Technical Efficiency of Beef Cattle Fattening with Self-Ownership and Partnership Systems in the Special Region of Yogyakarta, Indonesia

Abstract

One of the issues faced by the farmers of local beef cattle in Indonesia is the small ownership scale and the low rate of production which caused by several conditions, including the low efficiency of input utilisation. This matter has caused the self-ownership program of national beef to be unable to reach the expected targets. The aims of this research are: 1) to identify the factors that influence the production of beef cattle fattening business; 2) to analyze whether the farmers are already efficiently using the production factors; and 3) to analyze the technical inefficiency factors in the business of beef cattle fattening in the Special Region of Yogyakarta, Indonesia. Cross section is collected from 120 self-ownership farmers and 120 partnership farmers of beef cattle. The stochastic production frontier is used to estimated production function and efficiency. The research results indicate that the variables of forage feed, concentrate feed, medicines, supplements, labour, and the frequency of extension are having significant influences towards the productions of self-ownership and partnership systems. The dummy variables of the type of livestock and the membership of livestock group also have controls towards self-ownership system; however, these two variables are not influencing the partnership system. The technical efficiency values of self-ownership system are in the range of 0.50-0.96, as for the partnership system is ranged from 0.39-0.97. Both self-ownership and partnership systems are categorised as efficient with 0.87 and 0.86 of average values. The factors that become the source of technical efficiency on partnership system are the variables of education and breeding experience, and the variable that influences both systems is farmers age.

Keywords: Inefficiency, Production Function, Smallholder Farmers, Stochastic Frontier