Decomposition total factor productivity of Indonesian rice production

This paper analyzes the growth of total factor productivity of paddy farming efforts. Total productivity is decomposed into four parts: the advancement of technology, technical efficiency, allocative efficiency and the effect of business scale. If each component of productivity growth is known, strategies to increase rice production can be determined. This paper uses secondary data published by the Indonesian Statistics Agency. The analyses were performed using an econometric approach. The results show that growth in total factor productivity declines with a declining rate. The positive contributors to the growth of total factor productivity are the change in the technical and business scale effects; whereas the negative contributors are the technical and allocative efficiency. The growth in rice production is mainly due to the use of inputs and other factors such as the expansion and increase in cropping index. The growth in total factor productivity can be increased by improving technical and allocative efficiencies.