ENERGY EFFICIENCY OF INDONESIA’S SUGAR INDUSTRY BASED ON ECONOMIC FRAMEWORK: STOCHASTIC METAFRONTIER ANALYSIS

This study investigates the efficiency of energy use and technology gap in the Indonesian sugar industry and the factors influencing energy efficiency. Using the firm-level data of sugar mills in 42 regencies in Indonesia from 2010 to 2014, this study applies the meta stochastic frontier based on the input distance function. The metafrontier analysis is applied in sugar mills in the East Java province and other provinces in Indonesia. All the data used in this study are the secondary data taken from the Indonesian Central Board of Statistics. The results reveal that there is a large room to save energy consumption in this industry. The mills in East Java provinces have higher energy efficiency, technology gap ratio, and metafrontier energy efficiency compared to the mills in other provinces. According to the metafrontier energy efficiency, energy inefficiencies in both groups come from operational inefficiency and technology gap. The size of the mills and age of the mills have a positive relationship with the energy efficiency of sugar mills and the size of the mills is positively related to the technology gap ratio. Meanwhile, the productivity of labor and the types of ownership do not affect the energy efficiency and technology gap.

A Metafrontier Analysis on the Performance of Grain-Producing Regions in Norway

Previous application of the stochastic frontier model and subsequent measurement of the performance of the crop sector can be criticized for the estimated production function relying on the assumption that the underlying technology is the same for different agricultural systems. This paper contributes to estimating regional efficiency and the technological gap in Norwegian grain farms using the stochastic metafrontier approach. For this study, we classified the country into regions with district level of development and, hence, production technologies. The dataset used is farm-level balanced panel data for 19 years (1996–2014) with 1463 observations from 196 family farms specialized in grain production. The study used the true random effect model and stochastic metafrontier analysis to estimate region level technical efficiency (TE) and technology gap ratio (TGR) in the two main grain-producing regions of Norway. The result of the analysis shows that farmers differ in performance and technology use. Consequently, the paper gives some regionally and farming system-based policy insights to increase grain production in the country to achieve self-sufficiency and small-scale farming in all regions.

Metafrontier analysis of commercial and smallholder tomato production: A South African case

South African agriculture is a dualist agricultural system with well-developed commercial farmers and resource-poor smallholder farmers. In an effort to address the dualist nature of agriculture, the South African government has developed a strategic plan to assist smallholder farmers in entering commercial markets. The strategic plan aims to advance subsistence and smallholder farmers into commercial production through improved resource management for sustainable food security and smallholder livelihood. However, the productivity of smallholder farmers continues to be very low compared with that of commercial farmers. Our aim was to compare tomato productivity for commercial and smallholder tomato farmers in the Nkomazi area (Mpumalanga Province) using a metafrontier analysis. We used an output-oriented data envelopment analysis metafrontier approach and the Tobit model to investigate smallholder and commercial farmers’ technical efficiencies and related factors which affect tomato production. Results indicate that smallholder farmers have high levels of technical efficiency compared to the group frontier (0.74), but they are less technically efficient compared to the metafrontier (0.51). The group efficiencies of the smallholder farmers also showed a large variation ranging from 3% to 100%, while commercial farmers have high levels of efficiency compared to both the group frontier (0.89) and the metafrontier (0.88). Results from the Tobit regression indicate that farmers’ managerial decisions are an important determinant of their technical efficiency. We conclude that smallholder farmers first need to increase their level of technical efficiency relative to their peers before aiming to compete with commercial farmers. Significance: • Smallholder farmers should first improve their resource use efficiency compared to their fellow smallholder farmers before they consider comparing themselves against the commercial farmers.