Environmental Efficiency Analysis of Shallot Farming: A Stochastic Frontier Translog Regression Approach

Abstract

Shallot farming in Indonesia has been the predominant life support for farmers in the country side. However, when it is compared to that in other countries such as Thailand, shallot farming in Indonesia has yet to reach its optimal productivity. Numbers of determining factors have been identified, one of which is pest and plant diseases. The most common control measure devised by the local farmers to address the pest and plant diseases has been the use of chemical pesticide. Nonetheles,  its use tend to be excessive so that it potentially endangered the environment. On the other side, shallot farming demanded environmentally friendly practices to create sustainable business for the future. Based on that a research has been done to assess the environmental efficiency through analysis of stochastic frontier translog regression approach. The objectives of the research are: 1) to assess the influence of some conventional production input, in particular the influence of excessive pesticide on the shallot production using stochastic frontier translog (TL) regression, 2) to analyse the technical efficiency and environmental efficiency, and 3) to analyse the technical inefficiency effect on shallot farming. The research held in Nganjuk Regency of East Java Province, Indonesia, from October to November 2013. The results of stochastif frontier translog (TL) regression analysis indicated  that conventional production input variables such as seeds, organic fertilizer and labor, either individually or in quadratic forms, as well as in their interaction significantly affect the shallot production. The shallot farming has not reach the environmental efficiency level because the average of EEnv is only 0.5674. Similar result applied to the technical efficiency towards shallot farming, where the average TE is only 0.6107. The analysis of technical inefficiency aspect suggested that only access to farmer group  provide a significant influence, where farmers with better access to the farmer group have higher technical efficency.

Keywords : Stochastic frontier translog regression, environmental efficiency/EEnv, technical efficiency/TE, effect of technical inefficiency and shallot farming