Factors influencing the efficiency of cocoa farms: A study to increase income in rural Indonesia

Abstract

Indonesia is the fifth largest cocoa-producing country in the world, and an increase in cocoa farming efficiency can help farmers to increase their per capita income and reduce poverty in rural areas of this country. This research evaluated the efficiency of Indonesian cocoa farms using a non-parametric approach. The results revealed that the majority of cocoa farms are operated relatively inefficiently. The average technical and allocative efficiencies (0.82 and 0.46, respectively) of these cocoa farms demonstrated that there is potential for improvement. The potential cost reductions range from 36 to 76%, with an average of 60%, if farmers practice efficiently. The technical and allocative efficiencies and cocoa farm economies are affected by the use of quality seeds, organic fertilizers, frequency of extension and training of farm managers, access to bank credit and the market, the participation of women, and the farm manager’s gender. An increase in the output would increase farmers’ income and reduce poverty in rural areas. This research suggests that the availability of extension and training provided to farmers as well as support for women farmer groups should be increased. Credit programs are also important for cocoa farmers, so policymakers should develop programs that make production credit more accessible for farmers, especially through cooperatives and banks.

Technical efficiency of cocoa farming in Gorontalo Province

“…Furthermore, a 100% rise in fertilizer, insecticide, and labor units will be followed by an increased output of 1.8%, 6.6%, and 8.4%, respectively. This research is consistent with others conducted in Nigeria and Central Sulawesi, which proved that land area is a leveraging factor in increasing the cocoa production efficiency, apart from being affected by fertilizers, pesticides, and labor [11,20].…”

Technical Efficiency and the Factors that Affect it in Rice Production in Indonesia

“…Farmers who often followed lowland rice agricultural extension tended to have a higher level of technical efficiency than those who did not. This finding is in line with the arguments of Ahmed, Haji, and Geta (2013), Effendy et al (2019), Effendy, Hanani, Setiawan, and Muhaimin (2013), Emmanuel, Owusu-Sekyere, Owusu, and Jordaan (2016, and Mann and Warner (2017), which showed that the extension provided would increase the productivity of farmers and suppress the effects of unwanted technical inefficiency. The extension was informal education that could build the managerial capacity of a farmer (Mangisoni, Chigowo, & Katengeza, 2019).…”

Chronic sources of low cocoa production in Ghana: new insights from meta-analysis of old survey data

“…This study's estimated mean TE (0.72) is higher than that of Binam et al (2008) (0.44), Ofori-Bah and Asafu-Adjaye (2011) (0.48), Besseah and Kim (2014) (0.47), and Danso-Abbeam and Baiyegunhi (2019) (0.69). Another interesting comparison, given that Ghana is currently faced with a yield gap of about 23 percent relative to the global standard, is that the estimated mean TE is similar to that of Nigeria (0.71) (Binam, Gockowski, and Nkamleu 2008) and lower than that of Indonesia (0.82) (Effendy et al 2019). In terms of regional ranking, unlike Ofori-Bah and Asafu-Adjaye (2011) and Danso-Ajn bbeam and Baiyegunhi (2019) who found the Volta and Ashanti regions, respectively, to be least efficient, this study indicated the Western region.…”