Factors Affecting the Technical Efficiency of Tobacco Farming in East Java

Abstract

Tobacco is a plantation commodity that is much in demand in the domestic market and international. East Java Province is the largest tobacco producer in Indonesia that gave the biggest amount of national excise. 99,71% of tobacco land in Indonesia is cultivated by smallholders farmers, but it is less well maintained and only reach a productivity number below 1.000 kg/ha. Whereas, the optimum number of tobacco productivity is 2.294 kg/ha. The aim of this study is to analyze the technical efficiency of tobacco farming in East Java and the factors that affecting the technical efficiency. The method of the study is using the Stochastic Frontier Analysis and Technical Efficiency analysis. The result shows that the technical efficiency of tobacco farming in East Java is 0.854, which indicates that the tobacco farming is efficient. The inefficiency value is 0.146 which indicates that to increase their efficiency there are 14.6% possibility. The technical inefficiency of tobacco farming are influenced by household size, planting method, land ownership, and type of land.