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\hypersetup{pdftitle={How to Raise the Efficiency of the Indonesian Cocoa Farms?},pdfauthor={Andras Tothmihaly},pdfsubject={Tropentag 2016: Abstract},pdfkeywords={Cocoa, efficiency, Indonesia},pdfpagemode=None,colorlinks=true}
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\parbox[b]{13.4cm}{\centering \large{\textbf{Tropentag, September 18-21, 2016, Vienna, Austria}}\\[1ex] \Large{``Solidarity in a competing world ---\\fair use of resources''\\[2ex]}}
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\Large{\textbf{How to Raise the Efficiency of the Indonesian Cocoa Farms?\footnote{\textbf{Contact Address:} Andras Tothmihaly, Georg-August-Universität Göttingen, Department of Agricultural Economics and Rural Development, Heinrich-Duker-Weg 12, 37073~Gottingen, Germany, \mbox{e-mail}: \email{atothmi@gwdg.de}}\\[0.8ex]}}
\normalsize{\textsc{Andras Tothmihaly}}
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\begin{itemize*}
\item[]{\small{\textit{Georg-August-Universität Göttingen, Department of Agricultural Economics and Rural Development, Germany}}}
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\textbf{Abstract}
\begin{abstract}
\normalsize{
In the last 10 years, the global cocoa production has been unable to meet the growing global demand. Indonesia gives about one fifth of this production. In this country, more than 60 percent of 1.5 million cocoa farmers are poor. Demand can be met and farmer incomes can be improved by increasing cultivated area, by increasing input use, or by increasing efficiency. For sustainability, the last method is the most desirable option. 







Previous research on the efficiency of cocoa farming is only available with cross"=sectional data from African countries. We use household panel data from surveys conducted in Indonesia between 2001 and 2013. Our sample size of 1290 observations is larger than any previously used in the efficiency analysis of cocoa production. With the information gain of this data, we can characterise inefficiencies more realistically and we can also decompose productivity change.







Our study applies stochastic frontier analysis to investigate to what extent and how the Indonesian cocoa sector can be made more efficient. In multiple models, we explain cocoa bean output as a function of farm size, labour use, chemicals cost, and technological factors. These are augmented by inefficiency variables to reflect farmers' management capabilities and their access to knowledge as well as to productive resources.







According to our results, productivity doubled in the Indonesian cocoa farming between 2001 and 2013. The increased chemicals use supported by government subsidies was responsible for the majority of this gain. Additionally, the mean efficiency of cocoa farmers was estimated to be around 48 percent. The significant factors identified to have a positive influence on the efficiency levels are the farmers' educational attainment and their experience in cocoa farming. Our research also shows the failure of agricultural extension services, farmer associations, and rural credit programs to increase efficiency.







The results suggest that there is a large opportunity to expand the Indonesian cocoa output without further input use. Adjusting the deficient design of public extension programs, fostering the mutual benefits in the farmer groups, and developing viable credit institutions could be important parts of any policy.



}

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\noindent \textbf{Keywords:} Cocoa, efficiency, Indonesia
\index[key]{Cocoa}
\index[key]{Efficiency}
\index[key]{Indonesia}
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