Impact of economic factors changes on paddy farmers

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  • 1. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 2013Impact of Economic Factors Changes on Paddy FarmersHousehold Income in Lebak Swampland(Case of Swampland in HSU District, South KalimantanMuhammad Fauzi Makki1 Doctoral Program of Agric1 Department of Agriculture Economic, University of Lambung Mangkurat , Indonesia.2,3,4 Department of Agricultural Economic, Uni* E-mail of the corresponding authorAbstractPaddy farmer household at Lebak swampland are poor because of low income. Efforts to increase householdpaddy farmer’s income in Lebak swampland are alwayand expansion area (extensificationfarm household incomes in the Lebakmodels, 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 ofinput price followed by an increased in paddy output price in same proportion were able to increase farmhouseholds income. Seed subsidies are also able to increase the household income. In contrast; paddy areaexpansion or extensification would decrease household income. Therefolebak swampland is not priority choice.Keywords: Lebak swamplands; farmer income; extensification; inputs price, price of outputI. INTRODUCTIONSwamplands typology is an alternative area developed to address the needs oSwampland 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 increaserevenue in order to strengthen farm households economy. In fact there are many farmers plant paddy in the lebakswamplands is poor because of low income, as wellKalimantan. In this context, the poverty is structural poverty. This can not be solved only with shortsolutions, such as direct cash assistance.Paddy farmers income in Lebak Swampcaused by natural factors, also vulnerable to changes in input price and output. Theoretically; interventionscommonly performed in rice fields with different typologies, namely rain fed and irrigation toprovision of subsidized inputs especially seed subsidy and expansion policy (approach is not exactly an attempt to increase farm household income when applied inChanges in economic factors or external factors include price factor; subsidies and expansion policy(extensification) has always been an important issue inis the extent impact of these economic factors changes on householdOn the other hand; household swampnot separate the production aspects to consumption, with the main objective to meet family needs (Ellis, 1988Mendola, 2007; Kusnadi, 2005; Elly, 2008). Efforts to increase household farmers income is manifested in inputd Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)116Impact of Economic Factors Changes on Paddy FarmersHousehold Income in Lebak Swampland(Case of Swampland in HSU District, South KalimantanProvince-Indonesia)Muhammad Fauzi Makki1*M. Muslich Mustadjab2Nuhfil Hanani3and Rini Dwiastuti1 Doctoral Program of Agricultural Economic, University of Brawijaya, Indonesia1 Department of Agriculture Economic, University of Lambung Mangkurat , Indonesia.2,3,4 Department of Agricultural Economic, University of Brawijaya, Indonesiamail of the corresponding author: mfauzimakki@gmail.comswampland are poor because of low income. Efforts to increase householdswampland are always associated with the economic factor as price; subsidiesextensification). This study aims to analyze the impact of economic factors change onLebak swampland. Data is analyzed by using agricultural economodels, 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 ofan increased in paddy output price in same proportion were able to increase farmhouseholds income. Seed subsidies are also able to increase the household income. In contrast; paddy areaexpansion or extensification would decrease household income. Therefore, the expansion program option atswampland is not priority choice.lands; farmer income; extensification; inputs price, price of outputSwamplands 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 increaserevenue in order to strengthen farm households economy. In fact there are many farmers plant paddy in the lebakswamplands is poor because of low income, as well as in the District of Hulu Sungai Utara (HSU), SouthKalimantan. In this context, the poverty is structural poverty. This can not be solved only with shortsolutions, such as direct cash assistance.Swampland is not able to meet household needs because of low productivitycaused by natural factors, also vulnerable to changes in input price and output. Theoretically; interventionscommonly performed in rice fields with different typologies, namely rain fed and irrigation toprovision of subsidized inputs especially seed subsidy and expansion policy (extensificationapproach is not exactly an attempt to increase farm household income when applied inrs or external factors include price factor; subsidies and expansion policy) has always been an important issue in paddy farmers income in Lebak swampis the extent impact of these economic factors changes on household paddy farmers income inswampland paddy farmers in the Lebak is a subsistence farm households. They donot separate the production aspects to consumption, with the main objective to meet family needs (Ellis, 1988Mendola, 2007; Kusnadi, 2005; Elly, 2008). Efforts to increase household farmers income is manifested in inputwww.iiste.orgImpact of Economic Factors Changes on Paddy FarmersHousehold Income in Lebak Swampland(Case of Swampland in HSU District, South Kalimantanand Rini Dwiastuti4Brawijaya, Indonesia1 Department of Agriculture Economic, University of Lambung Mangkurat , Indonesia.versity of Brawijaya, Indonesiaswampland are poor because of low income. Efforts to increase households associated with the economic factor as price; subsidies). This study aims to analyze the impact of economic factors change onswampland. Data is analyzed by using agricultural economic householdmodels, 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 ofan increased in paddy output price in same proportion were able to increase farmhouseholds income. Seed subsidies are also able to increase the household income. In contrast; paddy areare, the expansion program option atlands; 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 increaserevenue in order to strengthen farm households economy. In fact there are many farmers plant paddy in the lebakas in the District of Hulu Sungai Utara (HSU), SouthKalimantan. In this context, the poverty is structural poverty. This can not be solved only with short-termto meet household needs because of low productivitycaused by natural factors, also vulnerable to changes in input price and output. Theoretically; interventionscommonly performed in rice fields with different typologies, namely rain fed and irrigation to increase revenue,extensification). However, thisapproach 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 policyswampland. The questionfarmers income in Lebak swampland.is a subsistence farm households. They donot 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
  • 2. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 2013allocation decision-making behavior and regulation of production in farming management, as well as thebehavior of decision-making related to l(1988); Sadoulet and Janvry (1995); decision to increase farm households income always associated productionaspects, consumption and manpower allocation. The approach is through agriculHousehold 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). Economicbehavior of farmers in countryside based on land typology have a particular characteristic, such asswamplands, becomes important because agriculture still plays an important role in many countries includingIndonesia (OECD, 2003).Several previous studies associated withby Abdurrahman (1992) - approached only on production aspects. Various research or other articles relate tovarious aspects that becoming research focus but still relevant farm household efarmers 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 alFang Wen-I (2010); and Chi kezie et alon dry land typology. Therefore, to answer thefarmers income in Lebak swampland to reduce poverty, then this article aims to analyze the impact of economicfactors changes, including: (1) increase in input and outputexpansion of paddy plant, each of household farmers income inSimulations conducted to determine the impact of changes in household rice farmers income in the event of pricechanges, subsidies and expansionproduction factor inputs simultaneously cover the cost of seeds, fertilizer, pesticides and labor outside the familyof 10%, (b) multiple form simulation increase in totalincrease, (c) seed subsidy provision forII. METHOD2.1. Data and ProceduresThis research uses primary data. Methods for determination of sample farmesampling. First, Sungai Pandan subdistrict selected purposively. The consideration is the largest area ofcrop in HSU district. From this sub districts, it is selected Rantau Karau Hulu Village. The justificationpaddy farmers if this village are : (a) diversification in farming other than paddy, particularly in duck and eggproduction; as well as fishing business; (b) most farmers work on offimplementing paddy in shallow lebak area (census on paddy production at Rantau Karau Huluof family) in people Rantau Karau Huluit is obtained various population census to calculate the number of respondents used in study sample. Thenumber of the sample is calculated based on formula byrandom from farm households in each subpredetermined based on above equation. Based on this method, it is selected 100 samples of farmers.This study uses agricultural economic householdspecification used are described as follows:d Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)117making behavior and regulation of production in farming management, as well as themaking 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 productionaspects, 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). Economiccountryside based on land typology have a particular characteristic, such aslands, becomes important because agriculture still plays an important role in many countries includingSeveral previous studies associated with increased paddy farmers income in “Lebak” swampapproached only on production aspects. Various research or other articles relate tovarious aspects that becoming research focus but still relevant farm household economic behavior in relation tofarmers income. The article studied by Sawit (1993); Kusnadi (2005); Cornejo et al (2005); Hendriks and MishraPaul Chavas; R. Mivhael Petrie and Roth (2005); Dewbre and Mishra (2007); Fariyanti et alet al (2007); Cristian and Herne Henningsen (2007);et al (2011). However, all research and article is motivated by farming is doneon dry land typology. Therefore, to answer the questions above and parallel efforts to increase householdland to reduce poverty, then this article aims to analyze the impact of economicfactors changes, including: (1) increase in input and output paddy price; ( 2) paddy seed subsidy, and (3) theplant, 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 pricechanges, subsidies and expansion of rice land. Simulation was done through: (a) increase in rice priceproduction factor inputs simultaneously cover the cost of seeds, fertilizer, pesticides and labor outside the familyof 10%, (b) multiple form simulation increase in total paddy production cost by 10 % with 10% rice priceincrease, (c) seed subsidy provision for paddy 10%, (d) paddy acreage expansion in the “lebakThis research uses primary data. Methods for determination of sample farmers for primary data are stratifiedsampling. First, Sungai Pandan subdistrict selected purposively. The consideration is the largest area ofcrop in HSU district. From this sub districts, it is selected Rantau Karau Hulu Village. The justificationpaddy farmers if this village are : (a) diversification in farming other than paddy, particularly in duck and eggproduction; as well as fishing business; (b) most farmers work on off-farm and nonlebak area (watun I) and middle lebak area (watun II). Firstly, it is conducted aRantau Karau Hulu villagers to determine population range. From 314 KK (headRantau 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. Thenumber of the sample is calculated based on formula by Parel et al (1973). Samples were taken with purposirandom from farm households in each sub-village (dusun). The goal is to obtain the amount of samplepredetermined based on above equation. Based on this method, it is selected 100 samples of farmers.agricultural economic household model with a simultaneous equations system. Modelsspecification used are described as follows:www.iiste.orgmaking behavior and regulation of production in farming management, as well as theabor allocation. According to Singh; Squire and Strauss (1986), Ellis(1988); Sadoulet and Janvry (1995); decision to increase farm households income always associated productiontural 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). Economiccountryside based on land typology have a particular characteristic, such as Lebaklands, becomes important because agriculture still plays an important role in many countries includingswampland - among othersapproached only on production aspects. Various research or other articles relate toconomic behavior in relation to(2005); Hendriks and MishraPaul 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 donequestions above and parallel efforts to increase household paddyland to reduce poverty, then this article aims to analyze the impact of economicseed subsidy, and (3) theSimulations conducted to determine the impact of changes in household rice farmers income in the event of priceof rice land. Simulation was done through: (a) increase in rice priceproduction factor inputs simultaneously cover the cost of seeds, fertilizer, pesticides and labor outside the familyion cost by 10 % with 10% rice pricelebak” area by 25%.rs for primary data are stratifiedsampling. First, Sungai Pandan subdistrict selected purposively. The consideration is the largest area of paddycrop in HSU district. From this sub districts, it is selected Rantau Karau Hulu Village. The justification is thepaddy farmers if this village are : (a) diversification in farming other than paddy, particularly in duck and eggfarm and non-farm activities, (c)Firstly, it is conducted avillagers to determine population range. From 314 KK (headKK become paddy farmers. From this census,it is obtained various population census to calculate the number of respondents used in study sample. TheSamples were taken with purposivevillage (dusun). The goal is to obtain the amount of samplepredetermined based on above equation. Based on this method, it is selected 100 samples of farmers.el with a simultaneous equations system. Models
  • 3. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 2013Land for Paddy Production in lebakPTP = a0 + a1 LHP + a2 PBP + a3The sign and magnitude of the expected paTotal Use of Labor paddy :TKP = TKDKP + TKLK ................................The use of paddy seedPBP = b0 + b1 HPBP + b2 LHP + bThe sign and magnitude of the expected estimations parameter are:urea fertilizer usagePPUR = co + c1 HPUR + c2 LHP + cThe sign and magnitude of the expected estimations parameter are:Pesticide usagePOP = do + d1 HPOP + d2 LHP + EThe sign and magnitude of the expected estimations parameter are:paddy input usage valueNPIP = (PBP *HPBP) + (PPUR * HPUR) + (POP * HPOP)Labor in-household for paddy farmingTKDKP = f0 + f1 TKDKOF + f2 TKDKNF + fThe sign and magnitude of the expected estimations parameter are:Labor out-household for paddy farmingTKLK = g0 + g1 UTKLK + gThe sign and magnitude of the expected estimations parameter are:TKDK usage at farming beside riceTKDKSP = h0 + h1 TKDKP + EThe sign and magnitude of the expected estimations parameter are:In-household labor usage for off-farm activityTKDKOF = j0 + j1 UTKDKOF + jThe sign and magnitude of the expected estimations parameter are:In-household labor usage for off-farm activityTKDKNF = k0 + k1 UTKDKNF + kThe sign and magnitude of the expected estimations parameter are:Total labor usage for rice activity with offTKDKN = TKDKP + TKDKOFTotal farmer labor usageTPTKP = TKDKP + TKLK + TKDKSP + TKDKOF + TKDKNFTotal cost of paddy farmingTBUTP = (PBP * HPBP) + (PPUR*HPUR) + (POP*HPOP) +(TKLK*UTKLK) + BTPLL ………..................................................Paddy farming household incomePUTP = (PTP * HPP) – TBUTPNon paddy farming household incomePUTSP = i0 + i1 TKDKSP + i2The sign and magnitude of the expected estimations parameterd Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)118lebak 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 < 0LHP + c3 PNPNGN + E .......................................…………...[4]The sign and magnitude of the expected estimations parameter are: C2 > 0; C1, C3LHP + E ..................................................................…………...[5]The sign and magnitude of the expected estimations parameter are: d2 > 0; d1, < 0NPIP = (PBP *HPBP) + (PPUR * HPUR) + (POP * HPOP) ...........................…………...[6]ingTKDKNF + f3 TKLK + f4 LHP + E..........................…………...[7]The sign and magnitude of the expected estimations parameter are: f1, f3, < 0; f1, f4 > 0household for paddy farmingUTKLK + g2 TKDKP + g3 LHP + E .........................…………...[8]The sign and magnitude of the expected estimations parameter are: g1, g2 < 0; g3 > 0TKDK usage at farming beside riceTKDKP + E ...................................................................…………...[9]The sign and magnitude of the expected estimations parameter are: h1 < 0farm activityUTKDKOF + j2 TKDKP + j3 TKDKNF + j4 TKDKSP + E .The sign and magnitude of the expected estimations parameter are: j2, j3, j4< 0; j1 > 0rm activityUTKDKNF + k2 TKDKP + k3 LHP + E ………….....................The sign and magnitude of the expected estimations parameter are: k1 > 0; k2, k3 < 0Total labor usage for rice activity with off-farm activityTKDKN = 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 incomeLHP ………………………………………………..The sign and magnitude of the expected estimations parameter are: i1 > 0; i2 < 0www.iiste.org…………...[1]> 0…………...[2]..........[3]…………...[4]< 0…………...[5]…………...[6]…………...[7]> 0…………...[8]…………...[9]TKDKSP + E ......[10].....................…..[11]……..[12]……………..[13]........................[14]……………..[15]LHP ……………………………………………….. ......[16]
  • 4. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 2013Total income from on-farm activityPTOF = PUTP + PUTSP................................Household income from off-farm activityPKOF = l0 + l1 TKDKN + l2The sign and magnitude of the expected estimations paraHousehold income from non-farm activityPKNF = m0 + m1 TKDKU + m2The sign and magnitude of the expected estimations parameter are:Total use of labor to off-farm activities with nonTKDKU = TKDKNF + TKDKOFPaddy farmer household incomePRT = PTOF + PKOF + PKNFFarmer household expenditure for food consumptionPPNGN = n0 + n1 AKPP + n2The sign and magnitude of the expected estimations parameter are:Farmer household expenditure for non foodPNPNGN = p0 + p1 AKPP + p2The sign and magnitude of the expected estimations parameter are:Farmer household expenditure for healthPGNKS = q0 + q1 AKPP + q2 PRT + EThe sign and magnitude of the expected estimations parameter are:Farmer household expenditure for educationPGNPD = r0 + r1 AKPPS + r2The sign and magnitude of the expected estimations parameter are:Farmer household expenditure for food and non food consumptionPKONS = PPNGN + PNPNGN ................................Total farmer household expenditurePGNRT = PKONS + PGNKS + PGNPDSavingTAB = 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 nonPOP = Use of pesticide (liters)HPOP = Price of pesticide (Rp /liter)NPIP = Total value of input use (Rp)d Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)119farm activity.............................................................................……………..[17]farm activityUTKDKOF + l3 LHP + E ..............................……………..[18]The sign and magnitude of the expected estimations parameter are: l1, l2 >0; l3<0farm activityUTKDKNF + E .....................................……………..[19]The sign and magnitude of the expected estimations parameter are: m1, m2 > 0farm activities with non-farm activitiesTKDKU = TKDKNF + TKDKOF..............................................................……………..[20]PRT = PTOF + PKOF + PKNF.............................................................……………..[21]Farmer household expenditure for food consumption2 PRT + E ................................................……………..[22]of the expected estimations parameter are: n1, n2 > 0Farmer household expenditure for non foodPRT + E ................................................……………..[23]The sign and magnitude of the expected estimations parameter are: p1, p2 > 0nditure for healthPRT + E ..........................................................……………..[24]The sign and magnitude of the expected estimations parameter are: q1, q2 > 0Farmer household expenditure for education2 PRT + E .............................................……………..[25]gn and magnitude of the expected estimations parameter are: r1, r2 > 0Farmer household expenditure for food and non food consumption............................................................................……………..[26]Total farmer household expenditurePGNRT = 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)www.iiste.org……………..[17]……………..[18]……………..[19]……………..[20]……………..[21]……………..[22]……………..[23]……………..[24]……………..[25]……………..[26]……………..[27]……………..[28]
  • 5. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 2013TKDKSP = In-household labor usage for other than paddy (HKO)TKDKOF = In-household labor usage for offTKDKNF = In-household labor usage for nonUTKLK = labor wage for outUTKDKOF = labor wage for offUTKDKNF = labor wage for nonTBUTP = 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 offPKNF = family income nonPRT = 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 nonAKPPS = Paddy farmer family members who are still in school (soul)PGNRT = Total household expenditure (RP)2.3. Estimation and SimulationModel identification shows that economic model of rice farmers household inover-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, statisticalcriteria for validation of value estimatMeans Squares Percent Error (RMSPE) and Theils Inequality Coefficient. The results of model prediction isconsidered appropriate or feasible as a base simulation if the value of RMSPE andto zero.Simulations conducted to determine the impact of rice farmer household income changes, when the price orother policy changes. Simulation was done through: (simultaneously to cover the cost of seeds, fertilizer, pesticides and labor outside the family (TKLK), respectively10%, (b) multiple simulation the increases 10% for total cost rice farming withthe provision of subsidies for paddyIII. RESULTS AND DISCUSSION3.1. General variability Econometrics Model ResultsThe empirical results of estimation model in this study is good. All exogenous variables included in thmodel has a sign in accordance with the parameters and logical theory. Statistical criteria used in evaluating theprediction is quite good. From 16 behavioral equations, most equations indicate adjusted Rmore than 67%. Generally, in simultaneous equations, this suggests that exogenous variables included in thestructural equation model was able to explain endogen variance of each variable. The value test statistic F isgenerally high, there are 12 equations of 16 equations that have F count value greater than 10.3; meaningd Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)120household 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 inidentified. 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, statisticalcriteria for validation of value estimation econometric model is the Root Means Squares Error (RMSE), RootMeans Squares Percent Error (RMSPE) and Theils Inequality Coefficient. The results of model prediction isconsidered appropriate or feasible as a base simulation if the value of RMSPE and U-Theil get smaller or closeSimulations conducted to determine the impact of rice farmer household income changes, when the price orother policy changes. Simulation was done through: (a) increase in the paddy production factor inputs pricetaneously 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 inIII. RESULTS AND DISCUSSION3.1. General variability Econometrics Model ResultsThe empirical results of estimation model in this study is good. All exogenous variables included in thmodel has a sign in accordance with the parameters and logical theory. Statistical criteria used in evaluating theprediction is quite good. From 16 behavioral equations, most equations indicate adjusted Rmore than 67%. Generally, in simultaneous equations, this suggests that exogenous variables included in thestructural equation model was able to explain endogen variance of each variable. The value test statistic F isare 12 equations of 16 equations that have F count value greater than 10.3; meaningwww.iiste.orgModel identification shows that economic model of rice farmers household in lebak swampland isidentified. Therefore, this research model estimation using 2SLS (Two Stage Least Squares). Modelvalidation aims to analyze the extent models are built to represent the real world. In this research, statisticalion econometric model is the Root Means Squares Error (RMSE), RootMeans Squares Percent Error (RMSPE) and Theils Inequality Coefficient. The results of model prediction isTheil get smaller or closeSimulations conducted to determine the impact of rice farmer household income changes, when the price orproduction factor inputs pricetaneously to cover the cost of seeds, fertilizer, pesticides and labor outside the family (TKLK), respectivelyprice increase of 10%, (c)acreage in lebak swamplandThe empirical results of estimation model in this study is good. All exogenous variables included in the structuralmodel has a sign in accordance with the parameters and logical theory. Statistical criteria used in evaluating theprediction is quite good. From 16 behavioral equations, most equations indicate adjusted R2values above 0.67 ormore than 67%. Generally, in simultaneous equations, this suggests that exogenous variables included in thestructural equation model was able to explain endogen variance of each variable. The value test statistic F isare 12 equations of 16 equations that have F count value greater than 10.3; meaning
  • 6. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 2013variation explanatory variables in each equation is jointly able to explain the variation of endogenous variableResults structural equation estimation for input demand sseeds; urea fertilizer, pesticides and wages TKLK, has a negative sign. This indicates that input price is animportant 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 impliesthat 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. Theseeds and fertilizers usage have significant effect on paddy production. This suggests the useincluding the price factor, to be one important factor in decision making.The results of family labor estimation foroff-farm activities and employment outside the famindicates 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 forlabor to be enlarged, it will reduce the labor for paddy farming. Reduced labor forTKLK for certain activities that are urgent, such as planting and harvesting. This is similar to the opinionet al (2005).The results of labor out-household estimation forinfluenced by the positive sign of land wide. The increase in labor wage of outlabor force allocation although relatively small though. This is consistent with studies Sawit (1993) and Fukuial (2004), the wages have a negative impact on labor usage. Conversely, the land area increase will increase theamount out-household labor. In paddyharvesting, due to urgent nature of the activity.3.2. Impact of paddy input factors priceThe 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 infarm income other than paddy abouthousehold income (PKNF) also decreasedfarmer household income (PRT) at lebakpaddy production cost is 10%, as shown in FigureFigure 1. Income change compar-8.00-6.00-4.00-2.000.00%d Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)121variation explanatory variables in each equation is jointly able to explain the variation of endogenous variableResults structural equation estimation for input demand showed the input prices, including the price of paddyseeds; urea fertilizer, pesticides and wages TKLK, has a negative sign. This indicates that input price is animportant 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 impliesthe use of land requires more input factors.In equation of rice production estimation; seeds, fertilizer, pesticides and labor usage have a positive sign. Theseeds and fertilizers usage have significant effect on paddy production. This suggests the useincluding 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 forfarm activities and employment outside the family has a negative sign. The reality infarming land is always dependent on labor availability in family. Conversely,farm labor TKLK with family labor for paddy. This meanslabor to be enlarged, it will reduce the labor for paddy farming. Reduced labor for paddyTKLK for certain activities that are urgent, such as planting and harvesting. This is similar to the opinionhousehold estimation for paddy; besides negatively affected by the wages, are alsoinfluenced by the positive sign of land wide. The increase in labor wage of out-household likely decrease theugh 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 thepaddy farming at lebak swampland, out-household labor is used in planting andharvesting, due to urgent nature of the activity.input factors priceprice input (seeds, fertilizers, pesticides and wages TKLK) affect the PUTP of1%. In addition to the decline of the PUTP, the increase in input prices also have an impact on the decline inabout -0.223%; off-farm households income (PKOF) ofhousehold income (PKNF) also decreased -0.208%. The increase of input prices is evidently loweringlebak swampland of -2.44%. Income change comparison due the increase inproduction cost is 10%, as shown in Figure 1. Income change comparison due to increased 10% cost of paddy farming8.006.004.002.000.00 PUTPPUTSPPTOFPKOFPKNFPRTwww.iiste.orgvariation explanatory variables in each equation is jointly able to explain the variation of endogenous variablehowed the input prices, including the price of paddyseeds; urea fertilizer, pesticides and wages TKLK, has a negative sign. This indicates that input price is anmaking. 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 impliesIn equation of rice production estimation; seeds, fertilizer, pesticides and labor usage have a positive sign. Theseeds 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 forily has a negative sign. The reality in lebak swamplandsfarming land is always dependent on labor availability in family. Conversely,. This means that if the non-farmwill increase the use ofTKLK 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 alsohousehold likely decrease theugh 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 thehousehold labor is used in planting andprice input (seeds, fertilizers, pesticides and wages TKLK) affect the PUTP of1%. In addition to the decline of the PUTP, the increase in input prices also have an impact on the decline inof -1.018% and non-farm208%. The increase of input prices is evidently lowering paddy2.44%. Income change comparison due the increase infarming
  • 7. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 20133.3. The impact of an input price increase toMultiple simulations, 10% increase in output price with 10% increase inimpact on input use and income, both farm income (PUTP) and the household farmers income (PRT). Theincrease in total cost of paddy farming 10%, with a 10% increase inseed usage of -3.88%, the decrease in urea usage of-13.79% for TKLK. But despite this decline, the impact on2.52%. The impact of increased costs toPUTSP (-0.223%); PKOF (-1.0185) and PKNF (with the increase 10% in paddyIncome change comparison are shown iFigure 2. Income change comparison due to 10% cost increased cost3.4. Impact of paddy seed subsidyInput prices for paddy crops tend to increase along with the increase of inflation and economic conditionschanges, both locally, regionally and nationally. This will put pressurethe other hand, paddy production level increasingly erratic due to climate change, increasing the pressure onfarmer household incomes, especially thave been executed but not yet holistic is seeds subsidy. The simulation results showed that seed subsidy can belowered total cost of -17.05%. This cost reduction impact on the increase12.028%; and PTOF 5.45%. Overall3.53%. Income change comparison of seed subsidy provision is shown by figureFigure 3. Income change compariso3.5. Impact of Paddy ExtensificationExtensification of paddy acreage by 25%, assuming the input and output prices of paddy is constant, willincrease the usage of paddy seeds-2.00-1.000.001.002.003.00PUTP%0.005.0010.0015.00%d Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)1223.3. The impact of an input price increase to paddy output price in the same proportionMultiple simulations, 10% increase in output price with 10% increase in paddy prices, intended to predict theinput use and income, both farm income (PUTP) and the household farmers income (PRT). Thefarming 10%, with a 10% increase in paddy prices, affect to a decrease in3.88%, the decrease in urea usage of -35.97%, the decrease of pesticideTKLK. But despite this decline, the impact on paddy farming income (PUTP) remain positive, up to2.52%. The impact of increased costs to paddy price with increase output price1.0185) and PKNF (-0.208%). The increase 10% in total cost ofprices 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 increasecrops tend to increase along with the increase of inflation and economic conditionsges, both locally, regionally and nationally. This will put pressure on farmer household income levels. Onproduction level increasingly erratic due to climate change, increasing the pressure onfarmer household incomes, especially those from paddy farming. One of the governments policy options thathave been executed but not yet holistic is seeds subsidy. The simulation results showed that seed subsidy can be17.05%. This cost reduction impact on the increase of farmer farming income (PUTP) of12.028%; and PTOF 5.45%. Overall paddy seed subsidy would increase the farmer household income (PRT) of3.53%. Income change comparison of seed subsidy provision is shown by figure 3.Figure 3. Income change comparison of seed subsidyExtensificationExtensification 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 pesticidesPUTP PUTSP PTOF PKOF PKNF PRTPUTPPUTSPPTOFPKOFPKNFPRT0.005.0010.0015.00 PUTPPUTSPPTOFPKOFPKNFPRTwww.iiste.orgoutput price in the same proportionprices, intended to predict theinput use and income, both farm income (PUTP) and the household farmers income (PRT). Theprices, affect to a decrease in paddy35.97%, the decrease of pesticide use of -11.35% andfarming income (PUTP) remain positive, up towith increase output price apparently lowering208%). The increase 10% in total cost of paddy farmingprices was still able to increase the farm households income (PRT) 0.54%.and 10% paddy price increasecrops tend to increase along with the increase of inflation and economic conditionson farmer household income levels. Onproduction level increasingly erratic due to climate change, increasing the pressure onfarming. One of the governments policy options thathave been executed but not yet holistic is seeds subsidy. The simulation results showed that seed subsidy can beof farmer farming income (PUTP) ofseed subsidy would increase the farmer household income (PRT) ofExtensification of paddy acreage by 25%, assuming the input and output prices of paddy is constant, willand pesticides (POP) 1.29%.
  • 8. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 2013The increase usage of inputs result the increase inputfarming –TBUTP- (include wages of TKLK) of 10.98%. Comparison between changes in input use, changes invalue of inputs usage and changes in total cost of paddy production due to an increase the total area ofcrops in “lebak” area by 25% are shown in FigureFigure 4. Comparison the changes of input use and cost due to 25 % paddyNot only inputs utilization, but vast areas of arable land expansion also affects labor usage. The labor usage inthe family (TKDKP) should be added as an increase of 24.32%. Similarly, the use TKLK will increase 29.36%.Therefore, the labor usage for paddythe amount of other labor than paddy(TKDKOF) of -12.78% and a reduction in labor for noncomparison due the increase in total area of5.Figure 5. Farm labor change comparison due 25 % paddy land increThe usage change of labor and input due to increased acreage of paincome. Therefore, it make paddy farmer income (PUTP) increased by 30.19%. In contrast, income fromoff-farm activities (PKOF) decreased by-10.83%. Overall, the expansion of paddyThere are two important causes of decline in rice farmers household income in lebak swampland, namely: (1)increase the use of paddy farming inputs adding tolabor usage due to the expansion of rice farming with increase labor forthe labor usage in other activities. This suitable research proposed by Phimister aTKDK compensation is limited then add TKLK or leave the nonexpansion is also difficult to realize because in irrigation addition in0.005.0010.0015.00%-20.00-10.000.0010.0020.0030.00%d Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)123The 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 inanges in total cost of paddy production due to an increase the total area ofcrops 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 increaseion, but vast areas of arable land expansion also affects labor usage. The labor usage inthe 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 reducepaddy farming (TKDKSP) of -14.16%, reduction in labor for off12.78% and a reduction in labor for non- farm (TKDKNF) of -19.15%. Farm labor changcomparison 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 increaThe usage change of labor and input due to increased acreage of paddy plants have positive impact on farmerincome. Therefore, it make paddy farmer income (PUTP) increased by 30.19%. In contrast, income fromfarm activities (PKOF) decreased by -44.19% and income from non-farm activities (PKNF) decreased bypaddy land 25% causes a decrease in farmers household income ofThere 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 increaselabor usage due to the expansion of rice farming with increase labor for paddy farming activities and/or reducethe 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 higherexpansion is also difficult to realize because in irrigation addition in Lebak swampland is difficult; too expensive.0.005.0010.0015.00PBP PPUR POP NPIP TBUTPPBPPPURPOPNPIPTBUTPTKDKPTKDKSPTKDKOFTKDKNFTKLKTKPwww.iiste.orgof 3.13% and also increase the total cost of paddy(include wages of TKLK) of 10.98%. Comparison between changes in input use, changes inanges in total cost of paddy production due to an increase the total area of paddyland wide increaseion, but vast areas of arable land expansion also affects labor usage. The labor usage inthe 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 reduce14.16%, reduction in labor for off-farm activities19.15%. Farm labor changespaddy crops in lebak swampland area by 25% is shown in figureasedddy plants have positive impact on farmerincome. Therefore, it make paddy farmer income (PUTP) increased by 30.19%. In contrast, income fromfarm activities (PKNF) decreased byland 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 increasefarming activities and/or reducend Roberts. (2006). Whenfarm wages are higher. In addition, theland is difficult; too expensive.TBUTPTKDKPTKDKSPTKDKOFTKDKNF
  • 9. Journal of Economics and Sustainable DevelopmentISSN 2222-1700 (Paper) ISSN 2222Vol.4, No.6, 2013This implies the need for further optimization for onvegetables, fisheries and livestock in order to increase household incomes ofresearch by Suparwoto and Waluyo (2009).farmer household. Yet according to AdewunmiZenebe Gebreegziabher (2011); nonimplicitly 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 % paddyIV. CONCLUSION1. Price of paddy seed, fertilizer and wages TKLK affect input demand and the rising of input price (seeds;fertilizers; pesticides) would decrease household income ofincrease coupled with paddyhousehold farmer income inincome of paddy farmers requires the input price stability at the farm leveother 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 ofpolicies 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 becausedifficulty of irrigation and too expensive. Negative impact of expansion on revenue has implications to theimportance to optimize on-farm activities such as diversification other thanfisheries and livestock that householdpolicy is the most likely alternative to increase farmer incomes inthe expertise that has been owned by the farmers and the land can still be used afterincrease farmer household income can also be done through nonnon-farm activities likely continue to increase. Income maximization from nonby improving farmer skills and opportunities utilization, not only around thebut covers a larger area. The increase in nonsecurity. It also means to strengthenReferencesAbdurrahman. 1992. Efficiency-60.00-40.00-20.000.0020.0040.00%d Sustainable Development1700 (Paper) ISSN 2222-2855 (Online)124the need for further optimization for on-farm activities such as diversification thanvegetables, fisheries and livestock in order to increase household incomes of paddy farmers. This is in line withresearch by Suparwoto and Waluyo (2009). The decline in income from non-farm income was very influential onfarmer household. Yet according to Adewunmi, et al (2011); Pam Zanohogo (2011); andZenebe Gebreegziabher (2011); non-farm income increased significantly to sustain houseimplicitly also means strengthening the farm household economy. Income change comparison due the acreageincreased of farmer household in lebak area by 25% shown in Figure 6.Figure 6. Income change comparison due to 25 % paddy land increasedseed, fertilizer and wages TKLK affect input demand and the rising of input price (seeds;fertilizers; pesticides) would decrease household income of paddy farmers. Adversely, the input priceprice output increase in the same proportion was still able to increasehousehold farmer income in lebak swamplands. Negative impact of higher input price to householdfarmers requires the input price stability at the farm level and smooth distribution. On theprice output must be maintained in order not fall or even can increase.Seed subsidies also have positive impact on household income of paddy farmers. Therefore, seed subsidieslemented can be expanded to include more farmers.-farm source of income, paddy crop area expansion (extensificationlands had lower household income. In addition, the expansion is difficult to realize becausedifficulty of irrigation and too expensive. Negative impact of expansion on revenue has implications to thefarm activities such as diversification other than paddyfisheries and livestock that household rice farmer income in Lebak swampland.policy is the most likely alternative to increase farmer incomes in Lebak swamplands at onthe expertise that has been owned by the farmers and the land can still be used after paincrease farmer household income can also be done through non-farm activities. Moreover, wages level infarm activities likely continue to increase. Income maximization from non-farm activities can be doneills and opportunities utilization, not only around the lebakbut covers a larger area. The increase in non-farm income is significant to sustain farmer household foodsecurity. It also means to strengthen the farm household economy.Analysis of paddy in lebak swampland of Hulu Sungai Utara District60.0040.0020.000.0020.0040.00PUTPPUTSPPTOFPKOFPKNFPRTwww.iiste.orgfarm activities such as diversification than paddy such asfarmers. This is in line withfarm income was very influential on; Pam Zanohogo (2011); and Bereket Zerai andfarm income increased significantly to sustain household food security. It isIncome change comparison due the acreageland increasedseed, fertilizer and wages TKLK affect input demand and the rising of input price (seeds;farmers. Adversely, the input priceprice output increase in the same proportion was still able to increaselands. Negative impact of higher input price to householdl and smooth distribution. On theprice output must be maintained in order not fall or even can increase.farmers. Therefore, seed subsidiesextensification) in Lebaklands had lower household income. In addition, the expansion is difficult to realize because of thedifficulty of irrigation and too expensive. Negative impact of expansion on revenue has implications to thepaddy such as vegetables,land. Farm diversificationlands at on-farm level duepaddy harvest. Efforts tofarm activities. Moreover, wages level infarm activities can be doneswampland area alonefarm income is significant to sustain farmer household foodin lebak swampland of Hulu Sungai Utara District - South
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