Comparative Economic Efficiency of Certified Rice Seed Production and Rice Grain Farming: A Case Study in Subak Dlod Sema, Badung Regency, Bali, Indonesia

The expansion of rice harvested area in Badung Regency has increased the demand for certified rice seed. However, rice seed production in Subak Dlod Sema, one of the major seed production centers in the region, currently fulfills only approximately 29.3% of the seed requirement based on the harvested area. This study aimed to compare the economic efficiency of certified rice seed production and rice grain farming and to identify the factors contributing to technical inefficiency in both farming systems. The study involved 53 farmers, consisting of 15 certified rice seed producers and 38 rice grain farmers. Data were analyzed using Stochastic Frontier Analysis (SFA), while Net Profit Margin (NPM) was employed as a complementary indicator of farm profitability. The results showed that both farming systems achieved high levels of technical efficiency but remained inefficient in terms of allocative and economic efficiency. The average technical efficiency scores were 0.954 for certified rice seed production and 0.985 for rice grain farming, while allocative efficiency averaged 0.281 and 0.234, respectively. Economic efficiency values were 0.267 for certified rice seed production and 0.231 for rice grain farming. These findings indicate that farmers were able to produce outputs close to the production frontier; however, the allocation of production inputs relative to their costs had not yet reached the economically optimal level. Farmers' age, formal education, and household size had no significant effect on technical inefficiency in either farming system, whereas farming experience significantly reduced technical inefficiency only in rice grain farming. Furthermore, certified rice seed production generated a higher Net Profit Margin (34.36%) than rice grain farming (22.45%), indicating greater profitability. Overall, the findings suggest that improving allocative efficiency is essential for enhancing economic performance, while the higher profitability of certified rice seed production highlights its potential for expansion to strengthen the availability of certified rice seed in Badung Regency.