The Efficiency of Smallholder Rubber Plantations and the Factors That Influence It: A Case Study in Indonesia Shorea Khaswarina * , Sucherly, Umi Kaltum, R. Rina Novianti Ariawaty Doctoral Study Program of Management Sciences, Faculty of Economics and Business, University of Padjadjaran, Dipatiukur Street No. 46 Building A 40132, Bandung 40132, Indonesia Corresponding Author Email: shorea.khaswarina@yahoo.com https://doi.org/10.18280/ijdne.180203 ABSTRACT Received: 27 December 2022 Accepted: 31 March 2023 Rubber has an essential role in supporting the people's economy in Indonesia, but lately, rubber production has continued to decrease. One of the efforts that significantly affected rubber productivity was a more efficient allocation and use of resources. This effort had to be supported by solid empirical knowledge regarding the technical efficiency of production and resource allocation. The efficiency of smallholder rubber plantations helped increase per capita income in rural areas. This study aimed to evaluate the efficiency level of smallholder rubber plantations and suggest several priority areas to increase the efficiency of smallholder rubber production. This study used 318 families of rubber farmers (15% of rubber farmers). Data collection used a questionnaire. This study analyzes the efficiency of smallholder rubber plantations in Indonesia using the Data Envelopment Analysis (DEA) approach. The results show that most smallholder rubber plantations operate in relatively inefficient conditions. The average technical efficiency (TE) and allocative efficiency (AE) of smallholder rubber plantations were 0.791 and 0.473, respectively. This implies an opportunity to increase the TE and AE of smallholder rubber plantations. Increasing the efficiency of smallholder rubber plantations can be done by adopting the best technology available and by increasing the efficiency of resources owned by farmers, such as land, clonal planting materials, and fertilizers. Clonal planting materials, education, agricultural counseling and training, access to credit, market access, experience in rubber farming, and the gender of the plantation manager determine the efficiency of smallholder rubber plantations. Improving the ability of rubber farmers can be done through counseling and training. It is also necessary to develop credit programs that are more accessible to farmers. Future research can be directed to analyze the technology used and the contribution of women to smallholder rubber plantations which are efficient versus inefficient in increasing the productivity of smallholder rubber. Keywords: rubber, smallholder plantations, efficiency, rubber production 1. INTRODUCTION The world's natural rubber industry would generate trade flows, providing employment and income for producing countries [1]. In 2021 Indonesia will be known as the second- largest natural rubber producer in the world after Thailand, with a production of approximately 3,037,000 tons per year [2]. Indonesia's rubber production has fluctuated in the last decade. In 2011, total rubber production was 2.99 million tons; it then increased to 3.68 million tons in 2017. Rubber production in Indonesia reached 3,037,000 tons in 2021; this value decreased by 0.26% from the previous year's 3,045,000 tonnes [2]. Rubber plantations are the world's primary source of natural rubber production. Natural rubber is used as a raw material in several manufacturing sectors, such as the tire manufacturing industry. Each rubber plantation has different plant characteristics and latex quality [3], and these factors affect rubber prices. Su et al. [4] state that rubber prices can change in the long and short term. Changes in the price of rubber in a short time are usually influenced by world natural rubber production and changes in world rubber consumption. In contrast, in the long term, prices are generally affected by changes in production, changes in crude rubber stocks, and changes in the consumption rate of a country or region. Rubber has an essential role in supporting economic development in Indonesia as an export commodity, but lately, rubber production has continued to decline. To overcome these problems, the Government has attempted to increase the productivity of smallholder rubber plantations through smallholder rubber development projects such as the People's Nucleus Plantation Project, the People's Rubber Development Project, Tree Crop Smallholder Development Projects, and Tree Crop Smallholder Sectors. However, the increase in rubber productivity is still slow, so it is necessary to design a strategy that can be implemented to improve smallholder rubber productivity. One effort that significantly affects productivity is a more efficient allocation and use of resources [5, 6]. However, efforts to improve productivity must be supported by solid empirical knowledge of the technical efficiency of production and the allocation of resources. Rubber farming faced several obstacles related to farmer- level inefficiencies [4]. Agricultural households in Indonesia have relatively low education, low technology adoption rates, International Journal of Design & Nature and Ecodynamics Vol. 18, No. 2, April, 2023, pp. 261-267 Journal homepage: http://iieta.org/journals/ijdne 261