Estimating Technical Efficiency of Rice Farming in Indonesia in Pre-crisis Period to Support Sustainable Development: Evaluating Fertilizer Subsidies and Informal Labor

Rice is one of the most essential commodities for maintaining food security in Indonesia. However, the productivity of lowland rice is generally constrained by the inefficient use of inputs; this situation was particularly prevalent in the pre-global crisis years of 2018–2021, influenced by outbreaks of COVID-19 and geopolitical tensions. This study aims to analyze the technical efficiency of lowland rice production in Indonesia and determine the contribution of subsidies for ZA, NPK, granule organic fertilizer and the dominance of informal labor to productivity.

This study employs the Stochastic Frontier Analysis (SFA) approach, utilizing a Cobb-Douglas-type production function with a multiplicative model and draws on secondary data obtained from the Central Statistics Agency and the Directorate General of Agricultural Infrastructure and Facilities.

The results suggest that all input variables have positive and significant effects on rice production, with granulated organic fertilizers and informal labor showing the highest coefficients. The national average technical efficiency varies over time but progressively improves under the model. Farmers with large-scale businesses have better technical efficiency than those with small-scale ones. Moreover, there’s an efficiency gap between various regions. Bali, DKI Jakarta and Gorontalo have the highest efficiency, while West Kalimantan and Central Kalimantan have the lowest efficiency.