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Abstract
Non parametric analysis of technical efficiency for irrigated farms in the Madiun regency in the west-central part of East Java, Indonesia
is conducted using linear programming techniques. This procedure allows the relative technical efficiency for each farm to be determined
and for inefficiencies to be decomposed into pure technical inefficiency and scale inefficiency and does not require restrictions or
assumptions regarding functional form to be placed on the data.
Farmers in Madiun generally are efficient relative to each other. Farmers operating inefficiently do so more often because of scale
inefficiencies rather than pure technical inefficiencies. A rna jority of the farms operate in the region of decreasing returns to scale rather than
increasing returns to scale. Farmer age, the level of diversification of cropping activities, and high school education were found to be related
to technical efficiency in the rainy season under irrigated conditions. Other socioeconomic factors were not statistically significant.
The results imply that inefficient farms use excessive levels of inputs, particularly nitrogen fertilizer. This is perhaps due to the lingering
effects of past input subsidization policies, particularly of fertilizers, in Indonesia, or to risk-reducing behavior. The results also imply that
current government policies to encourage diversification of cropping practices in Java may lead to greater technical inefficiencies in
production. In addition, extension education targeted to younger farmers with low levels of formal education would improve efficiency.