EFFICIENCY OF ALLOCATION OF PRODUCTION FACTORS IN THE MODEL RICE-BEEF CATTLE DIVERSIFICATION BUSINESS IN THE CENTER RICE LAND AGRICULTURE IN MOJOKERTO, EAST JAVA

Abstract

This study aims to analyze the technical, allocative, and economic efficiency of the rice-beef cattle diversification business model in Mojokerto Regency through a survey method of 120 respondents determined by stratified random sampling. Using the Cobb-Douglas production function and Marginal Product Value (NPM) analysis, the results revealed that this business is in a condition of increasing returns to scale (Σbi = 1.738), which indicates a large opportunity for business scale expansion. However, the findings indicate that allocative efficiency has not been achieved optimally (NPM/Px ≠ 1), where production factors such as land, fertilizer, feed, and livestock population are still less than optimally used (NPM/Px > 1), while labor and pesticides are actually overused (NPM/Px < 1). The average economic efficiency value of 0.73 indicates that there is still room for economic efficiency improvement by 27%. Policy implications include the need to optimize input use, develop integrated farming institutions, and trengthen market access for subsidized production inputs.