Description:
The technical efficiency reflects the ability of firm to attain maximum output produced given a specific measure and bundle of inputs as well as production technology available. The firm whose output fail to reach the maximum level is said to be technically inefficient. In the middle of a wide range issues of food security as well as a national requirement for being able to produce much more rice in order to self-sufficiency, then the question of whether wetland rice farming especially scattered in its central production area is efficient becomes relevant. This research aimed to evaluate the technical efficiency performance of wetland rice farming in the District of Barito Kuala. The analysis was done by stochastic frontier production function which is specified has a composite error comprising random error (noise) and error associated with technical inefficiency. The function was estimated by the method of maximum likelihood estimator (MLE). The technical efficiency measure is expressed by TE index, 0 ≤ TE ≤ 1 where 0 meaning that it is technically inefficient and 1 is technically efficient. The results showed an average index of TE wetland rice farming in the District of Barito Kuala is 0.89 meaning that it is relatively good. However, 13.3% of all the rice farming are considered technically inefficient; while the others: 30% have an index 0.8 ≤ TE < 0.9 and 56.67% has an index TE ≥ 0.9. Such result which there are some rice farming still technically inefficient or their TE index relatively low meaning some treatments may be set to consolidate production managerial aspects in order to improve the technical efficiency.
Keywords: technical efficiency, stochastic frontier production function, maximum likelihood estimator (MLE)