Farm Resource-Allocation and Efficiency in Three Regions of East Java, Indonesia

Abstract

The investigation reported in this thesis is placed within the context of the development objectives of Indonesia with emphasis placed on improving rice production. Evidence is provided to support the view that too much of the development effort to date has been concentrated on improving rice yield and that problems of a slow increase in agricultural production and inefficient farming still exists. Little attention has been paid to studying these problems. The main purpose of the thesis is to determine the factors which contribute to the 'levelling off' in the rate of increase of yield and the factors affecting farm-resource allocation and efficiency, and farm profits. ... The gains from achieving efficiency in rice production, and the distribution of profits of the sample farms have been analysed. It was found that rice-farm profits per hectare were 143 and 158 thousand rupiahs in the wet and dry seasons, respectively. However, the distribution of profits was markedly unequal as indicated by the Gini coefficients which were 0.465 and 0.348 in the wet and dry seasons, respectively. Implicitly, this finding supports the view that increases in productivity increase farm income but at the same time widen the inequality of the income distribution. In conjunction with this conclusion, it was indicated that the distributions of total farm area and technical and economic efficiency ratings were a significant determinant of the distributions of profits.