This paper explores the allocation of inputs in small-scale shallot production with a view to increasing efficiency and raising farmers' profits. The research uses primary data gathered through a survey of 43 farmers in one village in East Java. It applies double-log production function and polynomial cost function to measure the profit gap. Three simulations are used for input allocation based on low, medium and high input costs. The findings show that land, labour and seed are the most important group of inputs for production, followed by the fertilizer phosphate. Seeds were found to be used efficiently in all three simulations. However, allocation of labour, pesticides and potassium all exceeded optimum use. In contrast, inputs such as land, phosphate and nitrogen were under-utilized. The profit gaps for low, medium and high input costs were calculated at 4.72 per cent, 13.96 per cent and 17.92 per cent, respectively. The research concluded that the gap between actual and optimum profit for shallot farmers was significant, but could be improved with efficient input allocation.
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Sujarwo, Siaghaian S.
Department of Agricultural Economics, University of Kentucky. Selected paper prepared for presentation at the Southern Agricultural Economics Association SAEA Annual Meeting Orlando, Florida, 3-5 February 2013