Research on World Agricultural Economy

Shallot farming poses risks related to production and pricing failure due to price volatility and fluctuation. The utilization of production inputs influences the risks associated with shallot farming. The risk of shallot farming will affect the maximization of profits obtained by farmers. The efficient utilization of manufacturing elements has a one-way effect on potential lost profit (FMU). This study aims to assess the efficient use of production factors by considering risks and analyzing the relative efficiency of shallot farming. A quantitative method with descriptive analysis was deployed to perform this research. A profit maximization model was applied to identify the efficient factors of production. A relative inefficiency rate model was adopted to reveal farming efficiency. The analysis unveiled that shallot farming had not efficiently utilized labor, land area, and organic fertilizers as production elements. In contrast, the use of seeds and the following fertilizers proved inefficient: urea, TSP, NPK, PHONSKA, Curacron EC, Score, Sellestol, and Dithane M-45. Additionally, 88% of farmers attained a potential excess margin of above 75%, exhibiting the efficiency of shallot farming. Meanwhile, 12% of other farmers achieved a potential gross margin below 75%, indicating that their shallot farming was inefficient. To improve the efficiency of shallot farming in the future, government policy on the use of organic fertilizers and organic pesticides is needed.