impact of economic factors changes on paddy farmers
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Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
Impact of Economic Factors Changes on Paddy Farmers
Household Income in Lebak Swampland
(Case of Swampland in HSU District, South Kalimantan
Muhammad Fauzi Makki
1 Doctoral Program of Agric
1 Department of Agriculture Economic, University of Lambung Mangkurat , Indonesia.
2,3,4 Department of Agricultural Economic, Uni
* E-mail of the corresponding author
Abstract
Paddy farmer household at Lebak swampland are poor because of low income. Efforts to increase household
paddy farmer’s income in Lebak swampland are alway
and expansion area (extensification
farm household incomes in the Lebak
models, with simultaneous equations. The results showed that the increase in input prices of paddy (seeds,
fertilizers, pesticides and labor outside the family) would decrease farmer household income. The increased of
input price followed by an increased in paddy output price in same proportion were able to increase farm
households income. Seed subsidies are also able to increase the household income. In contrast; paddy area
expansion or extensification would decrease household income. Therefo
lebak swampland is not priority choice.
Keywords: Lebak swamplands; farmer income; extensification; inputs price, price of output
I. INTRODUCTION
Swamplands typology is an alternative area developed to address the needs o
Swampland resources in Indonesia reached 39 million ha, spread across the island of Sumatra, Kalimantan;
Sulawesi and Papua (Noor, 2004). Noor (2007) states one typology that has swamplands is Lebak swamplands.
The land has become one alternative in order to achieve an increase in paddy production as well as to increase
revenue in order to strengthen farm households economy. In fact there are many farmers plant paddy in the lebak
swamplands is poor because of low income, as well
Kalimantan. In this context, the poverty is structural poverty. This can not be solved only with short
solutions, such as direct cash assistance.
Paddy farmers income in Lebak Swamp
caused by natural factors, also vulnerable to changes in input price and output. Theoretically; interventions
commonly performed in rice fields with different typologies, namely rain fed and irrigation to
provision of subsidized inputs especially seed subsidy and expansion policy (
approach is not exactly an attempt to increase farm household income when applied in
Changes in economic factors or external factors include price factor; subsidies and expansion policy
(extensification) has always been an important issue in
is the extent impact of these economic factors changes on household
On the other hand; household swamp
not separate the production aspects to consumption, with the main objective to meet family needs (Ellis, 1988
Mendola, 2007; Kusnadi, 2005; Elly, 2008). Efforts to increase household farmers income is manifested in input
d Sustainable Development
1700 (Paper) ISSN 2222-2855 (Online)
116
Impact of Economic Factors Changes on Paddy Farmers
Household Income in Lebak Swampland
(Case of Swampland in HSU District, South Kalimantan
Province-Indonesia)
Muhammad Fauzi Makki1*
M. Muslich Mustadjab2 Nuhfil Hanani
3 and Rini Dwiastuti
1 Doctoral Program of Agricultural Economic, University of Brawijaya, Indonesia
1 Department of Agriculture Economic, University of Lambung Mangkurat , Indonesia.
2,3,4 Department of Agricultural Economic, University of Brawijaya, Indonesia
mail of the corresponding author: [email protected]
swampland are poor because of low income. Efforts to increase household
swampland are always associated with the economic factor as price; subsidies
extensification). This study aims to analyze the impact of economic factors change on
Lebak swampland. Data is analyzed by using agricultural econo
models, with simultaneous equations. The results showed that the increase in input prices of paddy (seeds,
fertilizers, pesticides and labor outside the family) would decrease farmer household income. The increased of
an increased in paddy output price in same proportion were able to increase farm
households income. Seed subsidies are also able to increase the household income. In contrast; paddy area
expansion or extensification would decrease household income. Therefore, the expansion program option at
swampland is not priority choice.
lands; farmer income; extensification; inputs price, price of output
Swamplands typology is an alternative area developed to address the needs of food, especially paddy.
Swampland resources in Indonesia reached 39 million ha, spread across the island of Sumatra, Kalimantan;
Sulawesi and Papua (Noor, 2004). Noor (2007) states one typology that has swamplands is Lebak swamplands.
e one alternative in order to achieve an increase in paddy production as well as to increase
revenue in order to strengthen farm households economy. In fact there are many farmers plant paddy in the lebak
swamplands is poor because of low income, as well as in the District of Hulu Sungai Utara (HSU), South
Kalimantan. In this context, the poverty is structural poverty. This can not be solved only with short
solutions, such as direct cash assistance.
Swampland is not able to meet household needs because of low productivity
caused by natural factors, also vulnerable to changes in input price and output. Theoretically; interventions
commonly performed in rice fields with different typologies, namely rain fed and irrigation to
provision of subsidized inputs especially seed subsidy and expansion policy (extensification
approach is not exactly an attempt to increase farm household income when applied in
rs or external factors include price factor; subsidies and expansion policy
) has always been an important issue in paddy farmers income in Lebak swamp
is the extent impact of these economic factors changes on household paddy farmers income in
swampland paddy farmers in the Lebak is a subsistence farm households. They do
not separate the production aspects to consumption, with the main objective to meet family needs (Ellis, 1988
Mendola, 2007; Kusnadi, 2005; Elly, 2008). Efforts to increase household farmers income is manifested in input
www.iiste.org
Impact of Economic Factors Changes on Paddy Farmers
Household Income in Lebak Swampland
(Case of Swampland in HSU District, South Kalimantan
and Rini Dwiastuti4
Brawijaya, Indonesia
1 Department of Agriculture Economic, University of Lambung Mangkurat , Indonesia.
versity of Brawijaya, Indonesia
swampland are poor because of low income. Efforts to increase household
s associated with the economic factor as price; subsidies
). This study aims to analyze the impact of economic factors change on
swampland. Data is analyzed by using agricultural economic household
models, with simultaneous equations. The results showed that the increase in input prices of paddy (seeds,
fertilizers, pesticides and labor outside the family) would decrease farmer household income. The increased of
an increased in paddy output price in same proportion were able to increase farm
households income. Seed subsidies are also able to increase the household income. In contrast; paddy area
re, the expansion program option at
lands; farmer income; extensification; inputs price, price of output.
f food, especially paddy.
Swampland resources in Indonesia reached 39 million ha, spread across the island of Sumatra, Kalimantan;
Sulawesi and Papua (Noor, 2004). Noor (2007) states one typology that has swamplands is Lebak swamplands.
e one alternative in order to achieve an increase in paddy production as well as to increase
revenue in order to strengthen farm households economy. In fact there are many farmers plant paddy in the lebak
as in the District of Hulu Sungai Utara (HSU), South
Kalimantan. In this context, the poverty is structural poverty. This can not be solved only with short-term
to meet household needs because of low productivity
caused by natural factors, also vulnerable to changes in input price and output. Theoretically; interventions
commonly performed in rice fields with different typologies, namely rain fed and irrigation to increase revenue,
extensification). However, this
approach is not exactly an attempt to increase farm household income when applied in Lebak swamplands.
rs or external factors include price factor; subsidies and expansion policy
swampland. The question
farmers income in Lebak swampland.
is a subsistence farm households. They do
not separate the production aspects to consumption, with the main objective to meet family needs (Ellis, 1988;
Mendola, 2007; Kusnadi, 2005; Elly, 2008). Efforts to increase household farmers income is manifested in input
Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
allocation decision-making behavior and regulation of production in farming management, as well as the
behavior of decision-making related to l
(1988); Sadoulet and Janvry (1995); decision to increase farm households income always associated production
aspects, consumption and manpower allocation. The approach is through agricul
Household economic studies typically use a basic model as originally proposed by Chayanov (Ellis, 1988),
Becker (1965); Gronou (1977), which were further developed by Singh; Squire and Strauss (1986). Economic
behavior of farmers in countryside based on land typology have a particular characteristic, such as
swamplands, becomes important because agriculture still plays an important role in many countries including
Indonesia (OECD, 2003).
Several previous studies associated with
by Abdurrahman (1992) - approached only on production aspects. Various research or other articles relate to
various aspects that becoming research focus but still relevant farm household e
farmers income. The article studied by
(2005) Jean-Paul Chavas; R. Mivhael Petrie and Roth (2005); Dewbre and Mishra (2007); Fariyanti et al
(2007); Fariyanti (2008); Cornejo, et al
Fang Wen-I (2010); and Chi kezie et al
on dry land typology. Therefore, to answer the
farmers income in Lebak swampland to reduce poverty, then this article aims to analyze the impact of economic
factors changes, including: (1) increase in input and output
expansion of paddy plant, each of household farmers income in
Simulations conducted to determine the impact of changes in household rice farmers income in the event of price
changes, subsidies and expansion
production factor inputs simultaneously cover the cost of seeds, fertilizer, pesticides and labor outside the family
of 10%, (b) multiple form simulation increase in total
increase, (c) seed subsidy provision for
II. METHOD
2.1. Data and Procedures
This research uses primary data. Methods for determination of sample farme
sampling. First, Sungai Pandan subdistrict selected purposively. The consideration is the largest area of
crop in HSU district. From this sub districts, it is selected Rantau Karau Hulu Village. The justification
paddy farmers if this village are : (a) diversification in farming other than paddy, particularly in duck and egg
production; as well as fishing business; (b) most farmers work on off
implementing paddy in shallow lebak area (
census on paddy production at Rantau Karau Hulu
of family) in people Rantau Karau Hulu
it is obtained various population census to calculate the number of respondents used in study sample. The
number of the sample is calculated based on formula by
random from farm households in each sub
predetermined based on above equation. Based on this method, it is selected 100 samples of farmers.
This study uses agricultural economic household
specification used are described as follows:
d Sustainable Development
1700 (Paper) ISSN 2222-2855 (Online)
117
making behavior and regulation of production in farming management, as well as the
making related to labor allocation. According to Singh; Squire and Strauss (1986), Ellis
(1988); Sadoulet and Janvry (1995); decision to increase farm households income always associated production
aspects, consumption and manpower allocation. The approach is through agricultural household models.
Household economic studies typically use a basic model as originally proposed by Chayanov (Ellis, 1988),
Becker (1965); Gronou (1977), which were further developed by Singh; Squire and Strauss (1986). Economic
countryside based on land typology have a particular characteristic, such as
lands, becomes important because agriculture still plays an important role in many countries including
Several previous studies associated with increased paddy farmers income in “Lebak” swamp
approached only on production aspects. Various research or other articles relate to
various aspects that becoming research focus but still relevant farm household economic behavior in relation to
farmers income. The article studied by Sawit (1993); Kusnadi (2005); Cornejo et al (2005); Hendriks and Mishra
Paul Chavas; R. Mivhael Petrie and Roth (2005); Dewbre and Mishra (2007); Fariyanti et al
et al (2007); Cristian and Herne Henningsen (2007);
et al (2011). However, all research and article is motivated by farming is done
on dry land typology. Therefore, to answer the questions above and parallel efforts to increase household
land to reduce poverty, then this article aims to analyze the impact of economic
factors changes, including: (1) increase in input and output paddy price; ( 2) paddy seed subsidy, and (3) the
plant, each of household farmers income in Lebak swampland.
Simulations conducted to determine the impact of changes in household rice farmers income in the event of price
changes, subsidies and expansion of rice land. Simulation was done through: (a) increase in rice price
production factor inputs simultaneously cover the cost of seeds, fertilizer, pesticides and labor outside the family
of 10%, (b) multiple form simulation increase in total paddy production cost by 10 % with 10% rice price
increase, (c) seed subsidy provision for paddy 10%, (d) paddy acreage expansion in the “lebak
This research uses primary data. Methods for determination of sample farmers for primary data are stratified
sampling. First, Sungai Pandan subdistrict selected purposively. The consideration is the largest area of
crop in HSU district. From this sub districts, it is selected Rantau Karau Hulu Village. The justification
paddy farmers if this village are : (a) diversification in farming other than paddy, particularly in duck and egg
production; as well as fishing business; (b) most farmers work on off-farm and non
lebak area (watun I) and middle lebak area (watun II). Firstly, it is conducted a
Rantau Karau Hulu villagers to determine population range. From 314 KK (head
Rantau Karau Hulu villagers; there were 257 KK become paddy farmers. From this census,
it is obtained various population census to calculate the number of respondents used in study sample. The
number of the sample is calculated based on formula by Parel et al (1973). Samples were taken with purposi
random from farm households in each sub-village (dusun). The goal is to obtain the amount of sample
predetermined based on above equation. Based on this method, it is selected 100 samples of farmers.
agricultural economic household model with a simultaneous equations system. Models
specification used are described as follows:
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making behavior and regulation of production in farming management, as well as the
abor allocation. According to Singh; Squire and Strauss (1986), Ellis
(1988); Sadoulet and Janvry (1995); decision to increase farm households income always associated production
tural household models.
Household economic studies typically use a basic model as originally proposed by Chayanov (Ellis, 1988),
Becker (1965); Gronou (1977), which were further developed by Singh; Squire and Strauss (1986). Economic
countryside based on land typology have a particular characteristic, such as Lebak
lands, becomes important because agriculture still plays an important role in many countries including
swampland - among others
approached only on production aspects. Various research or other articles relate to
conomic behavior in relation to
(2005); Hendriks and Mishra
Paul Chavas; R. Mivhael Petrie and Roth (2005); Dewbre and Mishra (2007); Fariyanti et al
; Hung-Hao Chang and
. However, all research and article is motivated by farming is done
questions above and parallel efforts to increase household paddy
land to reduce poverty, then this article aims to analyze the impact of economic
seed subsidy, and (3) the
Simulations conducted to determine the impact of changes in household rice farmers income in the event of price
of rice land. Simulation was done through: (a) increase in rice price
production factor inputs simultaneously cover the cost of seeds, fertilizer, pesticides and labor outside the family
ion cost by 10 % with 10% rice price
lebak” area by 25%.
rs for primary data are stratified
sampling. First, Sungai Pandan subdistrict selected purposively. The consideration is the largest area of paddy
crop in HSU district. From this sub districts, it is selected Rantau Karau Hulu Village. The justification is the
paddy farmers if this village are : (a) diversification in farming other than paddy, particularly in duck and egg
farm and non-farm activities, (c)
Firstly, it is conducted a
villagers to determine population range. From 314 KK (head
KK become paddy farmers. From this census,
it is obtained various population census to calculate the number of respondents used in study sample. The
Samples were taken with purposive
village (dusun). The goal is to obtain the amount of sample
predetermined based on above equation. Based on this method, it is selected 100 samples of farmers.
el with a simultaneous equations system. Models
Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
Land for Paddy Production in lebak
PTP = a0 + a1 LHP + a2 PBP + a3
The sign and magnitude of the expected pa
Total Use of Labor paddy :
TKP = TKDKP + TKLK ................................
The use of paddy seed
PBP = b0 + b1 HPBP + b2 LHP + b
The sign and magnitude of the expected estimations parameter are:
urea fertilizer usage
PPUR = co + c1 HPUR + c2 LHP + c
The sign and magnitude of the expected estimations parameter are:
Pesticide usage
POP = do + d1 HPOP + d2 LHP + E
The sign and magnitude of the expected estimations parameter are:
paddy input usage value
NPIP = (PBP *HPBP) + (PPUR * HPUR) + (POP * HPOP)
Labor in-household for paddy farming
TKDKP = f0 + f1 TKDKOF + f2 TKDKNF + f
The sign and magnitude of the expected estimations parameter are:
Labor out-household for paddy farming
TKLK = g0 + g1 UTKLK + g
The sign and magnitude of the expected estimations parameter are:
TKDK usage at farming beside rice
TKDKSP = h0 + h1 TKDKP + E
The sign and magnitude of the expected estimations parameter are:
In-household labor usage for off-farm activity
TKDKOF = j0 + j1 UTKDKOF + j
The sign and magnitude of the expected estimations parameter are:
In-household labor usage for off-farm activity
TKDKNF = k0 + k1 UTKDKNF + k
The sign and magnitude of the expected estimations parameter are:
Total labor usage for rice activity with off
TKDKN = TKDKP + TKDKOF
Total farmer labor usage
TPTKP = TKDKP + TKLK + TKDKSP + TKDKOF + TKDKNF
Total cost of paddy farming
TBUTP = (PBP * HPBP) + (PPUR*HPUR) + (POP*HPOP) +
(TKLK*UTKLK) + BTPLL ………..................................................
Paddy farming household income
PUTP = (PTP * HPP) – TBUTP
Non paddy farming household income
PUTSP = i0 + i1 TKDKSP + i2
The sign and magnitude of the expected estimations parameter
d Sustainable Development
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118
lebak swampland:
PPUR + a4 TKP + a5 POP + E ....................... …………...[1]
The sign and magnitude of the expected parameter estimations are: a1, a2, a3, a4, a5 > 0
................................................................................. …………...[2]
LHP + b3 TKP + E ………….....................................
the expected estimations parameter are: b2, b3 > 0; b1 < 0
LHP + c3 PNPNGN + E ....................................... …………...[4]
The sign and magnitude of the expected estimations parameter are: C2 > 0; C1, C3
LHP + E .................................................................. …………...[5]
The sign and magnitude of the expected estimations parameter are: d2 > 0; d1, < 0
NPIP = (PBP *HPBP) + (PPUR * HPUR) + (POP * HPOP) ........................... …………...[6]
ing
TKDKNF + f3 TKLK + f4 LHP + E .......................... …………...[7]
The sign and magnitude of the expected estimations parameter are: f1, f3, < 0; f1, f4 > 0
household for paddy farming
UTKLK + g2 TKDKP + g3 LHP + E ......................... …………...[8]
The sign and magnitude of the expected estimations parameter are: g1, g2 < 0; g3 > 0
TKDK usage at farming beside rice
TKDKP + E ................................................................... …………...[9]
The sign and magnitude of the expected estimations parameter are: h1 < 0
farm activity
UTKDKOF + j2 TKDKP + j3 TKDKNF + j4 TKDKSP + E .
The sign and magnitude of the expected estimations parameter are: j2, j3, j4< 0; j1 > 0
rm activity
UTKDKNF + k2 TKDKP + k3 LHP + E ………… .....................
The sign and magnitude of the expected estimations parameter are: k1 > 0; k2, k3 < 0
Total labor usage for rice activity with off-farm activity
TKDKN = TKDKP + TKDKOF ................................................................... ……………..[12]
TPTKP = TKDKP + TKLK + TKDKSP + TKDKOF + TKDKNF ........... ……………..[13]
TBUTP = (PBP * HPBP) + (PPUR*HPUR) + (POP*HPOP) +
(TKLK*UTKLK) + BTPLL ……….................................................................. .......................
TBUTP ...................................................................... ……………..[15]
Non paddy farming household income
LHP ………………………………………………..
The sign and magnitude of the expected estimations parameter are: i1 > 0; i2 < 0
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…………...[1]
> 0
…………...[2]
..........[3]
…………...[4]
< 0
…………...[5]
…………...[6]
…………...[7]
> 0
…………...[8]
…………...[9]
TKDKSP + E . .....[10]
..................... …..[11]
……..[12]
……………..[13]
........................[14]
……………..[15]
LHP ……………………………………………….. ......[16]
Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
Total income from on-farm activity
PTOF = PUTP + PUTSP ................................
Household income from off-farm activity
PKOF = l0 + l1 TKDKN + l2
The sign and magnitude of the expected estimations para
Household income from non-farm activity
PKNF = m0 + m1 TKDKU + m2
The sign and magnitude of the expected estimations parameter are:
Total use of labor to off-farm activities with non
TKDKU = TKDKNF + TKDKOF
Paddy farmer household income
PRT = PTOF + PKOF + PKNF
Farmer household expenditure for food consumption
PPNGN = n0 + n1 AKPP + n2
The sign and magnitude of the expected estimations parameter are:
Farmer household expenditure for non food
PNPNGN = p0 + p1 AKPP + p2
The sign and magnitude of the expected estimations parameter are:
Farmer household expenditure for health
PGNKS = q0 + q1 AKPP + q2 PRT + E
The sign and magnitude of the expected estimations parameter are:
Farmer household expenditure for education
PGNPD = r0 + r1 AKPPS + r2
The sign and magnitude of the expected estimations parameter are:
Farmer household expenditure for food and non food consumption
PKONS = PPNGN + PNPNGN ................................
Total farmer household expenditure
PGNRT = PKONS + PGNKS + PGNPD
Saving
TAB = PRT - PGNRT ................................
Note :
PTP = total paddy production (tons)
LHP = land area for paddy (ha)
PBP = paddy seed usage (kg)
Scene = Total labor use for paddy (HKO)
TKDKP = In-household labor usage for paddy (HKO)
TKLK = Out-household labor usage from outside the family for rice (HKO)
HPBP = Price of paddy seeds (Rp / kg)
HPUR = Price of fertilizer (Rp / kg)
PNPNGN = farm household expenditure for non
POP = Use of pesticide (liters)
HPOP = Price of pesticide (Rp /liter)
NPIP = Total value of input use (Rp)
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farm activity
............................................................................. ……………..[17]
farm activity
UTKDKOF + l3 LHP + E .............................. ……………..[18]
The sign and magnitude of the expected estimations parameter are: l1, l2 >0; l3<0
farm activity
UTKDKNF + E ..................................... ……………..[19]
The sign and magnitude of the expected estimations parameter are: m1, m2 > 0
farm activities with non-farm activities
TKDKU = TKDKNF + TKDKOF .............................................................. ……………..[20]
PRT = PTOF + PKOF + PKNF ............................................................. ……………..[21]
Farmer household expenditure for food consumption
2 PRT + E ................................................ ……………..[22]
of the expected estimations parameter are: n1, n2 > 0
Farmer household expenditure for non food
PRT + E ................................................ ……………..[23]
The sign and magnitude of the expected estimations parameter are: p1, p2 > 0
nditure for health
PRT + E .......................................................... ……………..[24]
The sign and magnitude of the expected estimations parameter are: q1, q2 > 0
Farmer household expenditure for education
2 PRT + E ............................................. ……………..[25]
gn and magnitude of the expected estimations parameter are: r1, r2 > 0
Farmer household expenditure for food and non food consumption
............................................................................ ……………..[26]
Total farmer household expenditure
PGNRT = PKONS + PGNKS + PGNPD ....................................... …………….
............................................................................... ……………..[28]
= total paddy production (tons)
land area for paddy (ha)
= paddy seed usage (kg)
= Total labor use for paddy (HKO)
household labor usage for paddy (HKO)
household labor usage from outside the family for rice (HKO)
= Price of paddy seeds (Rp / kg)
= Price of fertilizer (Rp / kg)
= farm household expenditure for non-food consumption (Rp)
= Use of pesticide (liters)
e of pesticide (Rp /liter)
= Total value of input use (Rp)
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……………..[17]
……………..[18]
……………..[19]
……………..[20]
……………..[21]
……………..[22]
……………..[23]
……………..[24]
……………..[25]
……………..[26]
……………..[27]
……………..[28]
Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
TKDKSP = In-household labor usage for other than paddy (HKO)
TKDKOF = In-household labor usage for off
TKDKNF = In-household labor usage for non
UTKLK = labor wage for out
UTKDKOF = labor wage for off
UTKDKNF = labor wage for non
TBUTP = Total cost of rice farming (Rp)
PUTP = income from rice farming households (Rp)
HPP = Price of paddy output (Rp / kg)
PUTSP = farm income than paddy (Rp)
PTOF = total income on farm / paddy farming+ besides paddy farming (RP)
PKOF = family income off
PKNF = family income non
PRT = Total household income (Rp)
PPNGN = farmer household expenditure on food (Rp)
PGNKS = farmer household expenditure on health (RP)
PGNPD = farmer household expenditure on education (Rp)
AKPP = Paddy farmer family (soul)
PKONS = Expenditure on food and non
AKPPS = Paddy farmer family members who are still in school (soul)
PGNRT = Total household expenditure (RP)
2.3. Estimation and Simulation
Model identification shows that economic model of rice farmers household in
over-identified. Therefore, this research model estimation using 2SLS (Two Stage Least Squares).
validation aims to analyze the extent models are built to represent the real world. In this research, statistical
criteria for validation of value estimat
Means Squares Percent Error (RMSPE) and Theil's Inequality Coefficient. The results of model prediction is
considered appropriate or feasible as a base simulation if the value of RMSPE and
to zero.
Simulations conducted to determine the impact of rice farmer household income changes, when the price or
other policy changes. Simulation was done through: (
simultaneously to cover the cost of seeds, fertilizer, pesticides and labor outside the family (TKLK), respectively
10%, (b) multiple simulation the increases 10% for total cost rice farming with
the provision of subsidies for paddy
III. RESULTS AND DISCUSSION
3.1. General variability Econometrics Model Results
The empirical results of estimation model in this study is good. All exogenous variables included in th
model has a sign in accordance with the parameters and logical theory. Statistical criteria used in evaluating the
prediction is quite good. From 16 behavioral equations, most equations indicate adjusted R
more than 67%. Generally, in simultaneous equations, this suggests that exogenous variables included in the
structural equation model was able to explain endogen variance of each variable. The value test statistic F is
generally high, there are 12 equations of 16 equations that have F count value greater than 10.3; meaning
d Sustainable Development
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120
household labor usage for other than paddy (HKO)
household labor usage for off-farm activities (HKO)
household labor usage for non-farm activities (HKO)
= labor wage for out-household (Rp / HKO)
= labor wage for off-farm activities (Rp / HKO)
= labor wage for non-farm activities (Rp / HKO)
= Total cost of rice farming (Rp)
= income from rice farming households (Rp)
= Price of paddy output (Rp / kg)
= farm income than paddy (Rp)
= total income on farm / paddy farming+ besides paddy farming (RP)
= family income off-farm activities (Rp)
= family income non-farm activities (Rp)
usehold income (Rp)
= farmer household expenditure on food (Rp)
= farmer household expenditure on health (RP)
= farmer household expenditure on education (Rp)
= Paddy farmer family (soul)
= Expenditure on food and non-food consumption (RP)
= Paddy farmer family members who are still in school (soul)
= Total household expenditure (RP)
Model identification shows that economic model of rice farmers household in
identified. Therefore, this research model estimation using 2SLS (Two Stage Least Squares).
validation aims to analyze the extent models are built to represent the real world. In this research, statistical
criteria for validation of value estimation econometric model is the Root Means Squares Error (RMSE), Root
Means Squares Percent Error (RMSPE) and Theil's Inequality Coefficient. The results of model prediction is
considered appropriate or feasible as a base simulation if the value of RMSPE and U-Theil get smaller or close
Simulations conducted to determine the impact of rice farmer household income changes, when the price or
other policy changes. Simulation was done through: (a) increase in the paddy production factor inputs price
taneously to cover the cost of seeds, fertilizer, pesticides and labor outside the family (TKLK), respectively
) multiple simulation the increases 10% for total cost rice farming with paddy price increase of 10%, (
seed; and (d) 25 % expansion of paddy acreage in
III. RESULTS AND DISCUSSION
3.1. General variability Econometrics Model Results
The empirical results of estimation model in this study is good. All exogenous variables included in th
model has a sign in accordance with the parameters and logical theory. Statistical criteria used in evaluating the
prediction is quite good. From 16 behavioral equations, most equations indicate adjusted R
more than 67%. Generally, in simultaneous equations, this suggests that exogenous variables included in the
structural equation model was able to explain endogen variance of each variable. The value test statistic F is
are 12 equations of 16 equations that have F count value greater than 10.3; meaning
www.iiste.org
Model identification shows that economic model of rice farmers household in lebak swampland is
identified. Therefore, this research model estimation using 2SLS (Two Stage Least Squares). Model
validation aims to analyze the extent models are built to represent the real world. In this research, statistical
ion econometric model is the Root Means Squares Error (RMSE), Root
Means Squares Percent Error (RMSPE) and Theil's Inequality Coefficient. The results of model prediction is
Theil get smaller or close
Simulations conducted to determine the impact of rice farmer household income changes, when the price or
production factor inputs price
taneously to cover the cost of seeds, fertilizer, pesticides and labor outside the family (TKLK), respectively
price increase of 10%, (c)
acreage in lebak swampland
The empirical results of estimation model in this study is good. All exogenous variables included in the structural
model has a sign in accordance with the parameters and logical theory. Statistical criteria used in evaluating the
prediction is quite good. From 16 behavioral equations, most equations indicate adjusted R2 values above 0.67 or
more than 67%. Generally, in simultaneous equations, this suggests that exogenous variables included in the
structural equation model was able to explain endogen variance of each variable. The value test statistic F is
are 12 equations of 16 equations that have F count value greater than 10.3; meaning
Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
variation explanatory variables in each equation is jointly able to explain the variation of endogenous variable
Results structural equation estimation for input demand s
seeds; urea fertilizer, pesticides and wages TKLK, has a negative sign. This indicates that input price is an
important factor in input use decision
(2007); and Hung and Fang (2010). Estimating input demand equation, both equations to use paddy seeds,
fertilizer urea, pesticides and TKLK, also significantly affected by land area, with a positive sign. This implies
that an increase in the use of land requires more input factors.
In equation of rice production estimation; seeds, fertilizer, pesticides and labor usage have a positive sign. The
seeds and fertilizers usage have significant effect on paddy production. This suggests the use
including the price factor, to be one important factor in decision making.
The results of family labor estimation for
off-farm activities and employment outside the fam
indicates that addition of paddy farming land is always dependent on labor availability in family. Conversely,
there is a trade off between non-farm labor TKLK with family labor for
labor to be enlarged, it will reduce the labor for paddy farming. Reduced labor for
TKLK for certain activities that are urgent, such as planting and harvesting. This is similar to the opinion
et al (2005).
The results of labor out-household estimation for
influenced by the positive sign of land wide. The increase in labor wage of out
labor force allocation although relatively small though. This is consistent with studies Sawit (1993) and Fukui
al (2004), the wages have a negative impact on labor usage. Conversely, the land area increase will increase the
amount out-household labor. In paddy
harvesting, due to urgent nature of the activity.
3.2. Impact of paddy input factors price
The increase 10% for paddy price input (seeds, fertilizers, pesticides and wages TKLK) affect the PUTP of
-7.61%. In addition to the decline of the PUTP, the increase in input prices also have an impact on the decline in
farm income other than paddy about
household income (PKNF) also decreased
farmer household income (PRT) at lebak
paddy production cost is 10%, as shown in Figure
Figure 1. Income change compar
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-6.00
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-2.00
0.00
%
d Sustainable Development
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variation explanatory variables in each equation is jointly able to explain the variation of endogenous variable
Results structural equation estimation for input demand showed the input prices, including the price of paddy
seeds; urea fertilizer, pesticides and wages TKLK, has a negative sign. This indicates that input price is an
important factor in input use decision-making. These results are consistent with Kusnadi (200
(2010). Estimating input demand equation, both equations to use paddy seeds,
fertilizer urea, pesticides and TKLK, also significantly affected by land area, with a positive sign. This implies
the use of land requires more input factors.
In equation of rice production estimation; seeds, fertilizer, pesticides and labor usage have a positive sign. The
seeds and fertilizers usage have significant effect on paddy production. This suggests the use
including the price factor, to be one important factor in decision making.
The results of family labor estimation for paddy affected by land usage, with a positive sign. The labor usage for
farm activities and employment outside the family has a negative sign. The reality in
farming land is always dependent on labor availability in family. Conversely,
farm labor TKLK with family labor for paddy. This means
labor to be enlarged, it will reduce the labor for paddy farming. Reduced labor for paddy
TKLK for certain activities that are urgent, such as planting and harvesting. This is similar to the opinion
household estimation for paddy; besides negatively affected by the wages, are also
influenced by the positive sign of land wide. The increase in labor wage of out-household likely decrease the
ugh relatively small though. This is consistent with studies Sawit (1993) and Fukui
(2004), the wages have a negative impact on labor usage. Conversely, the land area increase will increase the
paddy farming at lebak swampland, out-household labor is used in planting and
harvesting, due to urgent nature of the activity.
input factors price
price input (seeds, fertilizers, pesticides and wages TKLK) affect the PUTP of
1%. In addition to the decline of the PUTP, the increase in input prices also have an impact on the decline in
about -0.223%; off-farm households income (PKOF) of
household income (PKNF) also decreased -0.208%. The increase of input prices is evidently lowering
lebak swampland of -2.44%. Income change comparison due the increase in
production cost is 10%, as shown in Figure 1
. Income change comparison due to increased 10% cost of paddy farming
8.00
6.00
4.00
2.00
0.00PUTP
PUTSP
PTOF
PKOF
PKNF
PRT
www.iiste.org
variation explanatory variables in each equation is jointly able to explain the variation of endogenous variable
howed the input prices, including the price of paddy
seeds; urea fertilizer, pesticides and wages TKLK, has a negative sign. This indicates that input price is an
making. These results are consistent with Kusnadi (2005); Asmarantaka
(2010). Estimating input demand equation, both equations to use paddy seeds,
fertilizer urea, pesticides and TKLK, also significantly affected by land area, with a positive sign. This implies
In equation of rice production estimation; seeds, fertilizer, pesticides and labor usage have a positive sign. The
seeds and fertilizers usage have significant effect on paddy production. This suggests the use of both inputs,
affected by land usage, with a positive sign. The labor usage for
ily has a negative sign. The reality in lebak swamplands
farming land is always dependent on labor availability in family. Conversely,
. This means that if the non-farm
will increase the use of
TKLK for certain activities that are urgent, such as planting and harvesting. This is similar to the opinion Blanc
; besides negatively affected by the wages, are also
household likely decrease the
ugh relatively small though. This is consistent with studies Sawit (1993) and Fukui et
(2004), the wages have a negative impact on labor usage. Conversely, the land area increase will increase the
household labor is used in planting and
price input (seeds, fertilizers, pesticides and wages TKLK) affect the PUTP of
1%. In addition to the decline of the PUTP, the increase in input prices also have an impact on the decline in
of -1.018% and non-farm
208%. The increase of input prices is evidently lowering paddy
2.44%. Income change comparison due the increase in
farming
Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
3.3. The impact of an input price increase to
Multiple simulations, 10% increase in output price with 10% increase in
impact on input use and income, both farm income (PUTP) and the household farmers income (PRT). The
increase in total cost of paddy farming 10%, with a 10% increase in
seed usage of -3.88%, the decrease in urea usage of
-13.79% for TKLK. But despite this decline, the impact on
2.52%. The impact of increased costs to
PUTSP (-0.223%); PKOF (-1.0185) and PKNF (
with the increase 10% in paddy
Income change comparison are shown i
Figure 2. Income change comparison due to 10% cost increased cost
3.4. Impact of paddy seed subsidy
Input prices for paddy crops tend to increase along with the increase of inflation and economic conditions
changes, both locally, regionally and nationally. This will put pressure
the other hand, paddy production level increasingly erratic due to climate change, increasing the pressure on
farmer household incomes, especially t
have been executed but not yet holistic is seeds subsidy. The simulation results showed that seed subsidy can be
lowered total cost of -17.05%. This cost reduction impact on the increase
12.028%; and PTOF 5.45%. Overall
3.53%. Income change comparison of seed subsidy provision is shown by figure
Figure 3. Income change compariso
3.5. Impact of Paddy Extensification
Extensification of paddy acreage by 25%, assuming the input and output prices of paddy is constant, will
increase the usage of paddy seeds
-2.00
-1.00
0.00
1.00
2.00
3.00
PUTP
%
0.00
5.00
10.00
15.00
%
d Sustainable Development
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122
3.3. The impact of an input price increase to paddy output price in the same proportion
Multiple simulations, 10% increase in output price with 10% increase in paddy prices, intended to predict the
input use and income, both farm income (PUTP) and the household farmers income (PRT). The
farming 10%, with a 10% increase in paddy prices, affect to a decrease in
3.88%, the decrease in urea usage of -35.97%, the decrease of pesticide
TKLK. But despite this decline, the impact on paddy farming income (PUTP) remain positive, up to
2.52%. The impact of increased costs to paddy price with increase output price
1.0185) and PKNF (-0.208%). The increase 10% in total cost of
prices was still able to increase the farm households income (PRT) 0.54%.
are shown in Figure 2.
Figure 2. Income change comparison due to 10% cost increased cost and 10% paddy price increase
crops tend to increase along with the increase of inflation and economic conditions
ges, both locally, regionally and nationally. This will put pressure on farmer household income levels. On
production level increasingly erratic due to climate change, increasing the pressure on
farmer household incomes, especially those from paddy farming. One of the government's policy options that
have been executed but not yet holistic is seeds subsidy. The simulation results showed that seed subsidy can be
17.05%. This cost reduction impact on the increase of farmer farming income (PUTP) of
12.028%; and PTOF 5.45%. Overall paddy seed subsidy would increase the farmer household income (PRT) of
3.53%. Income change comparison of seed subsidy provision is shown by figure 3.
Figure 3. Income change comparison of seed subsidy
Extensification
Extensification of paddy acreage by 25%, assuming the input and output prices of paddy is constant, will
(PBP) 5.74%, urea fertilizer (PPUR) 1.42% and pesticides
PUTP PUTSP PTOF PKOF PKNF PRT
PUTP
PUTSP
PTOF
PKOF
PKNF
PRT
0.00
5.00
10.00
15.00 PUTP
PUTSP
PTOF
PKOF
PKNF
PRT
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output price in the same proportion
prices, intended to predict the
input use and income, both farm income (PUTP) and the household farmers income (PRT). The
prices, affect to a decrease in paddy
35.97%, the decrease of pesticide use of -11.35% and
farming income (PUTP) remain positive, up to
with increase output price apparently lowering
208%). The increase 10% in total cost of paddy farming
prices was still able to increase the farm households income (PRT) 0.54%.
and 10% paddy price increase
crops tend to increase along with the increase of inflation and economic conditions
on farmer household income levels. On
production level increasingly erratic due to climate change, increasing the pressure on
farming. One of the government's policy options that
have been executed but not yet holistic is seeds subsidy. The simulation results showed that seed subsidy can be
of farmer farming income (PUTP) of
seed subsidy would increase the farmer household income (PRT) of
Extensification of paddy acreage by 25%, assuming the input and output prices of paddy is constant, will
and pesticides (POP) 1.29%.
Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
The increase usage of inputs result the increase input
farming –TBUTP- (include wages of TKLK) of 10.98%. Comparison between changes in input use, changes in
value of inputs usage and changes in total cost of paddy production due to an increase the total area of
crops in “lebak” area by 25% are shown in Figure
Figure 4. Comparison the changes of input use and cost due to 25 % paddy
Not only inputs utilization, but vast areas of arable land expansion also affects labor usage. The labor usage in
the family (TKDKP) should be added as an increase of 24.32%. Similarly, the use TKLK will increase 29.36%.
Therefore, the labor usage for paddy
the amount of other labor than paddy
(TKDKOF) of -12.78% and a reduction in labor for non
comparison due the increase in total area of
5.
Figure 5. Farm labor change comparison due 25 % paddy land incre
The usage change of labor and input due to increased acreage of pa
income. Therefore, it make paddy farmer income (PUTP) increased by 30.19%. In contrast, income from
off-farm activities (PKOF) decreased by
-10.83%. Overall, the expansion of paddy
There are two important causes of decline in rice farmers household income in lebak swampland, namely: (1)
increase the use of paddy farming inputs adding to
labor usage due to the expansion of rice farming with increase labor for
the labor usage in other activities. This suitable research proposed by Phimister a
TKDK compensation is limited then add TKLK or leave the non
expansion is also difficult to realize because in irrigation addition in
0.00
5.00
10.00
15.00
%
-20.00
-10.00
0.00
10.00
20.00
30.00
%
d Sustainable Development
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The increase usage of inputs result the increase input (NPIP) of 3.13% and also increase the total cost of paddy
(include wages of TKLK) of 10.98%. Comparison between changes in input use, changes in
anges in total cost of paddy production due to an increase the total area of
crops in “lebak” area by 25% are shown in Figure 4.
Figure 4. Comparison the changes of input use and cost due to 25 % paddy land wide increase
ion, but vast areas of arable land expansion also affects labor usage. The labor usage in
the family (TKDKP) should be added as an increase of 24.32%. Similarly, the use TKLK will increase 29.36%.
paddy (TKP) increased by 24.84%. Conversely, an increase TKDKP should reduce
paddy farming (TKDKSP) of -14.16%, reduction in labor for off
12.78% and a reduction in labor for non- farm (TKDKNF) of -19.15%. Farm labor chang
comparison due the increase in total area of paddy crops in lebak swampland area by 25% is shown in figure
. Farm labor change comparison due 25 % paddy land increa
The usage change of labor and input due to increased acreage of paddy plants have positive impact on farmer
income. Therefore, it make paddy farmer income (PUTP) increased by 30.19%. In contrast, income from
farm activities (PKOF) decreased by -44.19% and income from non-farm activities (PKNF) decreased by
paddy land 25% causes a decrease in farmers household income of
There are two important causes of decline in rice farmers household income in lebak swampland, namely: (1)
farming inputs adding to production cost, (2) farmers have to compensate the increase
labor usage due to the expansion of rice farming with increase labor for paddy farming activities and/or reduce
the labor usage in other activities. This suitable research proposed by Phimister and Roberts. (2006).
TKDK compensation is limited then add TKLK or leave the non-farm wages are higher
expansion is also difficult to realize because in irrigation addition in Lebak swampland is difficult; too expensive.
0.00
5.00
10.00
15.00
PBP PPUR POP NPIP TBUTP
PBP
PPUR
POP
NPIP
TBUTP
TKDKP
TKDKSP
TKDKOF
TKDKNF
TKLK
TKP
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of 3.13% and also increase the total cost of paddy
(include wages of TKLK) of 10.98%. Comparison between changes in input use, changes in
anges in total cost of paddy production due to an increase the total area of paddy
land wide increase
ion, but vast areas of arable land expansion also affects labor usage. The labor usage in
the family (TKDKP) should be added as an increase of 24.32%. Similarly, the use TKLK will increase 29.36%.
84%. Conversely, an increase TKDKP should reduce
14.16%, reduction in labor for off-farm activities
19.15%. Farm labor changes
paddy crops in lebak swampland area by 25% is shown in figure
ased
ddy plants have positive impact on farmer
income. Therefore, it make paddy farmer income (PUTP) increased by 30.19%. In contrast, income from
farm activities (PKNF) decreased by
land 25% causes a decrease in farmers household income of -0.46%.
There are two important causes of decline in rice farmers household income in lebak swampland, namely: (1)
production cost, (2) farmers have to compensate the increase
farming activities and/or reduce
nd Roberts. (2006). When
farm wages are higher. In addition, the
land is difficult; too expensive.
TBUTP
TKDKP
TKDKSP
TKDKOF
TKDKNF
Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222
Vol.4, No.6, 2013
This implies the need for further optimization for on
vegetables, fisheries and livestock in order to increase household incomes of
research by Suparwoto and Waluyo (2009).
farmer household. Yet according to Adewunmi
Zenebe Gebreegziabher (2011); non
implicitly also means strengthening the farm household economy.
increased of farmer household in lebak area by 25% shown in Figure 6.
Figure 6. Income change comparison due to 25 % paddy
IV. CONCLUSION
1. Price of paddy seed, fertilizer and wages TKLK affect input demand and the rising of input price (seeds;
fertilizers; pesticides) would decrease household income of
increase coupled with paddy
household farmer income in
income of paddy farmers requires the input price stability at the farm leve
other hand, paddy price output must be maintained in order not fall or even can increase.
2. Seed subsidies also have positive impact on household income of
policies that have been implemented can be expanded to include more farmers.
3. In paddy farming, as part of on-
swamplands had lower household income. In addition, the expansion is difficult to realize because
difficulty of irrigation and too expensive. Negative impact of expansion on revenue has implications to the
importance to optimize on-farm activities such as diversification other than
fisheries and livestock that household
policy is the most likely alternative to increase farmer incomes in
the expertise that has been owned by the farmers and the land can still be used after
increase farmer household income can also be done through non
non-farm activities likely continue to increase. Income maximization from non
by improving farmer skills and opportunities utilization, not only around the
but covers a larger area. The increase in non
security. It also means to strengthen
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-60.00
-40.00
-20.00
0.00
20.00
40.00
%
d Sustainable Development
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124
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Figure 6. Income change comparison due to 25 % paddy land increased
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Analysis of paddy in lebak swampland of Hulu Sungai Utara District
60.00
40.00
20.00
0.00
20.00
40.00
PUTP
PUTSP
PTOF
PKOF
PKNF
PRT
www.iiste.org
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swampland area alone
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