Title: EFFICIENCY ANALYSIS OF MEAT PROCESSING INDUSTRY IN INDONESIA
Abstract: This paper aims to analyze the efficiency of the meat processing industry in Indonesia largescale and medium-year period 1990-2013.The method used data envelopment analysis (DEA) model of Variable Return to Scale (VRS) Input-oriented.It was found that, the estimation value Constant Return to Scale (CRS) model of efficiency with an average of 89.38 percent, which means that the industry is only able to optimize the resources available inputs to produce a production of 89.38 per cent, in other words there is still potential inputs that they can be optimized for 10.62 percent assuming all companies operating at an optimal scale.VRS model results by an average of 95.7 percent, which means that the efficiency is still below 100, there are inefficiencies at 4.3 percent, assuming the company is not operating at optimal scale due to factors existing constraints, medium scale efficiency (Scale) an average of 93.36 per cent less than 100 percent means that the industry is on a scale of inefficiency.The implications of negative growth efficiency or below 100 percent is the need for skills development of workers in order to adapt to technological upgrading and make the selection of efficient combination of inputs.KEY WORDS Efficiency, data envelopment analysis, variable return to scale, meat processing industry.«It was inevitable that the future is in the processing industry,» this is what the statement C.P. Timmer, researcher of the Center for Development Globel can ever Star Services for research on food security in Indonesia.Processing industry plays an important role in the nation's economy, including the meat processing industry.Meat processing industry is one of the food industry which contributes greatly to the economy (Lambert, 1994;Ali, 2007; Knudson, et al., 2010;Ali and Pappa, 2011).According to BPS data (2015), the contribution to Gross Domestic Product of the meat processing industry each year has increased from 8.72 percent in 2007 to 56 percent in 2012, a share which is the 2nd highest of the food and beverage industry.The increase was not followed by the growth rate of the Gross Domestic Product of the industry continues to decline from 12.17 percent in 2007 to 1.13 percent in 2012.Growth in industrial processing and preserving of meat in Indonesia from 1985 to 2013 year average growth of about 26.6 per cent per year, the average workforce grew 8 percent and corporate units grew modestly around an average of 4 percent.Problems of growth efficiency of the processing industry in Indonesia has become a concern among researchers in recent decades (see: Aswicahyono, 1998;Basri, 2001;Margono and Sharma, 2006;Modjo, 2007; Probowo and Cabanda 2011; Setiawan, 2013;and Surjaningsih and Permono, 2014).When the competition is going low, it will cause producers to operate inefficiently so that loss of efficiency and productivity (Gopinath, et al., 2002;Nurdianto, 2004).Changes efficiency contributes to productivity growth as reported Saputra (2011), that in the period 1990-2001 subsector processing industry in general has high efficiency.Bappenas (2010) find the positive growth of technical efficiency, productivity growth in the processing industry the period 2000-2007.The same was reported Probowo and Cabanda (2011), in the period 2000-2005 the processing industry in Indonesia is experiencing technical inefficiency.Various research efficiency of meat processing industrial has also been carried out in various countries with different results, such as, among others, by Xia and Buccola (2002),