Urbanization Impacts on Rice Farming Technical Efficiency: A Comparison of Irrigated and Non-Irrigated Areas in Indonesia

Abstract

By 2050, the world population is expected to double, with the majority living in urban areas. Urbanization is a result of population pressure, often emphasized in developing countries. It has various impacts on all economic sectors, among which is agriculture through irrigation, which plays an important role in the production and sustainability of farming. This paper aimed to analyze the effect of urbanization on farm performance using a sequential mixed method. The data of approximately 80,053 farmers were extracted from the Indonesian Rice Farm Household Survey (SPD) dataset. A stochastic frontier was employed to analyze technical efficiency (TE) and its determinants, which consist of farmers’ age, education level, climate change, land ownership, membership status, and pest infestation. The estimation results showed that the mean technical efficiency in both irrigation and non-irrigation rice farming was 64.7% and 66.2%, respectively. Although TE’s achievement in non-irrigated rice farming areas was greater than in irrigated ones, rice productivity in irrigated areas was greater than in non-irrigated. All technical efficiency determinants have significant effects on technical efficiency. The estimation results also showed that rice farming in urban areas tends to decrease technical efficiency.