Determinant of Patchouli Production in Aceh Jaya Regency Aceh Province

Vivi Silvia, Sartiyah, Muhammad Raihan Fitra and Cut Nadira
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Vivi Silvia: Economic Development, Syiah Kuala University, Faculty Economics and Business, Banda Aceh, Indonesia
Sartiyah: Economic Development, Syiah Kuala University, Faculty Economics and Business, Banda Aceh, Indonesia
Muhammad Raihan Fitra: Economic Development, Syiah Kuala University, Faculty Economics and Business, Banda Aceh, Indonesia
Cut Nadira: Economic Development, Syiah Kuala University, Faculty Economics and Business, Banda Aceh, Indonesia

Advances in Decision Sciences, 2023, vol. 27, issue 2, 99-121

Abstract: [Purpose] It is undeniable that improving the agricultural sector is important to make the economy grow. One way is to improve the quality of better products. In order to achieve the improvement, challenges in maintaining quality consistency, such as production capabilities and the efficient use of resources, have to be addressed. To contribute to the literature in this direction, this study aims to examine the factors of land area, labor, financial capital, fertilizer, and education that influence patchouli production and determine the efficiency of patchouli. [Design/methodology/approach] We employ the theory of Cobb Douglas’s production function and production theory in our study. We also use both multiple linear regression and efficiency approaches in our analysis. [Findings] The efficiency analysis revealed that patchouli farming was inefficient in terms of price, technical, and economic efficiency. We also find that land area, labor, financial capital, and fertilizer positively impacted patchouli production, whereas education had no effect on patchouli production in the Aceh Jaya Regency. The results of the analysis of price efficiency, technical efficiency, and economic efficiency show that patchouli production in the Aceh Jaya District, Aceh Province is inefficient. [Practical Implications] Our findings imply that necessitate technological advancements, as well as family labor to keep capital expenditures to a minimum, and organic fertilizers to improve patchouli production quality and income. To increase efficiency production in the Aceh Jaya District, Aceh Province, our findings also imply that it would be advisable for the government to promote patchouli oil production programs because this commodity has a very high selling value, and this commodity has high competitiveness in the international market. [Originality/value] This study investigates the farmer of patchouli in the Aceh Jaya regency by combining the theory of Cobb Douglas’s production function and production theory in the study. This study is highly related to efficiency sciences since this study’s framework assists policymakers in deciding what aspect to focus on. Our findings are new in the literature.

Keywords: Cobb-Douglas Production Function; Efficiency; Farming; Patchouli (search for similar items in EconPapers)
JEL-codes: C83 E23 O13 (search for similar items in EconPapers)
Date: 2023
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