Optimizing Efficiency and Value Added in Tofu Production: A Food Industry Perspective

Tofu production support food security and local economy in the Bandar area of Simalungun Regency. Tofu as an accessible additive for plant-based protein has all the potential to satisfy consumers’ demand and promote sustainable foods. The specific objectives of this study include; assessing technical, allocative and economic efficiency of tofu industries in the study area; and estimate the value added created. For the study, we incorporated time series data from the year 2019 to 2023 under descriptive analysis. The findings of the study on degree of technical, allocative and scale efficiencies were technical efficiency greater than one while allocative and scale efficiency were still less than one which implies that resource were not being used efficiently. However, the value added generated is positive with an average of 672,613,580.00 IDRs per year or 9.158.26 per tofu board, therefore should be continued. From the above findings, this study has some important policy implications such as stressing investment on new and more advanced production technology, offering training to labor so as to enhance efficiency level, and offering policies that may support the tofu firms sustainability. We foresee that the protective measures named above will enable the tofu industry to become more competitive, reduce somatic losses, and improve its contribution to the regional economy.