OUTPUT OF INDONESIAN CRUDE PALM OIL (CPO) INDUSTRY: A REVIEW - RUNNING HEAD : OUTPUT OF CPO IN INDONESIA

Background: the crude palm oil industry in Indonesia is one of the largest palm oil producers in the world over the past decade, so some efforts are needed to increase output through increasing the effectiveness of determinants. Purpose: to observe and analyze the determinants of the crude palm oil industry output and calculate the crude palm oil industry Total Factor Productivity (TFP). Method: the method used was the dynamic panel regression / Generalized Moment Method (GMM) and Total Factor Productivity (TFP). Micro data wass used based on the ISIC 5 (five) digit code with the 2009-2013 time series. Secondary data was obtained from the annual Indonesian Central Bureau of Statistics report. A total of 373 companies were observed in a row for 5 (five) years, resulting in a total of 1,119 observations. Result: the output of production fluctuated from year to year, in line with the development of raw materials and labor. While industrial capital had increased. Fstatistic (Capital, Labor and Material) probability values in the GMM two step systems estimation model obtained significant results at α = 1% (p = 0,000). The three variables simultaneously caused an increase in the company's output. The value of the Total Factor Productivity (TFP) of more than 0 indicates that CPO output growth is more than the sum of input growth. Conclusion: capital, raw materials, and total labor affect the output of the crude palm oil industry. Output had increased along with the use of production factors intensively and efficiently therefore capital, raw materials and labor need to be considered in policy formulation