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Economies of Scale and Allocative Efficiency of Rice Farming at West Seram Regency, Maluku Province, Indonesia

Author(s): Ismatul Hidayah | Andriko Noto Susanto

Journal: Asian Economic and Financial Review
ISSN 2305-2147

Volume: 3;
Issue: 5;
Start page: 624;
Date: 2013;
Original page

Keywords: Rice | Economies of scale | Production function | Allocative efficiency | West Seram | Indonesia

Economies of scale and allocative efficiency of rice farming has been conducted in technical irrigated field at Kabupaten Seram Bagian Barat – SBB (West Seram Regency), Province of Maluku. This study has the objectives to analyze production factors that affecting production and farming scale level, also technical efficiency and input utilization allocation in rice farming at West Seram Regency, by using linear regression from Cobb-Douglas production function. Result of this study showed that there were three independent variables that has significant effect toward production (Y), that is labor bulk (X6), urea fertilizer (X2) and NPK Pelangi fertilizer (X3) with consecutive elasticity 0,55; 0,19 and 0,11 which means that technical efficiency of this farming has been achieved. Value in return to scale (RTS) with 0,88 showed that increase rate for rice farming at West Seram Regency tend to decrease or decreasing return to scale (DRS), but still within rational production area. Result in allocative efficiency test toward farming input showed ratio MVPxi/Pxi>1, which means allocative efficiency of this farming still not achieved.
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