PRODUCTION EFFICIENCY OF SMALL-SCALE SHALLOT PRODUCERS IN EAST JAVA, INDONESIA

This study attempts to find ways for small-scale farmers to increase efficiency with their current technology for shallots. The efficiency measurements rely on a double-log production function, which is estimated by Principal Component Regression (PCR) to remove multicollinearity from the model. The results confirm that small-scale shallot farmers have difficulty in allocating their inputs efficiently. Land, seed, and labor are over-utilized; while fertilizer and pesticide are under-utilized. Small-scale shallot farmers have estimated gross profit losses of 32% due to inefficient allocation of inputs.