Efficiency of Palm Oil Companies in Indonesia: A DEA Approach
Keywords:efficiency, Data Envelopment Analysis, palm oil companies
AbstractThe purpose of this study was to investigate technical, allocative, cost and scale efficiency of palm oil companies in Indonesia. The data used cross sectional data on Indonesian Manufacturing Industries that were collected in the annual surveys by Indonesiaâ€™s Central of Statistics/BPS for 2015 which is registered under KBLI code 10431. Data envelopment analysisÂ (DEA) is a nonparametric method in operations research and economics for the estimation of production frontiers. It isÂ usedÂ to empirically measure productive efficiency of decision making units (DMUs). The input of the palm oil production system are capital, labor, materials, land and energy. While output include industrial product in terms of CPO/PKO and biogas. The finding shows that Riau Island, North Sulawesi and Papua have high score of efficiency in terms of TE, AE, CE and SE, while West Java and Banten province at low level in terms of cost and allocative efficiency. Nevertheless, on nationwide the score of allocative and cost efficiency still low. Hence, all the input efficiencies still need to be improved, and also reduce cost of production. Beside that, the companies should make an improvement by enhancing management capabilities and improving allocation efficiency.
Alsaleh, M., and Abdul, R. (2018). Determinants of Cost Efficiency of Bioenergy Industry: Evidence from EU28 Countries. Renewable Energy. 127, 746-762.
Azman, I. (2014). The impact of palm oil millsâ€™ capacity on technical efficiency of palm oil millers in Malaysia. Oil palm industry economic journal, 14(1), 34-41.
Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some models for estimating technical and scale inefficiencies in data envelopment analysis. Management science, 30(9), 1078-1092.
Barros, C.P, Milton, N., and Assaf. (2010). Efficiency in the Greek Insurance Industry. European Journal of Operational Research. 205, 431-436.
Bonner, S. E., & Sprinkle, G. B. (2002). The effects of monetary incentives on effort and task performance: theories, evidence, and a framework for research. Journal of Accounting, organizations society, 27(4-5), 303-345.
BPS. (2015). Indonesia's Central Statistic Agency. Jakarta, Indonesia.
Clarke, M., Seng, D., & Whiting, R. H. (2011). Intellectual capital and firm performance in Australia. Journal of Intellectual Capital, 12(4), 505-530.
Dhiaulhaq, A., dr Bruyn, T., Gritten, D., 2015. The use and effectiveness of mediation in forest and land conflict transformation in Southeast Asia: case studies from Cambodia, Indonesia and Thailand. Environ. Sci. Pol. 45, 132â€“145
Du, J., Cook, W. D., Liang, L., & Zhu, J. (2014). Fixed cost and resource allocation based on DEA cross-efficiency. European Journal of Operational Research, 235(1), 206-214.
FAOSTAT. (2017). Crops processed, Indonesia and World total Oil palm Production quantity. Retrieved from http://faostat3.fao.org/download/Q/QD/E.
Foong, S.Z.Y., Carmen, K.M.G., Christina, S.S., Denny K.S.Ng. (2018). Input-Output Optimization model for sustainable oil palm plantation development. Sustainable Production and Consumption. 17, 31-46
Gellert, P.K., 2015. Palm oil expansion in Indonesia: land grabbing as accumulation by dispossession. In: Shefner, J. (Ed.), States and Citizens: Accommodation, Facilitation and Resistance to Globalization. Emerald Group Publishing Limited, Bingley, pp. 65â€“99
Hamdani, N. D. Y., Budiwati, N., & Kurniawan, A. Y. (2016). Analysis of Household Economic Behavior on the Palm Oil Smallholder in South Kalimantanâ€“Indonesia. International Journal of Research, 15.
Hasnah, Fleming, E., & Coelli, T. (2004). Assessing the performance of a nucleus estate and smallholder scheme for oil palm production in West Sumatra: a stochastic frontier analysis. Agricultural Systems, 79(1), 17-30. Retrieved from doi:https://doi.org/10.1016/S0308521X(03)00043-X
Jalani, B., Basiron, Y., Darus, A., Chan, K., & Rajanaidu, N. (2002). Prospects of elevating national oil palm productivity: a Malaysian perspective. Oil palm industry economic journal, 2(2), 1-9.
Jean-Marc H. (2012). Data Envelopment Analysis (DEA): A pedagogical guide for decision makers in the public sector. IDHEAP Chair of Public Finance. Swiss.
Kutlar, A., Ali, K., and Murat, S. (2013). Determination of the efficiency of the world railway companies by method of DEA and comparison of their efficiency by Tobit analysis. Qual Quant. 47: 3576-3602
Li, M.-J., & Tao, W.-Q. (2017). Review of methodologies and polices for evaluation of energy efficiency in high energy-consuming industry. Applied Energy, 187, 203-215.
Nelson, P. N., Webb, M. J., Orrell, I., van Rees, H., Banabas, M.,
Berthelsen, S.,Hoare, M. (2010). Environmental sustainability of oil palm cultivation in Papua New Guinea (Vol. 75): Australian Centre for International Agricultural Research.
Safrizal, S. (2015). Small renewable energy biogas limbah cair (pome) pabrik kelapa sawit menggunakan tipe covered lagoon solusi alternatif defisit listrik Provinsi Riau. Jurnal Disprotek, 6(1).
Shewell, P ., and Stephen M. (2016). Data Envelopment Analysis in Performance: a critical analysis of the literature. Problems and Persfective in Management. 14 (3).
SobczyÅ„ski, T., Klepacka, A. M., Revoredo-Giha, C., & Florkowski, W. J. (2015). Dairy farm cost efficiency in leading milk-producing regions in Poland. Journal of dairy science, 98(12), 8294-8307.
Syahza, A. (2012). Potensi Pengembangan Industri Kelapa Sawit. Hasil Penelitian MP3EI Universitas Riau.
Tan, H. T., Lee, K. T., & Mohamed, A. R. (2010). Second-generation bio-ethanol (SGB) from Malaysian palm empty fruit bunch: energy and exergy analyses. Bioresource technology, 101(14), 5719-5727.
Venables, A. J. (2001). Geography and international inequalities: the impact of new technologies. Journal of Industry, Competition and Trade, 1(2), 135-159.
How to Cite
LicenseAuthors who publish with this journal agree to the following terms:
HABITAT by http://habitat.ub.ac.id/index.php/habitat/index is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).