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Contract Farming on Garlic Farm, Case Study in Temanggung Regency, Indonesia

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Contract Farming on Garlic Farm, Case Study in Temanggung Regency, Indonesia International Journal of Humanities, Religion and Social Science ISSN : 2548-5725 | Volume 5, Issue 1 2021 www.doarj.org CONTRACT FARMING ON GARLIC FARM, CASE STUDY IN TEMANGGUNG REGENCY, INDONESIA Ambar Setianingsih.,1 Edy Prasetyo.,2 and Siwi Gayatri3 1,2,3 Faculty of Animal Husbandry and Agriculture, Diponegoro University Email correspondence: [email protected] Abstract: The research aims were to (i) analyze the activity of contract farming on garlic farm between farmers and importers, (ii) analyze the income of the garlic farmers who participating in contract farming, (iii) analyze variables of assistance of production unit, technological assistance, and access to market toward income of garlic’ farmers. The research was conducted in Tretep District, Temanggung Regency. This research used a survey method of 80 respondents. Simple random sampling was used to determine respondents among 318 garlic farmers participating in contract farming. Data analysis was analyzed by descriptive, income analysis and multiple linear regression methods. The partnership was established with farmers providing land and labor, importers providing seeds and production facilities. Based on the result, the average production cost was IDR 9,911,979.00 with the largest percentage of production costs being labor costs. The average yield for one harvesting season was 5.36 tons or 6.96 tons/ha. The average income of farmer was IDR 15,879,895.00 or equivalent to IDR 30,995,170.00/ha. Simultaneously, assistance of production unit, technological assistance, and access to market had a significant effect on the income of garlic farmers in Temanggung Regency. Partially, assistance of production unit, and access to market significantly affected the income of garlic farmers in Temanggung Regency. Technological assistance had no significant effect on the income of garlic farmers in Temanggung Regency. Keywords: contract farming, garlic farmers, importers, income I. INTRODUCTION Garlic (Allium sativum L) is a species that is extracted from its tubers for cooking and medicine (Ashari, 1995). Moulia (2018) informed that have been used as antimicrobials. Domestic consumption continued to increase every year following the growth rate of population and income (Harinta, 2018). However, national production did not fulfil national demand. Production in 2015 was 20,293 tons, which decreased by 3.85% in 2017 to 19,510 tons (BPS, 2020). The trend of garlic production was decreasing. The lack of domestic demand was filled with imported products. Trade liberalization as well as reduction of import duties has contributed to the increase of imported garlic (Hermawan in Sakinah et al., 2019). Imported garlic have been increased since 2002-2017 (Sakinah et al., 2019). Indonesian garlic production has not been reached optimal production (Kiloes and Hardiyanto, 2019). Waridjo and Yosefina (2016) stated that Indonesian garlic farming had low productivity. Garlic farmers faced several problems, such as: low quality seed, failure of technology transfer and training, inefficient and excessive use of fertilizers. 33 www.doarj.org Contract Farming on Garlic Farm, Case Study in Temanggung Regency, Indonesia In order to boosted national production and reduce national dependency into imported garlic, Indonesian government launched the Regulation of Minister of Agriculture number 38 of 2017 which was renewed by the Regulation of the Minister of Agriculture number 39 of 2019. Government has mandated the importers to develop contract farming with local farmers in order to increase national production of garlic. It was mandatory for importers to provide seed, production input, technology transfer and access to market meanwhile the farmers will benefit amounted to 70% by its garlic production. The importers were mandatory to make partnership with farlic farmers and harvest local garlic equal to 5% from their Import Recommendation of Horticulture Products (Rekomendasi Izin Impor Hortikultura /RIPH). The contract farming in garlic commodity expected several outcomes, such as: a) Reduction of production costs because some of production inputs were provided by importes, b) Technological assistance by implementing Good Agricultural Practices (GAP). The transfer of technology will increase production, c) Improving marketing system (Directorate General of Horticulture, Ministry of Agriculture, 2018). Partnerships for farmers are expected to be able to answer various problems and obstacles at the farmers’ level, such as the provision of agricultural facilities, agricultural technology, marketing and increasing income (Ahmar, 2016). Temanggung Regency has highest garlic production in Central Java. Temanggung Regency produces 57.55% of total garlic production in Central Java Province. The contract farming between garlic farmers and importers in Temanggung Regency has existed since 2017 with covers 383,050 hectares involving 11 import companies (Agriculture and Food Security Office of Temanggung Regency, 2018). The implementation of national regulation toward contract farming between garlic farmers and importers will certainly affect the income of garlic farmers. This activity also provides seed and other production inputs and it were distributed for farmers (Munawaroh and Rijanta , 2020).Based on consideration above mention, this research aims were to: (i) analyze the activity of contract farming on garlic farm between farmers and importers, (ii) analyze the income of the garlic farmers who participating in contract farming, (iii) analyze variables of assistance of production unit, technological assistance, and access to market toward income of garlic’ farmers. Result of the reseach will be as a step to improve policy on improving local garlic production as well as farmer’s income. II. RESEARCH METHODS The research was conducted in the Tretep District, Temanggung Regency in December 2020. The research location was determined purposively in Tretep District, with the consideration it has highest garlic production in Central Java Temanggung Regency implemented government regulation of contract farming between farmers and importers in 2019. The research used survey method. The sample was determined by using simple random sampling among 318 farmers who participated in contract farming program. The number of sample was determined by the Slovin method of 80 garlic farmer respondents. The data sources used were primary data and secondary data. Primary data was in the form of direct interviews with garlic farmers participating in the 2019 of contract farming. Secondary data was obtained through documents and reports, both written and oral. The data collection methods were through direct observation, interviews, filling out questionnaires and documentation study. Descriptive analysis was used to analyze the partnership pattern of contract farming program between garlic farmers and importers. Moreover, the income analysis was used to analyze the 34 www.doarj.org Contract Farming on Garlic Farm, Case Study in Temanggung Regency, Indonesia second objective of the research. The income analysis was calculated for one harvesting season of garlic farm. Income analysis was according to Soekartawi (2006) : Pd = TR – TC Information: Pd = Total Income received by farmers from cultivating garlic in 2019 (IDR) TR = Total Revenue received by farmers from selling garlic in accordance with the distribution of revenue between farmers and importers (IDR) TR = Py x Y Information Py = Total Production of garlic in 2019 (kg) Y = Selling price of garlic (IDR) TC = Total cost (Total Production Cost) incurred by farmers (IDR) The calculation was as follows: TC = FC + VC Information: FC = Total fixed cost incurred by garlic farmers (IDR) VC = Total Variable Cost incurred by garlic farmers (IDR) Multiple linear regression analysis was used to analyzed the effect of the three independent variables, namely variables of assistance of production unit, technological assistance, and access to market toward the dependent variable of income of garlic farmers. The formulation of multiple linear regression analysis was as follows: Y = a + b1X1+ b2X2 + b3X3 + e Information: Y = Farmer’s income (weight score) a = Intercept b(1,2,3) = Variable Coefficient X1 = Assistance of production unit (score) X2 = Technological assistance (score) X3 = Access to marketing (score) e = Error coefficient The measurement of each variable used likert scale. The likert scale was used to measure the attitudes, opinions and perceptions of a person or group of people about social phenomena that are research variables (Sugiyono, 2015). The variable to be measured was translated into a variable indicator. Likert Scale had a choice of answer from very positive to negative responses and it can be scored, Research instruments used the likert scale can be developed in the form of a checklist or multiple choice. This research used four alternative measurement answers, namely: strongly agree (SS) with a weight score of 4, agree (S) with a weight score of 3, disagree (TS) with a weight score of 2 and strongly disagree (STS) with a weight of score 1. 35 www.doarj.org Contract Farming on Garlic Farm, Case Study in Temanggung Regency, Indonesia III. RESULTS AND DISCUSSION 3.1 Characteristics of Respondents The characteristics of the respondents provide an overview of the respondents related to garlic farmers participating in the contract farming program. The characteristics of the respondents in this research include age of the farmer, years of formal education, number of family
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