Production Efficiency of Oil Palm Farming in Smallholder Plantations in East Luwu Regency

Anjas Anjas; Syafiuddin Syafiuddin; Sri Mardiyati; Mohammad Natsir; Arifin Fattah

doi:10.63922/ijebir.v4i04.2086

Anjas Anjas Master of Agribusiness Study Program, Postgraduate Program, Universitas Muhammadiyah Makassar
Syafiuddin Syafiuddin Master of Agribusiness Study Program, Postgraduate Program, Universitas Muhammadiyah Makassar
Sri Mardiyati Master of Agribusiness Study Program, Postgraduate Program, Universitas Muhammadiyah Makassar
Mohammad Natsir Master of Agribusiness Study Program, Postgraduate Program, Universitas Muhammadiyah Makassar
Arifin Fattah Master of Agribusiness Study Program, Postgraduate Program, Universitas Muhammadiyah Makassar

DOI: https://doi.org/10.63922/ijebir.v4i04.2086

Keywords: Efficiency, Oil palm farming, Poduction, Smallhoder plantation

Abstract

This study investigates the factors influencing palm oil production, analyzes production elasticity, and measures the technical efficiency of smallholder oil palm farming in East Luwu Regency. Positioned within existing research on agricultural productivity, this study highlights the gap in understanding the efficiency of small-scale oil palm cultivation in Indonesia. A quantitative approach was employed using descriptive analysis and Stochastic Frontier Analysis (SFA) based on the Cobb-Douglas production function. A sample of 70 farmers was selected through simple random sampling from four villages in the Burau Subdistrict. Primary data were collected via structured questionnaires and interviews, supported by secondary data from relevant institutions. The results reveal that only two of the seven input variables—land area (coefficient: 0.861) and Phonska fertilizer (coefficient: 0.057)—significantly affect production. The average technical efficiency reached 86%, suggesting a 14% potential increase in output without additional input. A gamma value of 0.971 indicates that production variability is predominantly due to inefficiency rather than random factors. The study contributes to the body of knowledge by emphasizing the need for efficiency optimization through improved land use, balanced fertilization, capacity-building programs, and targeted policy interventions

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