Production risk and its determinants in soybean farming: Evidence from three major production centers in East Java, Indonesia

Faculty of Agriculture, Universitas Islam Malang, Malang, East Java, Indonesia

^* Corresponding author: This email address is being protected from spambots. You need JavaScript enabled to view it.

Abstract

This study investigates the magnitude and determinants of soybean production risk across three central East Java, Indonesia districts : Pasuruan, Jember, and Sampang. Using cross-sectional survey data from 90 soybean farmers, the analysis employs a Cobb-Douglas production function and the Just and Pope variance function to estimate risk levels, alongside a Probit regression to identify key influencing factors. The results indicate that seed input, urea fertilizer, and labor significantly enhance productivity, while the Sampang district exhibits statistically lower yields than Pasuruan. Organic manure is the only input identified as a risk-reducing factor, significantly lowering output variability. In contrast, Sampang is associated with higher production variance, reflecting elevated exposure to production risks. Furthermore, farming experience, land ownership, and access to extension services significantly reduce the probability of farmers facing high production risk. These findings highlight the importance of both agronomic and institutional interventions in mitigating production risk, especially in structurally vulnerable regions like Sampang.