ANALYSIS TOTAL FACTORS PRODUCTIVITY OF MEAT PROCESSING INDUSTRY IN INDONESIA

Published

 Russian Journal of Agricultural and Socio-Economic Sciences, 2(62), February 2017.Pp. 255-262. DOI https://doi.org/10.18551/rjoas.2017-02.30

ANALYSIS TOTAL FACTORS PRODUCTIVITY OF MEAT

 PROCESSING  INDUSTRY IN INDONESIA

Jafrizal
  Faculty of Economics, University of Sriwijaya

drh_jafrizal@yahoo.co.id

Jl. Srijaya Negara Bukit Besar Palembang, Indonesia
Telp: (0711) 580 964, 580 646 Fax: (0711) 580964

ABSTRACT

The purpose of the study is to analyze the productivity of meat processing industry in Indonesia. The data used are the result of the 1990-2013 annual survey for big and medium-scale industry by Indonesian Central Bureau of Statistics. In order to estimate productivity value, Data Envelopment Analysis-Malmquist (DEA-Malmquist. Study results found that the average level of productivity / Total Factor Productivity (TFP) by an average of 127.9 percent, meaning that there is a growth of industrial productivity was 27.9 percent (28 percent), with intervals of a minimum value of 55.9 per cent and a maximum value of 400.9 percent. The productivity growth is the contribution of the growth of technological change an average of 14.29 percent, while the growth of efficiency and economies of scale changes each average growth of -0.5 percent and -1.67 percent. It was also found that the growth of the industry after the economic crisis of 1997/1998 amounted to 34.9 percent, while the pre-crisis growth was only 17.2 percent / year.

KEYWORDS: Total Factor Productivity, Efficiency, Scale Economy, Industry Meat Processing, Indonesia

JEL : D240, Q130

                                                  

I.         INTRODUCTION

Requests processed meat products has driven the growth of the production value of the meat processing industry in Indonesia. In the period 2007-2013, for example, an average of 51.4 percent. Production growth was not followed by the growth of the business unit that grows very slowly which amounted to 6.5 percent (CBS, 2015). Despite a growth in production, the facts have not been able to increase meat consumption of Indonesian society which is equal to 10.6 kg / capita / year. According to BPS data (2015), that of the years 2004 to 2012 a trend towards the consumption of fresh beef continued to decline the range of 0.33 to 0.44 kg / capita / year, whereas the consumption of food products made from beef tends to increase. When examined in 2012 occurred a significant increase in the consumption of beef preserved up to 537.5 per cent, but in previous years consumption of beef preserved only in the range of 0.02 kg - 0.08 kg. In 2013 consumption of 0.55 kg of beef preserved beef and 1.46 kg of processed food. The upward trend in consumption of such meat processing industry has contributed to the growth and preservation (Ministry of Agriculture, 2013).

Growth in the meat processing industry in Indonesia from 1985-2013 year average growth of about 26.6 percent per year, the average workforce grew 8 percent and corporate units grew modestly around an average of 4 percent. The annual industrial growth data presented in Table 1.1.

Table 1.1 Performance meat processing industry in Indonesia

Periode	Produksi	Growth	Tenaga Kerja	Growth	Perusahaan	Growth
Tahun	(Milyar Rp)	( persen)	(Orang)	( persen)	(Unit)	( persen)
1985-1990	47,88	23,9	2797,7	16,02	23	7,7
1990-1995	65,28	-0,1	2396,5	-8,21	25	0,9
1995-2000	141,43	21,8	2467,5	2,39	27	-1,6
2000-2005	645,85	30,5	4279,2	11,09	26	-0,9
2005-2010	1311,73	21,1	5420,2	3,54	38	11,0
2010-2013	2245,75	35,9	6555,0	7,23	48	4,1
Rata-Rata Pertumbuhan		26,6		8		4

Source: BPS (2015)

Meat processing industry performance fluctuated. The highest production in the period 2010-2013, while the lowest in the period 1990-1995 the growth - 0.1 percent. The highest employment growth in the period 1985-1990 by an average of 16.02 percent, while the lowest in the period 1990 to 1995, amounting to an average of -8.21 per cent. Growth in the number of units of the highest company in the period 2005-2010 by 11 percent, while the lowest was no period of 1995-2000. The condition can not be separated by the macro economic conditions in Indonesia. Growth in the meat processing industry is the contribution of the industrial processing of chicken and other meat-based by 17 percent while beef-based company is not growing.
At the time of the global financial crisis of 2008, the meat processing industry had experienced an increase in high production value of Rp. 2.3 trillion, then continued to decline in 2009 amounted to Rp. 1.9 trillion in 2010 from Rp. 1.3 trillion. The decline in production value, followed by the decline in the workforce. Different conditions at the time of the economic crisis in 1997/1988 which give effect to the majority of industry performance in Indonesia, but this impact is not seen affecting the performance of the meat processing industry. In the period 1996-1999 instead of production value processing industry continues to experience growth from Rp. 100.7 billion to Rp. 199.7 billion (CBS, 2015).

The growth of the processing industry has not been able to increase the consumption of meat Indonesian people are still below the standard of the Food Agriculture Organisation (FAO) which initiated the consumption of meat 33 kg / capita / year and is still under public consumption Malaysia amounted to 53.3 kg / capita / year (OECD , 2014). Meat consumption Malaysian state can not be separated from the meat processing industry productivity growth, which reached 47.5 percent (Yodfiatfinda, et al., 2012). The productivity level can not be separated with the rise and fall of the efficient use of factors of production inputs and technology. Increased efficiency is considered important for the reason it can keep costs low enabling consumers to obtain products at more competitive prices and earn higher profits. Efficient industry can survive, especially in the competitive market segment that is quite sensitive to price (Ward, 1988; Marion and Kim, 1991; Lambert, 1994).

National beef production per year Average order of 413,000 tons and an average consumption of 522,000 tons per year, so that the supply shortage of 109,000 tons per year. Lack of domestic meat supply caused the price of local meat increased to an average of Rp. 61 362 per year. The high price of meat will still not be met from domestic production so as to encourage the importation of meat. Imports of meat do well because of the influence of the price of imported meat is cheaper than from lolal (Ilham, 1998). Prices of meat imports in the period 2005- 2013 average of US $ 41 773 / kg and average local meat Rp 61 361 / kg. The volume of imports which do affect the import tariff and the price of imported meat. The price of imported meat is influenced by the exchange rate against the US Dollar (Ilham, 1998). The rupiah against the US dollar pad 2005-2013 period average Rp.9.837.

Table 1.2 Production, Consumption, Import Prices and Price Local Beef 2005-2013 in Indonesia.

Year	Production  (000 Ton)	Cunsumption (000 Ton)	Selisih (000 Ton)	Rupiah exchange rate (Rp/US$)	Prices Meat Imports (Rp/kg)	Local meat prices (Rp/kg)
2005	385	479	-94	9830	25935	39240
2006	395	449	-54	9020	36350	45120
2007	339	453	-114	9419	36912	48650
2008	392	478	-86	10950	44101	54100
2009	409	502	-93	9400	34550	63210
2010	436	520	-84	8991	40319	66150
2011	450	612	-162	9068	45767	66860
2012	480	610	-130	9670	44091	76692
2013	430	594	-164	12189	67934	92237
Average	413	522	-109	9837	41773	61362
Source: BPS (2015)

The high price of domestic beef has always been a hot issue every year. The rise in prices has always been associated with high demand / consumption (demand) while the supply / domestic production can not meet, causing scarcity (scarcity). One alternative to meet the demand for beef is imported.
The amount of beef imports from 2008 to 2013 has always exceeded the quota set by the government. In 2010 the quota was set at 73.300 tons but the realization of 140,000 tons. In 2013 decreased quota of 33,000 tons, while the realization of imports amounted to 55.8 thousand tons. Beef imports also decreased from the year 2008 of 202,900 Tons be 138 900 tons in 2013. The realization of beef imports in 2010 reached 123 percent of quota. The condition occurs due to huge demand of domestic consumption that can not be met from the local cattle.

Table 1.3. The provision, common uses and availability of beef in 2009-2012 and forecast 2013-2014.

No.	Uraian	Tahun
		2008	2009	2010	2011	2012	2013
1	Impor Daging (000 Ton)	91,6	110,2	140	102,9	40,3	55,8
2	Kuota Impor daging (000 Ton)	0	0	73,7	67,2	34	32
3.	Impor sapi (000 Ton)	202,9	234,5	210,7	122,5	101,4	138,9

Source: BPS (2015)

According to the Ministry of Industry (2013), demand for meat needed by the meat processing industry in the country is actually only 19 520 tonnes per year, or far below the overall quota meat imports were 32,000 tons in 2013 pegged. Supply shortage of beef in Indonesia occurred since the government cut import quotas on meat from the original 90,000 tons in 2011 to 34,000 tons in 2012. Even in 2013, the quota returned depreciated to only 32,000 tons. Policies such meat import quota restrictions issued by the government to support the self-sufficiency target in 2014. Actual imports of meat, although the number is greater than the quota, but has not been able to meet the raw material requirements of meat for iindustri that these conditions will affect the performance of the meat processing industry.
Performance meat processing industry is also affected by the level of consumption of meat, firm age and capital intensity. Keramidou and Mimis (2011c) reported that the industry's performance is not affected by capital intensity, firm age and skills of the workforce. Unlike the Sripoorni and Manonmani (2014) reported growth of capital and capital intensity and the positive effect is the dominant factor for determining total factor productivity. Associated with raw materials, yet security of supply in quantity, quality and price are suitable for domestic products, it will affect the performance of the processing industry. According to Goldar, et al., (2003) and Ohlan (2013) that the imported raw materials used in the production of a very strong influence of efficiency and productivity. Parameswaran (2002) says that the company's involvement in international trade through the export and import of raw materials and technology have a positive effect on technical efficiency. Imports have a tendency to make local companies more competitive, but the effect on the company concentrated smaller than the companies are not concentrated (Ullah et al., 2013).

Bertuuan researchers to analyze the productivity of the meat processing industry in Indonesia in the period 1990-2013. The title of this research is "Analysis of Productivity of Meat Processing Industry in Indonesia".

II. LITERATURE REVIEW

Kumbhakar and Lovell (2000); Collie, et al., (2005), outlines the Total Factor Productivity (TFP) into three components, namely changes in technology (technical change), changes in technical efficiency (technical efficiency change), and the effects of economies of scale (scale economic effects). Companies may be technically efficient but still can improve productivity by leveraging economies of scale. The effect can be described as follows:

 

Figure 2.5. Productivity, Technical Efficiency and Scale Economy

Source: Coelli et al., (2005)

In Figure 2.1, explains that in order to measure the productivity of each data point used help lines derived from point 0 to each data point, the line a, b and c. Tilt (slope) of the line is Y / X and is a measure of productivity (Y is the output and X is the input). If the company is operating at point A, then the company is not efficient. At point A company can still increase efficiency by moving to point B without increasing the use of inputs, then the company is technically efficient, the slope of the line will be larger. This suggests that higher levels of productivity at point B. If the company moves to point C, the line is tangent to the frontier of production and show the maximum possible productivity is achieved. The movement to the point C is an example of the utilization of economies of scale. Point C is the point of optimal scale (technically). The company's operations in other points on the frontier of production (in addition to point C) will result in lower levels of productivity. The conclusion from the foregoing description is a company that is efficient technically still possible to improve productivity by leveraging economies of scale.

The description does not include a time component. If the productivity comparison made between different time, a source of productivity change is probably more technical changes. Technical changes involve technological advances demonstrated by the shift in the production frontier upward.

 

                                                                                                              

Figure 2.2. Technical changes in Between Two Time Periods

Source: Coelli  et al., (2005)

This is shown in Figure 2.6, in the form of a shift in the production frontier (in the period 0) 0F0 'into the production frontier (in the period 1) 0F1'. In the first period, the entire company is technically able to produce more output for each input level, relative to output which may be produced in the period 0. Thus an increase in the productivity of a company from one year to the next year not only from improved efficiency, but may also be due to technical changes or use of economies of scale or a combination of these three factors.

Technical efficiency and economic efficiency (scale) can not be separated with productivity. Productivity growth can be decomposed into changes in efficiency, changes in technology and changes in the economic scale (Kumbkhar and Lovell, 2000, Coelli, et al., 2005). Malmquist index introduced by Caves, et al., (1982), and their decomposition to changes in efficiency and technology changes proposed by Nishimizu and Page (1982) and Fare et al., (1992). Malmquist index of productivity change between periods t and t + 1, is defined as follows:

MQ_t,t+1=     ..............................(2.1)

where   is the distance from the observation in period t + 1 to frontier ke- period t;  is a vector of input-output in the period to-t. Further Malmquist index can be decomposed into changes in technology and changes in technical efficiency. Technical efficiency alone can be decomposed into changes in technical efficiency murnidan economies of scale changes:

MQ_t,t+1= 

                X   ....................................................(2.2)

The first confinement measure changes in technical efficiency, economies of scale changes tengahmerupakan confinement and confinement third show of technological change. Further to look at environmental factors that affect productivity, which was developed decomposition analysis of changes in productivity based on the index of productivity Hick-Moorsteen-Bjurek (HMB Productivity Index) which states that the index of productivity HMB formed by four components: technical changes, changes in efficiency, changes scale and variety of the combined effect of input-output (see Goto and Nemoto, 2005).

Ln HMB (x^t+1,x^t,y^t+1_,y^t=ln+ +

...................(2.3)

Malmquist index calculates all values ​​(technical change, technical efficiency, pure efficiency, economies of scale) compared with 1. Malmquist Index 1menunjukkan same with no change during the period under consideration. Malmquist index greater than 1 indicates progress, while an index of less than 1 indicates a setback. Estimation of Total Factor Productivity (TFP) with the DEA approach using Malmquist index approach. Illustration index TFP as follows: If a firm can produce output the same in period t and t + 1, but using the input that is different, that only 75 percent of the input period t, then the index of TFP will increase by 1 / 0.75 or, if the company using the same input in period t and t + 1, but produces a different output is output period t + 1 increased by 30 per cent of the output period t, the TFP index of 1.3.

III. RESEARCH METHODS

3.1 Types and Sources of Data

The data used in this research is time series data processing and preservation of meat industry in Indonesia are derived from the annual survey data Large and Medium Manufacturing Statistics Statistics Indonesia-year period 1990-2013 were not published. Chosen in 1990 as in 1990 the state of Indonesia first began importing cattle that became the beginning of the meat processing industry uses imported beef. Chosen in 2013 as the last year's research data due consideration of the availability of annual survey data for 2013 BPS only available in May 2015.
Data used in the study includes data input and output as well as the value of imports. Input and output variables are used, among other things:

a. The cost of raw and auxiliary materials (raw materials) is the value of costs / expenses incurred for input in the production process in the form of raw materials and so on which are used for materials for production processes in the value / unit Rupiah (Central Bureau of Statistics, 2015).

b. Spending on labor is rewarded for services that have been sacrificed by working for other parties which include wages / salaries and other intensive. The data used, both production workers and other workers in the value / unit Rupiah (Central Bureau of Statistics, 2015).

c. Electric power purchased by the industry come in two types, namely with the amount / quantity (in Kwh), which is converted to the value (in US $). This study uses electricity purchased in the value / unit Rupiah (Central Bureau of Statistics, 2015).

d. Spending fuels and industrial lubricants for gasoline, diesel oil, diesel oil, fuel oil, and lubricants, in liters and in units of Rupiah. The data used as a variable in this study is the amount of usage of all types of fuels that the value / unit Rupiah (Central Bureau of Statistics, 2015).

e. The cost of other expenses consist of cost of capital lease which is calculated from the amount of the costs incurred for the lease or contract on buildings, machinery, equipment and land, indirect taxes, interest on loans, gifts and donations for 1 year (Agency statistic, 2015).

d. The output value is the output value of the meat processing industry is the value of the output produced from the industrial activities, in the form of goods produced, services industries, the profits of selling, increase the stock of intermediate goods and other revenues in the value / unit Rupiah (Central Bureau of Statistics, 2015).

 3.2. Analysis method

Productivity value used in this study is the rate of change of Total Factor Productivity (TFP) is estimated by the method or Malmquist DEA Malmquist Productivity Index (MPI). According Latruffe (2010), a general measure of productivity is to measure the index of Total Factor Productivity (TFP), which compares the index of aggregate output over aggregate input index. Some ways aggregation resulted in the index Total Factor Productivity (TFP) is different. The major indexes used are Laspeyre, Paasche, Fisher, Tornqvist and index-Köves Eltetö-Szulc. In general, using the weights in the price of construction. This measurement dividing the relative output of each of the company's revenues with relative input in the company's costs.
Malmquist index introduced by Caves et al., (1982), and decomposed into changes in efficiency and technology changes proposed by Nishimizu and Page (1982) and Fare et al., (1992). Productivity measurement in this study refers to the total factor productivity (TFP) of all the factors that are used, and not the partial productivity, such as labor productivity and capital productivity. The approach used in the measurement is Malmquist Productivity Index (MPI) that the program uses DEA Malmquist measure changes in productivity (productivity changes) follow the time variations and can be decomposed into changes in efficiency (efficiency changes) and changes in technology (technical changes) with the DEA like approach nonparametric. Malmquits DEA model is used to measure the efficiency and productivity of enterprise data that follows variations in time using observations at time t and t + 1. The concept of Total Factor Productivity (TFP) developed by Kumbhakar and Lovell (2000) and used empirically by Coelli, et al., (2005), which outlines changes in TFP into three components of the change in technology, changes in technical efficiency and change of economies of scale (scale economy).

Malmquist index calculates all values (changes in technology, technical efficiency, pure efficiency, efficiency of scale) compared with 1. Malmquist Index 1menunjukkan same with no change during the period under consideration. Malmquist index greater than 1 menunjukkankemajuan, while an index of less than 1 indicates kemunduran.Estimasi Total Factor Productivity (TFP) with DEA-Malmquist approach indekTFP illustrated as follows: If a company can produce the same output in period t and t + 1, but using input that is different, that only 75 percent of the input period t, then indekTFP will increase by 1 / 0.75 or, if the company uses the same input in period t and t + 1, but produces a different output is output period t + 1 rose 30 percent of the output period t, the TFP index of 1.3.

IV. RESULTS AND DISCUSSION

Table 4.1 shows that the average level of productivity / Total Factor Productivity (TFP) industry over the study period from 1990 to 2013 year amounted to 127.9 percent, meaning that there is a growth of industrial productivity was 27.9 percent (28 percent), with a minimum interval of values 55.9 per cent and a maximum value of 400.9 percent. The standard deviation of 65.5 percent which means that there are differences in sample values ​​against the average score of 65.5 percent during the study period. The productivity growth is the contribution of technological change growth of 14.29 percent, while the growth of efficiency changes and scale economies each grew by -0.5 percent and -1.67 percent. From Table 4.1 can also be seen the growth of the industry after the economic crisis of 1997/1998 amounted to 34.9 percent, while the pre-crisis growth of only 17.2 percent.

On annual basis, productivity growth can be seen from Table 4.1. The average level of industrial productivity during the period 1990-1992 was obtained value of Total Factor Productivity (TFP) by an average of 94.5 percent, meaning that there is a growth of industrial productivity amounted to 5.5 percent. This growth is the contribution of the growth of the technological changes that grew an average of 5 per cent while, the change in efficiency and scale economies each grew by -11 percent and -5.5 percent. These results are consistent with reports Aswicayono (2002) and Timmer (1999).

Such conditions may be due in the period 1990-1992 are still many companies began using high-tech machine tools, so the introduction of machine tools takes time so that workers are able to operate properly. Human resource management needs of efficiency in utilizing its resources. The slow transfer of technology due to constraints in obtaining skilled labor may also be a barrier to raising productivity potential. It tersbut according to a report by The World Bank (World Bank, 1991).

Table 4.1. Productivity Growth in Meat Processing Industry in Indonesia

Period	Decomposition of  Total Factor Productivity (TFP)
	∆ TFP ( persent)	∆ Efficiency ( persent)	∆Tech( persent	∆ Scala ( persent
1990-1992	94,5	89	105	94,5
1993-1995	137	129,33	112,67	108
1996-1998	137	100,67	138,67	99,67
1999-2001	128,67	100,33	124	95,33
2002-2004	95,33	104,67	92	115
2005-2007	125,33	102,67	121,33	102,67
2008-2010	130	102	123	104,33
2011-2013	133,67	97	132,67	98,67
Average	127,9	99,5	114,29	98,33
Std. Dev	65,2
Minimum	55,9
Maximum	400,9

Information: EFFch = Efficiency Change;                            TECHch = Technical Change;

                     PEch   = Pure Efficiency Change                    SEch      = Scale Economic

                     TFPch = Total Factor Productivity Change       ∆        = Perubahan/ Pertumbuhan

Source: Outhor’s Calculation

In the period 1990-1992, there was an additional large capital input in 1992, up from 51 billion in 1990 to 572.5 billion rupiah in 1992. The effect of adding capital in rejuvenating the engine and increase the plant capacity has not been a big impact on productivity industry, so that the contribution of technological change have not been able to have a big impact.
The average level of industrial productivity during the period 1993-1995 was obtained value of Total Factor Productivity (TFP) by an average of 137 percent, meaning that there is a growth of industrial productivity by 37 percent. This growth is a positive contribution from the change in efficiency of growth, technological change and scale economies each grew 29.33 percent, 12.67 percent and 8 percent. These results are consistent with reports Aswicayono (2002), Modjo (2007).
This condition can be caused due to the period 1992 and 1993 national meat processing industry to raise capital and to rejuvenate machinery and equipment and increase the capacity of the plant. The average level of industrial productivity during the period 1996-1998 was obtained value of Total Factor Productivity (TFP) on average by 137 per cent, growth in this period is equal to the growth in the previous period, meaning that the growth of industrial productivity by 37 per cent can still be maintained in conditions of economic crisis. This growth is a positive growth contribution of changes in technology and changes in the efficiency of respectively 38.67 percent and 0.67 percent, while the economies of scale grew -0.33 percent. The positive TFP growth occurs different from the reports Tanuwijaya and Sharma (2004) and Modjo (2007).
The different results could be due to the period of 1997 there was an increase of capital input of 399 million rupees from 179 Million in 1996, despite a decline in capital input in 1998. The increase in capital was also followed by the increase in raw material inputs are still available, so TFP growth able to continue to grow during the economic crisis to capitalize on the growth of technology and the efficient allocation of raw material resources. The results of the study of this industry, TFP growth after the economic crisis of 1997/1998 grew by 34.9 percent, whereas before the crisis TFP growth grew only 17.2 percent. This proves that the meat processing industry is a potential sector that can survive and grow during the economic recession. This condition is consistent with the reports Knudson, et al., (2010) and Peter (2012).
The average level of industrial productivity during the period 1999-2001 was obtained value of Total Factor Productivity (TFP) by an average of 128.67 per cent, meaning that there is a growth of 28.67 percent of industrial productivity. This growth is the contribution of the growth changes in technology and changes in efficiency and scale economies each grew 24 percent and 0.33 percent, while the economies of scale grew -4.67 percent. These results differ from those reported Setiawan (2013) and Modjo (2007).

Differences in results can be caused because the industry is still able to take advantage of its resources efficiently, despite an unstable condition after the domestic political situation, high interest rates and the exchange rate rendahserta access to financial resources is still low, as well as the practices and values managerial relatively not professional. The low value of the rupiah resulted only in capital input but although expensive raw material procurement can still be obtained, so that the industry can still increase productivity with the use of technological equipment and resources to the optimum.

The average level of industrial productivity during the 2002-2004 period that the value Total Factor Productivity (TFP) by an average of 95.33 percent, which means that there is a growth of industrial productivity amounted to -4.67 percent. This growth is the contribution of the growth of economic scale changes and changes in technical efficiency respectively 15 percent and 4.67 percent, sedangkanperubahan technology grew -8 percent. These results are in contrast to reports Surjaningsih and Permono (2014).

This can occur because of changes in efficiency is strong in 2000-2004 associated with the ongoing consolidation after the financial crisis of 1998 aggravated domestic political conditions affecting the investment climate, making it difficult to increase investor confidence shown by the low growth and low investment realization investation. Slowing changes in technical efficiency means a decline in the production frontier, because of declining production capability of the machine. One possible reason is the interference with the machine as well as the high price of new machinery because of the low value of the rupiah against the dollar. The same results with a research report Bappenas (2010).

Results of the study period 2002 - 2004 showed higher TFP growth, this can happen because the company increase productivity by increasing production efficiency. The company increased the efficiency of input use between, improve the layout of the production to shorten the switching between work stations, align the workflow in the workplace as well as an increase in capital input for machine tools and large buildings. The implications of the growth of the negative efficiency is the need for skills development of workers in order to adapt to technological upgrading. In the period 2000-2004. However, the increase in the level of technology brought by these factors may not be realized in full scale. This technology imported can not be followed by the mastery of technologies that reduce technical efficiency.

The average level of industrial productivity during the period of 2005-2007 obtained value Total Factor Productivity (TFP) by an average of 125.33 per cent, meaning that there is a growth of 25.33 percent of industrial productivity. This growth is the contribution of the growth of technological change, changes in efficiency and scale economies each grew 21.33 percent, 2.67 percent and 2.67 pesen. Results are brbeda with Bappenas research report (2010). There are differences in the results of the source of productivity gains found by Bappenas the technical efficiency change, while changes in technology and economies of scale contribute to negative, while the results penilitian find productivity growth meruupakan growth contribution of technological change, changes in efficiency and economies of scale respectively positive growth. The company increased the efficiency of input use between, improve the layout of the production to shorten the switching between work stations, align the workflow in the workplace. Increased capital input engine and building a positive effect on the productivity of the industry in the period thereafter.

The average level of industrial productivity during the period of 2008-2010 obtained value Total Factor Productivity (TFP) by an average of 130 percent, meaning that there is a growth of industrial productivity by 30 percent. This growth is the contribution of the growth of technological change, changes in economies of scale and efficiency of each grew 23 percent, and 2 percent pesen 4.33. The results were the same as the Surjaningsih and Permono (2014).
TFP growth was driven by positive contributions from changes in technology, while the growth of efficiency and low-scale changes. Such conditions can prove that the industry is more resilient to the economic recession, walaupunterjadi the 2008 global financial crisis which affects the economy as a whole, did not affect the meat processing industry. In addition to the result of the global financial crisis of 2008, the application of the Minister of Agriculture No. 59 / Permentan / HK.060 / 8/2007 about the decline of meat import quotas up to the 10 percent do not affect the performance of this industry.

Productivity growth in the period 2008-2010 is the result of the increase of raw material usage and increase capital input. The condition occurs because of the increased consumption of raw materials and capital input will help drive production growth despite the global financial crisis. The industry is the only import-oriented so that by utilizing the domestic market alone is able to grow because it meets local needs. This is in accordance with the CPM report (2015) and Sharif (2013).

The average level of industrial productivity during the period 2011-2013 was obtained value of Total Factor Productivity (TFP) by an average of 133.67 per cent, meaning that there is a growth of 33.67 percent of industrial productivity. This growth is the contribution of the growth of technological change by 32.67 percent, while the change in efficiency and scale economies each grew 3 percent and 1.33 percent. In the 2011-2013 upheaval in both industrial raw materials availability issues and pricing issues. The decline in imports resulting decreased availability of raw materials and price increases helped to provide impact for the processing industry is mainly a problem of cost efficiency. The costs incurred for raw material usage resulting in reduced efficiency. Industrial productivity can still grow due to the use of technology and economies of scale. These results are consistent with reports Aswicayono (2002).

V. CONCLUSIONS AND RECOMMENDATIONS

The research found that the average level of productivity / Total Factor Productivity (TFP) industry over the study period from 1990 to 2013 year amounted to 127.9 percent, meaning that there is a growth of industrial productivity was 27.9 percent (28 percent), with an interval of values 55.9 percent minimum and maximum values ​​of 400.9 percent. The productivity growth is the contribution of technological change growth of 14.29 percent, while the growth of efficiency changes and scale economies each grew by -0.5 percent and -1.67 percent. It was also found that the growth of the industry after the economic crisis of 1997/1998 amounted to 34.9 percent, while the pre-crisis growth was only 17.2 percent / year. Low productivity growth in the period 1990-1992 by an average of 5.5 percent / year and the highest in the period 1993-1998 by an average of 37 percent / year. Meat processing industry is still able to increase its productivity by leveraging efficiencies and economies of scale are not yet optimized.

VI. REFERENCES

Aswicahyono, H and Hill (2002).‘perspirasi’ versus ‘Inspiration’ in Asian Industrialization: Indonesia Before the Crisi. Jurnal of Development Studies, 38 (3), pp.138-163.

Badan Pusat Statistik,  2015. Statistik Industri Besar dan Sedang Indonesia 2013. BPS, Jakarta, Indonesia.

BAPPENAS, 2010. “Perubahan Produktivitas Industri Manufaktur Indonesia dan Faktor-Faktor yang Mempengaruhinya:Analisis Panel Data 2000-2007”. Laporan Akhir. Direktorat Evaluasi Kinerja Pembangunan Sektoral Kementerian PPN/Bappenas. Jakarta.

Coelli, T., Rao, D., O‟Donnell, C. and Battese, G., 2005. An Introduction to Efficiency and Productivity Analysis. Springer, New York, second edition.

Goldar, B. N., Renganathan, V. S. &  R.  Banga, 2003. “Ownership and Efficiency inEngineering Firms in India, 1990-91 to 1999-2000.” Working Paper. Indian Councilfor Research on International Economic Relations.

Goncharuk G,A, 2009. ‘How to make meat business moreEffective: A case of Ukraine.’ British Food JournalVol. 111 No. 6,pp. 583-597

Gopinath, M.,  D. Pick and Y. Li. 2002. “Does Industrial Concentration Raise Productivity in Food Industries?”. WorkingPaper. Annual Meeting of the Western Agricultural Economics Association. Long Beach, California July 28-31, 2002.

Goto, M. and N. Jiro, 2005. “Productivity, Efficiency, Scale Economies and Technical Change: A New Decomposition Analysis of TFP Applied to the Japanese Prefectures.” NBER Working Paper 11373. National Bureau of Economic Research. Cambridge.

Ilham, N. 1998.  Penawaran dan Permintaan Daging Sapi di Indonesia; Suatu Analisis Simulasi. Tesis. Program Pascasarjana, Institut Pertanian Bogor, Bogor. (Tidak Publikasi)

Kementerian Pertanian, 2013. Statistik Peternakan dan Kesehatan Hewan 2013. Kementerian Pertanian. Jakarta.

Kementerian Pertanian, 2013. Statistik Pengolahan dan pemasaran Hasil Pertanian 2013. Direktorat Jenderal Pengolahan dan Pemasaran Hasil Pertanian Kementerian Pertanian. Jakarta.

Keramidou, I.  and A. Mimis.  2011c. ‘An Application of the Double-Bootstrap Data Envelopment Analysis to Investigate Sources of Efficiency in the Greek Poultry Sector’. World's Poultry Science Journal, Vol. 67, Pp. 675-686.

Knudson,W.A.,  S. Miller and H. C.Peterson, 2010. “The Economic Impact Of The Michigan Food Processing Industries.The Strategic Marketing Institute”. WorkingPaper 01-0910.Bussiness Innovation In Agriculture, Food And Natural Resources .Agriculture Hall, Michigan State University, East Lansing

Kopelko M, Alfons Oude Lansink, Spiro Stefanou 2012. “Analysis of static and dynamic productivity growth in the  Spanish meat processing iindustri”. Paper on European Association of Agricultural Economists 131st Seminar, September 18-19, Prague, Czech Republic

Kumbhakar, S. C. and C. A. K. Lovell, 2000. Stochastic Frontier Analysis. Cambridge: Cambridge University Press.

Lambert, D. K., 1994. ‘Technological Change in Meat andPoultry-Packing and Processing’. Journal Agriculture and Applied Economic. vol 26 (2), Pp:591-604

Margono, H. & Sharma, S. C., 2006. ‘Efficiency and Productivity Analyses of Indonesian Manufacturing Industries’. Journal of Asian Economics, 17, Pp.979-995.

Modjo, Ikhsan., 2007.“Total Factor Productivity in Indonesian Manufacturing: A Stochastic Frontier Approach”, Global Economic Review. Vol. 36, No. 4, pp. 321-342.

Nishimizu, M. and J. M. Page, 1982. ‘Total Factor Productivity Growth, Technological Progress and Technical Efficiency Change: Dimensions of Productivity Change in Yugoslavia, 1965-78’. Economic Journal 92: 920-936

Nossal, K , Sheng Y,  and Zhao, S., 2008. ‘Productivity in the beef cattle andslaughter lamb industries.  Meat and LivestockAustralia’.research report 08.13AustralianBureau of Agricultural and Resource Economics (ABARE). Australia.

OECD., 2014. Agricultural Output. https://data.oecd.org/agroutput/meat-consumption.htm.Diakses Tanggal 15 Agustus 2015

Ohlan, R., 2013. ‘Efficiency and Total Factor Productivity Growth in Indian Dairy Sector.’ Quarterly Journal of International Agriculture 52. No 1 Pp: 51-57

Parameswaran M., 2002. “Economic Reforms And Technical Efficiency:Firm Level Evidence From Selected Industries In India.” Working Paper339. Working Papers Published Since August 1997 (Wp 279 Onwards).

Peters,S., 2012. “Economic Impact Analysis of Ontario”s Food and Beverage Processing Sector”.OAFEFinal Report. Alliance of Ontario Food Processors850 Fountain Street SouthCambridge, Ontario.

Setiawan, M., 2013. ‘Structure, ConductandPerformance; Evidence Fromthe IndonesianFoodandBeveragesIindustri’. Empir Econ 45: Pp. 1149-1165

Sripoorni R.S., and M.Manonmani, 2014. ‘Factors Influencing Total Factor Productivity Across The Southern States Of India - An Application Of Discriminant Function’. IRACST – International Journal of Commerce, Business and Management (IJCBM), ISSN: 2319–2828Vol. 3, No. 4, Pp. 623-625

Surjaningsih, N. and B. P. Permono, 2014. The Dynamics of Total Factor Productivity of Medium and Large Manufacturing in Indonesia.Bulletin of Monetary, Economics and Banking. Pp. 278-308

Syarif, Haniwar, 2013. “Opportunity in indonesian meat intermediate iindustri”. PapersNational Assocoation Meat Processor Association. Brisbane. 22-23 Agustus 2013.

Timmer, Marcel P. (1999), Indonesia's Ascent on the Technology Ladder: Capital Stock

and Total Factor Productivity in Indonesian Manufacturing, 1975-1995, Bulletin  of Indonesian Economic Studies 35 (1): 75-97.

Ullah , A.,  E. Ghani and  A. Y. Javed, 2013. Market Power and Industrial Performance in Pakistan. PIDE Working Papers 2013: 88

Ward, C.E. (1988). “Productivity - Concentration Relationship in the U.S. Meatpacking Iindustri.” Southern Journal of Agricultural Economics 19. Pp. 217-222.

http://www.kemenperin.go.id/artikel/3581/Bahan-Baku-Makin-Langka,Industri-Pengolahan-Terancam-Gulung-Tikar. Diakses tanggal 14 September 2014.

ANALYSIS TOTAL FACTORS PRODUCTIVITY OF MEAT

 PROCESSING  INDUSTRY IN INDONESIA

Jafrizal
  Faculty of Economics, University of Sriwijaya

drh_jafrizal@yahoo.co.id

Jl. Srijaya Negara Bukit Besar Palembang, Indonesia
Telp: (0711) 580 964, 580 646 Fax: (0711) 580964

ABSTRACT

The purpose of the study is to analyze the productivity of meat processing industry in Indonesia. The data used are the result of the 1990-2013 annual survey for big and medium-scale industry by Indonesian Central Bureau of Statistics. In order to estimate productivity value, Data Envelopment Analysis-Malmquist (DEA-Malmquist. Study results found that the average level of productivity / Total Factor Productivity (TFP) by an average of 127.9 percent, meaning that there is a growth of industrial productivity was 27.9 percent (28 percent), with intervals of a minimum value of 55.9 per cent and a maximum value of 400.9 percent. The productivity growth is the contribution of the growth of technological change an average of 14.29 percent, while the growth of efficiency and economies of scale changes each average growth of -0.5 percent and -1.67 percent. It was also found that the growth of the industry after the economic crisis of 1997/1998 amounted to 34.9 percent, while the pre-crisis growth was only 17.2 percent / year.

KEYWORDS: Total Factor Productivity, Efficiency, Scale Economy, Industry Meat Processing, Indonesia

JEL : D240, Q130

                                                  

I.         INTRODUCTION

Requests processed meat products has driven the growth of the production value of the meat processing industry in Indonesia. In the period 2007-2013, for example, an average of 51.4 percent. Production growth was not followed by the growth of the business unit that grows very slowly which amounted to 6.5 percent (CBS, 2015). Despite a growth in production, the facts have not been able to increase meat consumption of Indonesian society which is equal to 10.6 kg / capita / year. According to BPS data (2015), that of the years 2004 to 2012 a trend towards the consumption of fresh beef continued to decline the range of 0.33 to 0.44 kg / capita / year, whereas the consumption of food products made from beef tends to increase. When examined in 2012 occurred a significant increase in the consumption of beef preserved up to 537.5 per cent, but in previous years consumption of beef preserved only in the range of 0.02 kg - 0.08 kg. In 2013 consumption of 0.55 kg of beef preserved beef and 1.46 kg of processed food. The upward trend in consumption of such meat processing industry has contributed to the growth and preservation (Ministry of Agriculture, 2013).

Growth in the meat processing industry in Indonesia from 1985-2013 year average growth of about 26.6 percent per year, the average workforce grew 8 percent and corporate units grew modestly around an average of 4 percent. The annual industrial growth data presented in Table 1.1.

Table 1.1 Performance meat processing industry in Indonesia

Periode	Produksi	Growth	Tenaga Kerja	Growth	Perusahaan	Growth
Tahun	(Milyar Rp)	( persen)	(Orang)	( persen)	(Unit)	( persen)
1985-1990	47,88	23,9	2797,7	16,02	23	7,7
1990-1995	65,28	-0,1	2396,5	-8,21	25	0,9
1995-2000	141,43	21,8	2467,5	2,39	27	-1,6
2000-2005	645,85	30,5	4279,2	11,09	26	-0,9
2005-2010	1311,73	21,1	5420,2	3,54	38	11,0
2010-2013	2245,75	35,9	6555,0	7,23	48	4,1
Rata-Rata Pertumbuhan		26,6		8		4

Source: BPS (2015)

Meat processing industry performance fluctuated. The highest production in the period 2010-2013, while the lowest in the period 1990-1995 the growth - 0.1 percent. The highest employment growth in the period 1985-1990 by an average of 16.02 percent, while the lowest in the period 1990 to 1995, amounting to an average of -8.21 per cent. Growth in the number of units of the highest company in the period 2005-2010 by 11 percent, while the lowest was no period of 1995-2000. The condition can not be separated by the macro economic conditions in Indonesia. Growth in the meat processing industry is the contribution of the industrial processing of chicken and other meat-based by 17 percent while beef-based company is not growing.
At the time of the global financial crisis of 2008, the meat processing industry had experienced an increase in high production value of Rp. 2.3 trillion, then continued to decline in 2009 amounted to Rp. 1.9 trillion in 2010 from Rp. 1.3 trillion. The decline in production value, followed by the decline in the workforce. Different conditions at the time of the economic crisis in 1997/1988 which give effect to the majority of industry performance in Indonesia, but this impact is not seen affecting the performance of the meat processing industry. In the period 1996-1999 instead of production value processing industry continues to experience growth from Rp. 100.7 billion to Rp. 199.7 billion (CBS, 2015).

The growth of the processing industry has not been able to increase the consumption of meat Indonesian people are still below the standard of the Food Agriculture Organisation (FAO) which initiated the consumption of meat 33 kg / capita / year and is still under public consumption Malaysia amounted to 53.3 kg / capita / year (OECD , 2014). Meat consumption Malaysian state can not be separated from the meat processing industry productivity growth, which reached 47.5 percent (Yodfiatfinda, et al., 2012). The productivity level can not be separated with the rise and fall of the efficient use of factors of production inputs and technology. Increased efficiency is considered important for the reason it can keep costs low enabling consumers to obtain products at more competitive prices and earn higher profits. Efficient industry can survive, especially in the competitive market segment that is quite sensitive to price (Ward, 1988; Marion and Kim, 1991; Lambert, 1994).

National beef production per year Average order of 413,000 tons and an average consumption of 522,000 tons per year, so that the supply shortage of 109,000 tons per year. Lack of domestic meat supply caused the price of local meat increased to an average of Rp. 61 362 per year. The high price of meat will still not be met from domestic production so as to encourage the importation of meat. Imports of meat do well because of the influence of the price of imported meat is cheaper than from lolal (Ilham, 1998). Prices of meat imports in the period 2005- 2013 average of US $ 41 773 / kg and average local meat Rp 61 361 / kg. The volume of imports which do affect the import tariff and the price of imported meat. The price of imported meat is influenced by the exchange rate against the US Dollar (Ilham, 1998). The rupiah against the US dollar pad 2005-2013 period average Rp.9.837.

Table 1.2 Production, Consumption, Import Prices and Price Local Beef 2005-2013 in Indonesia.

Year	Production  (000 Ton)	Cunsumption (000 Ton)	Selisih (000 Ton)	Rupiah exchange rate (Rp/US$)	Prices Meat Imports (Rp/kg)	Local meat prices (Rp/kg)
2005	385	479	-94	9830	25935	39240
2006	395	449	-54	9020	36350	45120
2007	339	453	-114	9419	36912	48650
2008	392	478	-86	10950	44101	54100
2009	409	502	-93	9400	34550	63210
2010	436	520	-84	8991	40319	66150
2011	450	612	-162	9068	45767	66860
2012	480	610	-130	9670	44091	76692
2013	430	594	-164	12189	67934	92237
Average	413	522	-109	9837	41773	61362
Source: BPS (2015)

The high price of domestic beef has always been a hot issue every year. The rise in prices has always been associated with high demand / consumption (demand) while the supply / domestic production can not meet, causing scarcity (scarcity). One alternative to meet the demand for beef is imported.
The amount of beef imports from 2008 to 2013 has always exceeded the quota set by the government. In 2010 the quota was set at 73.300 tons but the realization of 140,000 tons. In 2013 decreased quota of 33,000 tons, while the realization of imports amounted to 55.8 thousand tons. Beef imports also decreased from the year 2008 of 202,900 Tons be 138 900 tons in 2013. The realization of beef imports in 2010 reached 123 percent of quota. The condition occurs due to huge demand of domestic consumption that can not be met from the local cattle.

Table 1.3. The provision, common uses and availability of beef in 2009-2012 and forecast 2013-2014.

No.	Uraian	Tahun
		2008	2009	2010	2011	2012	2013
1	Impor Daging (000 Ton)	91,6	110,2	140	102,9	40,3	55,8
2	Kuota Impor daging (000 Ton)	0	0	73,7	67,2	34	32
3.	Impor sapi (000 Ton)	202,9	234,5	210,7	122,5	101,4	138,9

Source: BPS (2015)

According to the Ministry of Industry (2013), demand for meat needed by the meat processing industry in the country is actually only 19 520 tonnes per year, or far below the overall quota meat imports were 32,000 tons in 2013 pegged. Supply shortage of beef in Indonesia occurred since the government cut import quotas on meat from the original 90,000 tons in 2011 to 34,000 tons in 2012. Even in 2013, the quota returned depreciated to only 32,000 tons. Policies such meat import quota restrictions issued by the government to support the self-sufficiency target in 2014. Actual imports of meat, although the number is greater than the quota, but has not been able to meet the raw material requirements of meat for iindustri that these conditions will affect the performance of the meat processing industry.
Performance meat processing industry is also affected by the level of consumption of meat, firm age and capital intensity. Keramidou and Mimis (2011c) reported that the industry's performance is not affected by capital intensity, firm age and skills of the workforce. Unlike the Sripoorni and Manonmani (2014) reported growth of capital and capital intensity and the positive effect is the dominant factor for determining total factor productivity. Associated with raw materials, yet security of supply in quantity, quality and price are suitable for domestic products, it will affect the performance of the processing industry. According to Goldar, et al., (2003) and Ohlan (2013) that the imported raw materials used in the production of a very strong influence of efficiency and productivity. Parameswaran (2002) says that the company's involvement in international trade through the export and import of raw materials and technology have a positive effect on technical efficiency. Imports have a tendency to make local companies more competitive, but the effect on the company concentrated smaller than the companies are not concentrated (Ullah et al., 2013).

Bertuuan researchers to analyze the productivity of the meat processing industry in Indonesia in the period 1990-2013. The title of this research is "Analysis of Productivity of Meat Processing Industry in Indonesia".

II. LITERATURE REVIEW

Kumbhakar and Lovell (2000); Collie, et al., (2005), outlines the Total Factor Productivity (TFP) into three components, namely changes in technology (technical change), changes in technical efficiency (technical efficiency change), and the effects of economies of scale (scale economic effects). Companies may be technically efficient but still can improve productivity by leveraging economies of scale. The effect can be described as follows:

 

Figure 2.5. Productivity, Technical Efficiency and Scale Economy

Source: Coelli et al., (2005)

In Figure 2.1, explains that in order to measure the productivity of each data point used help lines derived from point 0 to each data point, the line a, b and c. Tilt (slope) of the line is Y / X and is a measure of productivity (Y is the output and X is the input). If the company is operating at point A, then the company is not efficient. At point A company can still increase efficiency by moving to point B without increasing the use of inputs, then the company is technically efficient, the slope of the line will be larger. This suggests that higher levels of productivity at point B. If the company moves to point C, the line is tangent to the frontier of production and show the maximum possible productivity is achieved. The movement to the point C is an example of the utilization of economies of scale. Point C is the point of optimal scale (technically). The company's operations in other points on the frontier of production (in addition to point C) will result in lower levels of productivity. The conclusion from the foregoing description is a company that is efficient technically still possible to improve productivity by leveraging economies of scale.

The description does not include a time component. If the productivity comparison made between different time, a source of productivity change is probably more technical changes. Technical changes involve technological advances demonstrated by the shift in the production frontier upward.

 

                                                                                                              

Figure 2.2. Technical changes in Between Two Time Periods

Source: Coelli  et al., (2005)

This is shown in Figure 2.6, in the form of a shift in the production frontier (in the period 0) 0F0 'into the production frontier (in the period 1) 0F1'. In the first period, the entire company is technically able to produce more output for each input level, relative to output which may be produced in the period 0. Thus an increase in the productivity of a company from one year to the next year not only from improved efficiency, but may also be due to technical changes or use of economies of scale or a combination of these three factors.

Technical efficiency and economic efficiency (scale) can not be separated with productivity. Productivity growth can be decomposed into changes in efficiency, changes in technology and changes in the economic scale (Kumbkhar and Lovell, 2000, Coelli, et al., 2005). Malmquist index introduced by Caves, et al., (1982), and their decomposition to changes in efficiency and technology changes proposed by Nishimizu and Page (1982) and Fare et al., (1992). Malmquist index of productivity change between periods t and t + 1, is defined as follows:

MQ_t,t+1=     ..............................(2.1)

where   is the distance from the observation in period t + 1 to frontier ke- period t;  is a vector of input-output in the period to-t. Further Malmquist index can be decomposed into changes in technology and changes in technical efficiency. Technical efficiency alone can be decomposed into changes in technical efficiency murnidan economies of scale changes:

MQ_t,t+1= 

                X   ....................................................(2.2)

The first confinement measure changes in technical efficiency, economies of scale changes tengahmerupakan confinement and confinement third show of technological change. Further to look at environmental factors that affect productivity, which was developed decomposition analysis of changes in productivity based on the index of productivity Hick-Moorsteen-Bjurek (HMB Productivity Index) which states that the index of productivity HMB formed by four components: technical changes, changes in efficiency, changes scale and variety of the combined effect of input-output (see Goto and Nemoto, 2005).

Ln HMB (x^t+1,x^t,y^t+1_,y^t=ln+ +

...................(2.3)

Malmquist index calculates all values ​​(technical change, technical efficiency, pure efficiency, economies of scale) compared with 1. Malmquist Index 1menunjukkan same with no change during the period under consideration. Malmquist index greater than 1 indicates progress, while an index of less than 1 indicates a setback. Estimation of Total Factor Productivity (TFP) with the DEA approach using Malmquist index approach. Illustration index TFP as follows: If a firm can produce output the same in period t and t + 1, but using the input that is different, that only 75 percent of the input period t, then the index of TFP will increase by 1 / 0.75 or, if the company using the same input in period t and t + 1, but produces a different output is output period t + 1 increased by 30 per cent of the output period t, the TFP index of 1.3.

III. RESEARCH METHODS

3.1 Types and Sources of Data

The data used in this research is time series data processing and preservation of meat industry in Indonesia are derived from the annual survey data Large and Medium Manufacturing Statistics Statistics Indonesia-year period 1990-2013 were not published. Chosen in 1990 as in 1990 the state of Indonesia first began importing cattle that became the beginning of the meat processing industry uses imported beef. Chosen in 2013 as the last year's research data due consideration of the availability of annual survey data for 2013 BPS only available in May 2015.
Data used in the study includes data input and output as well as the value of imports. Input and output variables are used, among other things:

a. The cost of raw and auxiliary materials (raw materials) is the value of costs / expenses incurred for input in the production process in the form of raw materials and so on which are used for materials for production processes in the value / unit Rupiah (Central Bureau of Statistics, 2015).

b. Spending on labor is rewarded for services that have been sacrificed by working for other parties which include wages / salaries and other intensive. The data used, both production workers and other workers in the value / unit Rupiah (Central Bureau of Statistics, 2015).

c. Electric power purchased by the industry come in two types, namely with the amount / quantity (in Kwh), which is converted to the value (in US $). This study uses electricity purchased in the value / unit Rupiah (Central Bureau of Statistics, 2015).

d. Spending fuels and industrial lubricants for gasoline, diesel oil, diesel oil, fuel oil, and lubricants, in liters and in units of Rupiah. The data used as a variable in this study is the amount of usage of all types of fuels that the value / unit Rupiah (Central Bureau of Statistics, 2015).

e. The cost of other expenses consist of cost of capital lease which is calculated from the amount of the costs incurred for the lease or contract on buildings, machinery, equipment and land, indirect taxes, interest on loans, gifts and donations for 1 year (Agency statistic, 2015).

d. The output value is the output value of the meat processing industry is the value of the output produced from the industrial activities, in the form of goods produced, services industries, the profits of selling, increase the stock of intermediate goods and other revenues in the value / unit Rupiah (Central Bureau of Statistics, 2015).

 3.2. Analysis method

Productivity value used in this study is the rate of change of Total Factor Productivity (TFP) is estimated by the method or Malmquist DEA Malmquist Productivity Index (MPI). According Latruffe (2010), a general measure of productivity is to measure the index of Total Factor Productivity (TFP), which compares the index of aggregate output over aggregate input index. Some ways aggregation resulted in the index Total Factor Productivity (TFP) is different. The major indexes used are Laspeyre, Paasche, Fisher, Tornqvist and index-Köves Eltetö-Szulc. In general, using the weights in the price of construction. This measurement dividing the relative output of each of the company's revenues with relative input in the company's costs.
Malmquist index introduced by Caves et al., (1982), and decomposed into changes in efficiency and technology changes proposed by Nishimizu and Page (1982) and Fare et al., (1992). Productivity measurement in this study refers to the total factor productivity (TFP) of all the factors that are used, and not the partial productivity, such as labor productivity and capital productivity. The approach used in the measurement is Malmquist Productivity Index (MPI) that the program uses DEA Malmquist measure changes in productivity (productivity changes) follow the time variations and can be decomposed into changes in efficiency (efficiency changes) and changes in technology (technical changes) with the DEA like approach nonparametric. Malmquits DEA model is used to measure the efficiency and productivity of enterprise data that follows variations in time using observations at time t and t + 1. The concept of Total Factor Productivity (TFP) developed by Kumbhakar and Lovell (2000) and used empirically by Coelli, et al., (2005), which outlines changes in TFP into three components of the change in technology, changes in technical efficiency and change of economies of scale (scale economy).

Malmquist index calculates all values (changes in technology, technical efficiency, pure efficiency, efficiency of scale) compared with 1. Malmquist Index 1menunjukkan same with no change during the period under consideration. Malmquist index greater than 1 menunjukkankemajuan, while an index of less than 1 indicates kemunduran.Estimasi Total Factor Productivity (TFP) with DEA-Malmquist approach indekTFP illustrated as follows: If a company can produce the same output in period t and t + 1, but using input that is different, that only 75 percent of the input period t, then indekTFP will increase by 1 / 0.75 or, if the company uses the same input in period t and t + 1, but produces a different output is output period t + 1 rose 30 percent of the output period t, the TFP index of 1.3.

IV. RESULTS AND DISCUSSION

Table 4.1 shows that the average level of productivity / Total Factor Productivity (TFP) industry over the study period from 1990 to 2013 year amounted to 127.9 percent, meaning that there is a growth of industrial productivity was 27.9 percent (28 percent), with a minimum interval of values 55.9 per cent and a maximum value of 400.9 percent. The standard deviation of 65.5 percent which means that there are differences in sample values ​​against the average score of 65.5 percent during the study period. The productivity growth is the contribution of technological change growth of 14.29 percent, while the growth of efficiency changes and scale economies each grew by -0.5 percent and -1.67 percent. From Table 4.1 can also be seen the growth of the industry after the economic crisis of 1997/1998 amounted to 34.9 percent, while the pre-crisis growth of only 17.2 percent.

On annual basis, productivity growth can be seen from Table 4.1. The average level of industrial productivity during the period 1990-1992 was obtained value of Total Factor Productivity (TFP) by an average of 94.5 percent, meaning that there is a growth of industrial productivity amounted to 5.5 percent. This growth is the contribution of the growth of the technological changes that grew an average of 5 per cent while, the change in efficiency and scale economies each grew by -11 percent and -5.5 percent. These results are consistent with reports Aswicayono (2002) and Timmer (1999).

Such conditions may be due in the period 1990-1992 are still many companies began using high-tech machine tools, so the introduction of machine tools takes time so that workers are able to operate properly. Human resource management needs of efficiency in utilizing its resources. The slow transfer of technology due to constraints in obtaining skilled labor may also be a barrier to raising productivity potential. It tersbut according to a report by The World Bank (World Bank, 1991).

Table 4.1. Productivity Growth in Meat Processing Industry in Indonesia

Period	Decomposition of  Total Factor Productivity (TFP)
	∆ TFP ( persent)	∆ Efficiency ( persent)	∆Tech( persent	∆ Scala ( persent
1990-1992	94,5	89	105	94,5
1993-1995	137	129,33	112,67	108
1996-1998	137	100,67	138,67	99,67
1999-2001	128,67	100,33	124	95,33
2002-2004	95,33	104,67	92	115
2005-2007	125,33	102,67	121,33	102,67
2008-2010	130	102	123	104,33
2011-2013	133,67	97	132,67	98,67
Average	127,9	99,5	114,29	98,33
Std. Dev	65,2
Minimum	55,9
Maximum	400,9

Information: EFFch = Efficiency Change;                            TECHch = Technical Change;

                     PEch   = Pure Efficiency Change                    SEch      = Scale Economic

                     TFPch = Total Factor Productivity Change       ∆        = Perubahan/ Pertumbuhan

Source: Outhor’s Calculation

In the period 1990-1992, there was an additional large capital input in 1992, up from 51 billion in 1990 to 572.5 billion rupiah in 1992. The effect of adding capital in rejuvenating the engine and increase the plant capacity has not been a big impact on productivity industry, so that the contribution of technological change have not been able to have a big impact.
The average level of industrial productivity during the period 1993-1995 was obtained value of Total Factor Productivity (TFP) by an average of 137 percent, meaning that there is a growth of industrial productivity by 37 percent. This growth is a positive contribution from the change in efficiency of growth, technological change and scale economies each grew 29.33 percent, 12.67 percent and 8 percent. These results are consistent with reports Aswicayono (2002), Modjo (2007).
This condition can be caused due to the period 1992 and 1993 national meat processing industry to raise capital and to rejuvenate machinery and equipment and increase the capacity of the plant. The average level of industrial productivity during the period 1996-1998 was obtained value of Total Factor Productivity (TFP) on average by 137 per cent, growth in this period is equal to the growth in the previous period, meaning that the growth of industrial productivity by 37 per cent can still be maintained in conditions of economic crisis. This growth is a positive growth contribution of changes in technology and changes in the efficiency of respectively 38.67 percent and 0.67 percent, while the economies of scale grew -0.33 percent. The positive TFP growth occurs different from the reports Tanuwijaya and Sharma (2004) and Modjo (2007).
The different results could be due to the period of 1997 there was an increase of capital input of 399 million rupees from 179 Million in 1996, despite a decline in capital input in 1998. The increase in capital was also followed by the increase in raw material inputs are still available, so TFP growth able to continue to grow during the economic crisis to capitalize on the growth of technology and the efficient allocation of raw material resources. The results of the study of this industry, TFP growth after the economic crisis of 1997/1998 grew by 34.9 percent, whereas before the crisis TFP growth grew only 17.2 percent. This proves that the meat processing industry is a potential sector that can survive and grow during the economic recession. This condition is consistent with the reports Knudson, et al., (2010) and Peter (2012).
The average level of industrial productivity during the period 1999-2001 was obtained value of Total Factor Productivity (TFP) by an average of 128.67 per cent, meaning that there is a growth of 28.67 percent of industrial productivity. This growth is the contribution of the growth changes in technology and changes in efficiency and scale economies each grew 24 percent and 0.33 percent, while the economies of scale grew -4.67 percent. These results differ from those reported Setiawan (2013) and Modjo (2007).

Differences in results can be caused because the industry is still able to take advantage of its resources efficiently, despite an unstable condition after the domestic political situation, high interest rates and the exchange rate rendahserta access to financial resources is still low, as well as the practices and values managerial relatively not professional. The low value of the rupiah resulted only in capital input but although expensive raw material procurement can still be obtained, so that the industry can still increase productivity with the use of technological equipment and resources to the optimum.

The average level of industrial productivity during the 2002-2004 period that the value Total Factor Productivity (TFP) by an average of 95.33 percent, which means that there is a growth of industrial productivity amounted to -4.67 percent. This growth is the contribution of the growth of economic scale changes and changes in technical efficiency respectively 15 percent and 4.67 percent, sedangkanperubahan technology grew -8 percent. These results are in contrast to reports Surjaningsih and Permono (2014).

This can occur because of changes in efficiency is strong in 2000-2004 associated with the ongoing consolidation after the financial crisis of 1998 aggravated domestic political conditions affecting the investment climate, making it difficult to increase investor confidence shown by the low growth and low investment realization investation. Slowing changes in technical efficiency means a decline in the production frontier, because of declining production capability of the machine. One possible reason is the interference with the machine as well as the high price of new machinery because of the low value of the rupiah against the dollar. The same results with a research report Bappenas (2010).

Results of the study period 2002 - 2004 showed higher TFP growth, this can happen because the company increase productivity by increasing production efficiency. The company increased the efficiency of input use between, improve the layout of the production to shorten the switching between work stations, align the workflow in the workplace as well as an increase in capital input for machine tools and large buildings. The implications of the growth of the negative efficiency is the need for skills development of workers in order to adapt to technological upgrading. In the period 2000-2004. However, the increase in the level of technology brought by these factors may not be realized in full scale. This technology imported can not be followed by the mastery of technologies that reduce technical efficiency.

The average level of industrial productivity during the period of 2005-2007 obtained value Total Factor Productivity (TFP) by an average of 125.33 per cent, meaning that there is a growth of 25.33 percent of industrial productivity. This growth is the contribution of the growth of technological change, changes in efficiency and scale economies each grew 21.33 percent, 2.67 percent and 2.67 pesen. Results are brbeda with Bappenas research report (2010). There are differences in the results of the source of productivity gains found by Bappenas the technical efficiency change, while changes in technology and economies of scale contribute to negative, while the results penilitian find productivity growth meruupakan growth contribution of technological change, changes in efficiency and economies of scale respectively positive growth. The company increased the efficiency of input use between, improve the layout of the production to shorten the switching between work stations, align the workflow in the workplace. Increased capital input engine and building a positive effect on the productivity of the industry in the period thereafter.

The average level of industrial productivity during the period of 2008-2010 obtained value Total Factor Productivity (TFP) by an average of 130 percent, meaning that there is a growth of industrial productivity by 30 percent. This growth is the contribution of the growth of technological change, changes in economies of scale and efficiency of each grew 23 percent, and 2 percent pesen 4.33. The results were the same as the Surjaningsih and Permono (2014).
TFP growth was driven by positive contributions from changes in technology, while the growth of efficiency and low-scale changes. Such conditions can prove that the industry is more resilient to the economic recession, walaupunterjadi the 2008 global financial crisis which affects the economy as a whole, did not affect the meat processing industry. In addition to the result of the global financial crisis of 2008, the application of the Minister of Agriculture No. 59 / Permentan / HK.060 / 8/2007 about the decline of meat import quotas up to the 10 percent do not affect the performance of this industry.

Productivity growth in the period 2008-2010 is the result of the increase of raw material usage and increase capital input. The condition occurs because of the increased consumption of raw materials and capital input will help drive production growth despite the global financial crisis. The industry is the only import-oriented so that by utilizing the domestic market alone is able to grow because it meets local needs. This is in accordance with the CPM report (2015) and Sharif (2013).

The average level of industrial productivity during the period 2011-2013 was obtained value of Total Factor Productivity (TFP) by an average of 133.67 per cent, meaning that there is a growth of 33.67 percent of industrial productivity. This growth is the contribution of the growth of technological change by 32.67 percent, while the change in efficiency and scale economies each grew 3 percent and 1.33 percent. In the 2011-2013 upheaval in both industrial raw materials availability issues and pricing issues. The decline in imports resulting decreased availability of raw materials and price increases helped to provide impact for the processing industry is mainly a problem of cost efficiency. The costs incurred for raw material usage resulting in reduced efficiency. Industrial productivity can still grow due to the use of technology and economies of scale. These results are consistent with reports Aswicayono (2002).

V. CONCLUSIONS AND RECOMMENDATIONS

The research found that the average level of productivity / Total Factor Productivity (TFP) industry over the study period from 1990 to 2013 year amounted to 127.9 percent, meaning that there is a growth of industrial productivity was 27.9 percent (28 percent), with an interval of values 55.9 percent minimum and maximum values ​​of 400.9 percent. The productivity growth is the contribution of technological change growth of 14.29 percent, while the growth of efficiency changes and scale economies each grew by -0.5 percent and -1.67 percent. It was also found that the growth of the industry after the economic crisis of 1997/1998 amounted to 34.9 percent, while the pre-crisis growth was only 17.2 percent / year. Low productivity growth in the period 1990-1992 by an average of 5.5 percent / year and the highest in the period 1993-1998 by an average of 37 percent / year. Meat processing industry is still able to increase its productivity by leveraging efficiencies and economies of scale are not yet optimized.

VI. REFERENCES

Aswicahyono, H and Hill (2002).‘perspirasi’ versus ‘Inspiration’ in Asian Industrialization: Indonesia Before the Crisi. Jurnal of Development Studies, 38 (3), pp.138-163.

Badan Pusat Statistik,  2015. Statistik Industri Besar dan Sedang Indonesia 2013. BPS, Jakarta, Indonesia.

BAPPENAS, 2010. “Perubahan Produktivitas Industri Manufaktur Indonesia dan Faktor-Faktor yang Mempengaruhinya:Analisis Panel Data 2000-2007”. Laporan Akhir. Direktorat Evaluasi Kinerja Pembangunan Sektoral Kementerian PPN/Bappenas. Jakarta.

Coelli, T., Rao, D., O‟Donnell, C. and Battese, G., 2005. An Introduction to Efficiency and Productivity Analysis. Springer, New York, second edition.

Goldar, B. N., Renganathan, V. S. &  R.  Banga, 2003. “Ownership and Efficiency inEngineering Firms in India, 1990-91 to 1999-2000.” Working Paper. Indian Councilfor Research on International Economic Relations.

Goncharuk G,A, 2009. ‘How to make meat business moreEffective: A case of Ukraine.’ British Food JournalVol. 111 No. 6,pp. 583-597

Gopinath, M.,  D. Pick and Y. Li. 2002. “Does Industrial Concentration Raise Productivity in Food Industries?”. WorkingPaper. Annual Meeting of the Western Agricultural Economics Association. Long Beach, California July 28-31, 2002.

Goto, M. and N. Jiro, 2005. “Productivity, Efficiency, Scale Economies and Technical Change: A New Decomposition Analysis of TFP Applied to the Japanese Prefectures.” NBER Working Paper 11373. National Bureau of Economic Research. Cambridge.

Ilham, N. 1998.  Penawaran dan Permintaan Daging Sapi di Indonesia; Suatu Analisis Simulasi. Tesis. Program Pascasarjana, Institut Pertanian Bogor, Bogor. (Tidak Publikasi)

Kementerian Pertanian, 2013. Statistik Peternakan dan Kesehatan Hewan 2013. Kementerian Pertanian. Jakarta.

Kementerian Pertanian, 2013. Statistik Pengolahan dan pemasaran Hasil Pertanian 2013. Direktorat Jenderal Pengolahan dan Pemasaran Hasil Pertanian Kementerian Pertanian. Jakarta.

Keramidou, I.  and A. Mimis.  2011c. ‘An Application of the Double-Bootstrap Data Envelopment Analysis to Investigate Sources of Efficiency in the Greek Poultry Sector’. World's Poultry Science Journal, Vol. 67, Pp. 675-686.

Knudson,W.A.,  S. Miller and H. C.Peterson, 2010. “The Economic Impact Of The Michigan Food Processing Industries.The Strategic Marketing Institute”. WorkingPaper 01-0910.Bussiness Innovation In Agriculture, Food And Natural Resources .Agriculture Hall, Michigan State University, East Lansing

Kopelko M, Alfons Oude Lansink, Spiro Stefanou 2012. “Analysis of static and dynamic productivity growth in the  Spanish meat processing iindustri”. Paper on European Association of Agricultural Economists 131st Seminar, September 18-19, Prague, Czech Republic

Kumbhakar, S. C. and C. A. K. Lovell, 2000. Stochastic Frontier Analysis. Cambridge: Cambridge University Press.

Lambert, D. K., 1994. ‘Technological Change in Meat andPoultry-Packing and Processing’. Journal Agriculture and Applied Economic. vol 26 (2), Pp:591-604

Margono, H. & Sharma, S. C., 2006. ‘Efficiency and Productivity Analyses of Indonesian Manufacturing Industries’. Journal of Asian Economics, 17, Pp.979-995.

Modjo, Ikhsan., 2007.“Total Factor Productivity in Indonesian Manufacturing: A Stochastic Frontier Approach”, Global Economic Review. Vol. 36, No. 4, pp. 321-342.

Nishimizu, M. and J. M. Page, 1982. ‘Total Factor Productivity Growth, Technological Progress and Technical Efficiency Change: Dimensions of Productivity Change in Yugoslavia, 1965-78’. Economic Journal 92: 920-936

Nossal, K , Sheng Y,  and Zhao, S., 2008. ‘Productivity in the beef cattle andslaughter lamb industries.  Meat and LivestockAustralia’.research report 08.13AustralianBureau of Agricultural and Resource Economics (ABARE). Australia.

OECD., 2014. Agricultural Output. https://data.oecd.org/agroutput/meat-consumption.htm.Diakses Tanggal 15 Agustus 2015

Ohlan, R., 2013. ‘Efficiency and Total Factor Productivity Growth in Indian Dairy Sector.’ Quarterly Journal of International Agriculture 52. No 1 Pp: 51-57

Parameswaran M., 2002. “Economic Reforms And Technical Efficiency:Firm Level Evidence From Selected Industries In India.” Working Paper339. Working Papers Published Since August 1997 (Wp 279 Onwards).

Peters,S., 2012. “Economic Impact Analysis of Ontario”s Food and Beverage Processing Sector”.OAFEFinal Report. Alliance of Ontario Food Processors850 Fountain Street SouthCambridge, Ontario.

Setiawan, M., 2013. ‘Structure, ConductandPerformance; Evidence Fromthe IndonesianFoodandBeveragesIindustri’. Empir Econ 45: Pp. 1149-1165

Sripoorni R.S., and M.Manonmani, 2014. ‘Factors Influencing Total Factor Productivity Across The Southern States Of India - An Application Of Discriminant Function’. IRACST – International Journal of Commerce, Business and Management (IJCBM), ISSN: 2319–2828Vol. 3, No. 4, Pp. 623-625

Surjaningsih, N. and B. P. Permono, 2014. The Dynamics of Total Factor Productivity of Medium and Large Manufacturing in Indonesia.Bulletin of Monetary, Economics and Banking. Pp. 278-308

Syarif, Haniwar, 2013. “Opportunity in indonesian meat intermediate iindustri”. PapersNational Assocoation Meat Processor Association. Brisbane. 22-23 Agustus 2013.

Timmer, Marcel P. (1999), Indonesia's Ascent on the Technology Ladder: Capital Stock

and Total Factor Productivity in Indonesian Manufacturing, 1975-1995, Bulletin  of Indonesian Economic Studies 35 (1): 75-97.

Ullah , A.,  E. Ghani and  A. Y. Javed, 2013. Market Power and Industrial Performance in Pakistan. PIDE Working Papers 2013: 88

Ward, C.E. (1988). “Productivity - Concentration Relationship in the U.S. Meatpacking Iindustri.” Southern Journal of Agricultural Economics 19. Pp. 217-222.

http://www.kemenperin.go.id/artikel/3581/Bahan-Baku-Makin-Langka,Industri-Pengolahan-Terancam-Gulung-Tikar. Diakses tanggal 14 September 2014.