Policy Impacts on Farm Efficiency: Fertilizer Subsidies in Corn Production in Madura Island, Indonesia

Fauziyah Elys, Maflahah Iffan and Ratna Hidayati Dwi

Research on World Agricultural Economy, 2025, vol. 6, issue 4

Abstract: This study aimed to analyze the effectiveness of the fertilizer subsidy policy and the impact of input use on corn production. The policy impact was measured using technical inefficiency in corn production. This study employed a case study on Madura Island, Indonesia. A total of 135 farmer respondents were selected using the multistage random sampling method. A series of analyses was conducted, incorporating the Cobb-Douglas Frontier Stochastic production function within the Technical Efficiency Impact Model. Five dimensions (planning, access via farmer cards, non-farmer cardholders, distribution, and the fundamental principles of ensuring the right quantity, right timing, right location, right price and right quality), derived from the Regulation of the Indonesian Ministry of Agriculture concerning the 2022 fertilizer subsidy policy, were used as the key measurements for assessing policy effectiveness. The results showed that the implementation of the fertilizer subsidy policy was in the effective category. The inputs that positively impacted corn production were land area, seeds, urea fertilizer, NPK fertilizer, manure, workers, and insecticides. Furthermore, the effectiveness of the fertilizer subsidy policy showed a positive impact on technical efficiency. This study can provide stakeholders with an overview of the effectiveness of the policy, serving as evaluation material. Improvements in production and technical efficiency after the change in fertilizer subsidy policy in corn farming on Madura Island can be achieved through the allocation of inputs according to recommendations. Additionally, enhancing the effectiveness of the fertilizer subsidy policy implementation can be considered a strategy to improve technical efficiency in corn farming.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:reowae:412805

DOI: 10.22004/ag.econ.412805

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