Production Cost Efficiency in Indonesian Soybean Farming: Evidence from a Stochastic Frontier Analysis
DOI:
https://doi.org/10.23917/jep.v27i1.14104Keywords:
cost efficiency, inefficiency, soybean, farming, stochastic frontierAbstract
The widening gap between domestic soybean demand and local production has raised concerns over the economic sustainability of soybean farming in Indonesia. This study examines the determinants of production cost, cost efficiency, and cost inefficiency in soybean farming in Central Java Province, focusing on Grobogan and Blora Regencies. Using farm-level data from 200 soybean farmers, the study applies a stochastic cost frontier model and a second-stage regression of predicted cost inefficiency. The results show that output and labor wage significantly increase total production cost, while fertilizer price is weakly significant and seed price is not statistically significant. The mean cost efficiency score is 0.8904, indicating that farmers could reduce production costs by approximately 10.96 percent while maintaining the same output and input-price conditions. The second-stage results show that planting frequency and irrigation access are significantly associated with lower cost inefficiency, while age, farming experience, and education are not statistically significant. These findings suggest that cost inefficiency in soybean farming is more closely related to production routines and water access than to general farmer characteristics. Policy support should therefore focus on improving input timing, labor management, irrigation access, and repeated production learning among smallholder soybean farmers.
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Copyright (c) 2026 Avi Budi Setiawan, Mochammad Yusuf, Maulida Dewi Pangestika, Faza Ashiela Junaedy, Sandry Windiharto Putro
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