic efficiency (EE) level of soybean farming. Primary data were collected using a survey method of soybean farmers in paddy field areas in the Tabanan Regency of Bali Province, Indonesia. Data were analyzed using the stochastic frontier approach using the Frontier 4.1 analysis tool. Factors that positively affected the increasing soybean production were land area, urea and NPK fertilizers, and soybean seeds. The factor positively affecting soybean production inefficiency was a farming experience. The average TE value was 0.77, implying that soybean farming in the study area was efficient. However, the EE value below 0.70 implied that soybean farming was inefficient. Based on soybean farmers’ farming experience, TE and EE values were getting lower. The low value of EE was suspected of causing farmers’ low interest in cultivating soybean.

Keywords

• production efficiency
• production inefficiency
• soybeans
• stochastic frontier approach