IDEAS home Printed from https://ideas.repec.org/a/ags/veagro/347640.html
   My bibliography  Save this article

Taking a deeper look at the Priority of Agricultural Industry Efficiency through the Use of Data Envelopment Approach

Author

Listed:
  • Harya, Gyska Indah
  • Kuswanto
  • Asmara, Rosihan
  • Ibrahim, Jabal Tarik
  • Maulidah, Silvana
  • Budiwitjaksono, Gideon Setyo

Abstract

The research aims to analyze the technical efficiency of the chocolate industry, which has outstanding performance in producing chocolate products in East Java, Indonesia. The research sample includes all small and large-scale chocolate industries in East Java, with 42 Decision Making Units (DMUs). Efficiency research uses Data Envelopment Analysis (DEA), which is usually used in agricultural production research. However, in this research, DEA was used to analyze the efficiency of the chocolate industry making this concept as an empirical novelty. The analysis results show that there are industries operating at the Constant Returns to Scale (CRS) level (0.971), with a percentage of 66.67%, consisting of 28 DMUs, and the Variable Returns to Scale (VRS) level (0.992), with a percentage of 85.71%, which is represented by 36 DMUs. The Technical Efficiency (TE) is categorized as full technical efficiency at 85.72%, with a high category at 14.28%, and no DMUs fall under the moderate and low categories. This indicates that the allocation of inputs in each DMU is significantly different. Six DMUs require improvement in the distribution of industrial capital and raw materials input to achieve full efficiency category by making decisions based on the DMU's recommendations as a reference (benchmarks). This article concludes that industrial efficiency is a priority for the establishment of a business to achieve its goals easily. When the industry can control the quality and quantity of its products, it can be highly beneficial. The policy implications required for this case research to maintain and improve the efficiency of the chocolate industry in East Java, Indonesia, are for industries to prioritize joint management, increase the scale of operations, increase production frequency, expand innovative chocolate processing technology, prioritize product quality, and be able to penetrate export markets.

Suggested Citation

  • Harya, Gyska Indah & Kuswanto & Asmara, Rosihan & Ibrahim, Jabal Tarik & Maulidah, Silvana & Budiwitjaksono, Gideon Setyo, 2024. "Taking a deeper look at the Priority of Agricultural Industry Efficiency through the Use of Data Envelopment Approach," Agroalimentaria Journal - Revista Agroalimentaria, Centro de Investigaciones Agroalimentarias, Facultad de Ciencias Económicas y Sociales, Universidad de los Andes, vol. 29(57), January.
    • Handle: RePEc:ags:veagro:347640
    DOI: 10.22004/ag.econ.347640
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/347640/files/Articulo_7_Harya-et-al_R57.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.347640?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Timothy J. Coelli & D.S. Prasada Rao & Christopher J. O’Donnell & George E. Battese, 2005. "An Introduction to Efficiency and Productivity Analysis," Springer Books, Springer, edition 0, number 978-0-387-25895-9, September.
    2. Marcus Wagner & Nguyen Van Phu & Théophile Azomahou & Walter Wehrmeyer, 2002. "The relationship between the environmental and economic performance of firms: an empirical analysis of the European paper industry," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 9(3), pages 133-146, September.
    3. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "Returns to scale and damages to scale under natural and managerial disposability: Strategy, efficiency and competitiveness of petroleum firms," Energy Economics, Elsevier, vol. 34(3), pages 645-662.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lundgren, Tommy & Marklund, Per-Olov & Zhang, Shanshan, 2016. "Industrial energy demand and energy efficiency – Evidence from Sweden," Resource and Energy Economics, Elsevier, vol. 43(C), pages 130-152.
    2. Helmi Hammami & Thanh Ngo & David Tripe & Dinh-Tri Vo, 2022. "Ranking with a Euclidean common set of weights in data envelopment analysis: with application to the Eurozone banking sector," Annals of Operations Research, Springer, vol. 311(2), pages 675-694, April.
    3. Atris, Amani Mohammed & Goto, Mika, 2019. "Vertical structure and efficiency assessment of the US oil and gas companies," Resources Policy, Elsevier, vol. 63(C), pages 1-1.
    4. Kox, Henk L.M. & Leeuwen, George van & Wiel, Henry van der, 2010. "Competitive, but too small - productivity and entry-exit determinants in European business services," MPRA Paper 24389, University Library of Munich, Germany.
    5. Silvia Saravia-Matus & T. S. Amjath-Babu & Sreejith Aravindakshan & Stefan Sieber & Jimmy A. Saravia & Sergio Gomez y Paloma, 2021. "Can Enhancing Efficiency Promote the Economic Viability of Smallholder Farmers? A Case of Sierra Leone," Sustainability, MDPI, vol. 13(8), pages 1-17, April.
    6. Norman Gemmell & Patrick Nolan & Grant Scobie, 2017. "Public sector productivity: Quality adjusting sector-level data on New Zealand schools," Working Papers 2017/02, New Zealand Productivity Commission.
    7. Kangile, Rajabu Joseph, 2015. "Efficiency In Production By Smallholder Rice Farmers Under Cooperative Irrigation Schemes In Pwani And Morogoro Regions, Tanzania," Research Theses 265681, Collaborative Masters Program in Agricultural and Applied Economics.
    8. Veronika Fenyves & Tibor Tarnóczi & Zoltán Bács & Dóra Kerezsi & Péter Bajnai & Mihály Szoboszlai, 2022. "Financial efficiency analysis of Hungarian agriculture, fisheries and forestry sector," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 68(11), pages 413-426.
    9. Simona Alfiero & Laura Broccardo & Massimo Cane & Alfredo Esposito, 2018. "High Performance Through Innovation Process Management in SMEs. Evidence from the Italian wine sector," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2018(3), pages 87-110.
    10. Krisada Prachumrasee & Panpun Ronghanam & Kasipat Thonmanee & Pakpoom Phonsungnoen & Pathompohn Mangma & Prasongchai Setthasuravich & Grichawat Lowatcharin, 2024. "From Traditional to Digital: Transforming Local Administrative Organization Workflows in Thailand Through Social Listening Tools," Social Sciences, MDPI, vol. 13(12), pages 1-19, December.
    11. Helis Luik-Lindsaar & Ants-Hannes Viira & Haldja Viinalass & Tanel Kaart & Rando Värnik, 2018. "How do herd's genetic level and milk quality affect performance of dairy farms?," Czech Journal of Animal Science, Czech Academy of Agricultural Sciences, vol. 63(10), pages 379-388.
    12. Stefan Lewandowski, 2017. "Corporate Carbon and Financial Performance: The Role of Emission Reductions," Business Strategy and the Environment, Wiley Blackwell, vol. 26(8), pages 1196-1211, December.
    13. Sueyoshi, Toshiyuki & Goto, Mika, 2012. "DEA environmental assessment of coal fired power plants: Methodological comparison between radial and non-radial models," Energy Economics, Elsevier, vol. 34(6), pages 1854-1863.
    14. Fethi, Meryem Duygun & Pasiouras, Fotios, 2010. "Assessing bank efficiency and performance with operational research and artificial intelligence techniques: A survey," European Journal of Operational Research, Elsevier, vol. 204(2), pages 189-198, July.
    15. William Griffiths & Xiaohui Zhang & Xueyan Zhao, 2010. "A Stochastic Frontier Model for Discrete Ordinal Outcomes: A Health Production Function," Department of Economics - Working Papers Series 1092, The University of Melbourne.
    16. Antonio Peyrache, 2024. "A Homothetic and Additively Separable Production Frontier," CEPA Working Papers Series WP012024, School of Economics, University of Queensland, Australia.
    17. Victor Ajayi & Michael Pollitt, 2022. "Changing times - Incentive regulation, corporate reorganisations, and productivity in Great Britain’s gas networks," Working Papers 023, The Productivity Institute.
    18. Sabrina Auci & Laura Castellucci & Manuela Coromaldi, 2021. "How does public spending affect technical efficiency? Some evidence from 15 European countries," Bulletin of Economic Research, Wiley Blackwell, vol. 73(1), pages 108-130, January.
    19. Barbara Langlois & Vincent Martinet, 2023. "Defining cost-effective ways to improve ecosystem services provision in agroecosystems," Review of Agricultural, Food and Environmental Studies, Springer, vol. 104(2), pages 123-165, June.
    20. Ziętara, Wojciech, 2013. "Polish farms with cattle production in comparison to selected countries," Multiannual Program Reports 179225, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:veagro:347640. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/ciulave.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.