The Agricultural Commercialisation and its Impact on Economy Management: An Application of Duality-Neoclassic and Stochastic Frontier Approach

Rice is the main source of livelihood and staple in Indonesia. This study examines the welfare of rice farmers 'households and the availability of rice in terms of domestic rice production. We analyse empirical evidence that households in the rice subsector have not achieved a sufficient level of commercialisation in terms of production. Duality-neoclassic and stochastic frontier approach were employed to evaluate the inefficiency and commercialisation of farmer households in rice production. From the three models, it shows that the level of commercialisation of rice farmers is still low and requires a strong policy instrument to improve commercialization and increase production.