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 ,

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, . 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.

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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 . Temanggung Regency produces 57.55% of total garlic production in 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

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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.

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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 dependents and years of experience in farming.

Table1.Total and Percentage of Respondents Based on Characteristics of Research Respondents

No Characteristics Criteria Total Percentage Information ---- Person ------% ---- 1 Gender Male 80 100,00 Female 0 0,00 2 Age (Years) < 30 11 13,75 Average = 40,78 31 – 40 31 38,75 years 41 – 50 29 36,25 51 – 59 6 7,50 > 60 2 2,50 3 Level of Education Bachelor 2 2,50 Average =8,01 degree years High School 12 15,00 Junior High 29 36,25 School Elementary 34 42,50 School No school 3 3,75 4 Experience (Years) < 1 11 13,75 Average =2,45 2 – 3 57 71,25 years > 4 12 15,00 5 Land Area posessed <1 56 70,00 Average = 1,02 (Ha) 1,01 – 2 20 25,00 Ha > 2 4 5,00 6 Land Area in < 0,5 51 63,75 Average = 0,64 partnership (Ha) 0,6 – 1 23 28,75 ha > 1 6 7,50

The head of the family or husband was the one to make decision about contract farming between farmers and importers. Male farmers had more responsibilities in farming activity as well as greater decision than female or their wives related with farming activites. Female farmers gave contribution from the planting, harvesting and sorting. Female farmers or the wives had greater involvement, they had less involvement in decision making of farming activities, especially in garlic farming. The low level of women involvement in decision making in the family tends to be due to a lack of acknowledgment of women abilities and their experience (Hutajulu, 2015). Based on this, it need more efforts to put attention in order to develop empowering program for women farmer especially to improve their capability. Moreover, age of farmers can be related to physical ability for managing a farm. The average age of the respondents were 40.78 years. This was in the stage of productive age, where

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

they were physically able to manage their garlic farm. Most of the farmers had 8.24 years of formal education. Farmer’ education had an effect towards farmer’ absorption on technological adoption. Low level of farmer’ education will block the process of adoption innovation (Soekartawi, 2006). In addition, farmer had low experience in managing a garlic farm. Most of the farmers had 2.45 years of experience in garlic farm. Farmers had low experience in managing garlic farm. It means they started to planting garlic when the contract farming had been implemented between importers and farmers.

3.2 Contract Farming Pattern of Garlic Farming in Temanggung Regency Contract farming pattern between garlic farmers and importers in Temanggung Regency was agribusiness operational cooperation/kerjasama operasional agribisnis (KOA). These pattern was related with the implementation of contract farming in local garlic farming have been lauched by Indonesian Ministry of Agriculture in 2019. Farmers had responsibility to provide land, facilities and labor as well as able to produce up to 6 tons/ha of garlic. It was mandatory for importers to provide seeds and production inputs, such as: seed, fertilizer. Importers had responsibility to provide agricultural technological assistance, including giving training as well as to assists farmers in the garlic cultivation process. Importers were expected to provide market by buying farmers’ garlic. This partnership expected to improve farmer’ income. The farmers got 70% of benefit from this contract farming by selling product to importer. There were 11 garlic importers involved in contract farming. However, implementation of contract farming had not yet been implemented correctly. Lack of technological assistance from importers prevent garlic farmers to get more benefits from contract farming activity. The total garlic production during implementation of contract farming amounted to 6.96 tons/ha. 3.3 Income Analysis of Garlic Farmer

Table 2. Production Cost

Volume Average Cost Cost per ha No Components (average) Total Percentage Total Percentage --- Rp ------% ------Rp ------% --- 1. Input Cost a. Liquid fertilizer 0,13 liter 7.187 0,07 11.219 0,07 b. Pesticide 0,6 liter 35.062 0,35 54.731 0,36 c. Mulch 0,26 roll 101.250 1,02 158.048 1,03 Total input cost 143.500 1,45 224.000 1,38 2. Labor Cost a. Family labor 174,93 HOK b. Non Family labor 164,82 HOK Total labor cost 7.844.670 79,14 12.245.365 78,96 3. Other cost (irrigation, 779.375 7,86 1.216.585 7,93 etc.) 4. Land Rental fee 750.000 7,57 1.170.731 7,63 5. Equipment Cost 22.125 0,22 34.536 0,23 Total fixed cost 1.923.791 19,41 3.002.991 19,58 Production Cost 9.911.979 100 16.174.618 100 Based on Table 2, it shows that labor cost was the highest expenses have been financed by farmers. Family labor is widely used in garlic farming as well as paid labor. The total

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

production cost was IDR 9,911,979.00. Labor was important factor in garlic farm. It was based on family labor and paid labor. Labor include activities for managing a farm including physical ability to do work and decision making related with planning and managing their farm as well as marketing farm product.

Table 3. Production, selling price, revenue and income of garlic farm

No Component Average Per ha

1 Net production 3,13 5,02 2 Total production 4,34 6,96 2 Selling price Rp. 8.200,00 Rp. 8.200,00 3 Revenue Rp. 25.791.875,00 Rp. 47.169.170,00 4 Income Rp. 15.879.895,00 Rp. 30.995.170,00

Multiple linear regression equation model in the following form:

The constant value of -8.584 indicates that whenever variables of assistance of production unit, technological assistance, and access to market are zero, the income of garlic farmer has a value of -8.584. Negative constant value means that whenever contract farming does not have variables of assistance of production unit, technological assistance, and access to market, the income of garlic farmers was negative or the income of garlic farmers decreases. Tabel 4 shows the result of multiple regression analysis. The F test results using SPSS show that the significance value was 0.000 or less than 0.05. The calculated F value of 358.438 was more than significance level of 5 percent or 0.05, it can be concluded that hypothesis alternative was accepted. It means that the variables of variables of assistance of production unit, technological assistance, and access to market had simultaneously significant effect toward the income of the garlic farmers in the Temanggung Regency. Tabel 4 also shows the result of T test. The variables of production unit assistance and access to market had significant effect toward farmers’ income. Meanwhile, the variable of technological assistance had no significant effect toward farmer’ income. Importers did not provide enough technical assistance for garlic farmers hence there was lack of technological transfer for garlic farmers in Temanggung Regency. Farmers got technical assistance and technological transfer from extension agents. There was lack of partnership between importers and local government to develop knowledge transfer to farmers. The assistance provided by importers was only to pursued the obligation to plant garlic up to 5% of their import quota. It can be noted that the success of a contract farming is determined by willingness between the partners in carrying out their agreement. In other words, the success of a contract farming depends on the common values, norms, attitudes and behavior of the partners who have been involved in contract farming (Erfit, 2017).

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

Table 4. Results of multiple regresion analysis

Input Variables Coefficient Standart Error t-ratio Constant - 8,584 0,890 - 9,650 Assistance of 0,479 0,034 14,238 * production unit (X1) Technological 0,005 0,024 0,201 ns assistance (X2) Access to market 0,562 0,023 24,300 * (X3) R2 0,934 γ 0,931 0,48291 0,472 Information: * It has significantly affects the 95% confidence level ns It has no significant effect

IV. CONCLUSSIONS AND SUGGESTIONS 4.1 Conclussion Contract farming between importers and garlic farmers in Temanggung Regency was carried out in 2019. Based on the result, there was national regulation for importers to collaborate with garlic farmers to plant garlic amounted to 5% of their import quota in the form of a contract farming. Technological transfer did not have significant effect toward farmers’ income in Temanggung regency because importers had less attention to technology transfer process in garlic farming. On the other hand, production unit assistance and access to market had significant effect toward garlic farmers’ income in Temanggung Regency. 4.2 Suggestion 1. Agriculture Office of Temanggung Regency needs to facilitate garlic farmers to collaborate with private stakeholder in order to assist farmers in providing seeds or other agricultural inputs. 2. It need more concreate plan and regulation to make collaboration with importers to implement contract farming between importers and garlic farmers. 3. It need to strengthen the role of farmer’ institutions as well as improving capability the extension agents. 4. It need willingness from government to assist garlic farmers in improving marketing system and price stability.

REFERENCES

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

Ahmar, A., Mappamiring, M., and Parawangi, A. 2016. The Role of Government in Farmer’s Empowerment Program in Parumpanai Village, Wasuponda District, Luwu Timur Regency. J. Administrasi Publik. 2(2): 120 – 136. Ashari, S. 1995. Production Aspect in Horticulture. UI. Press. Jakarta. Direktorat Jenderal Hortikultura 2018. Perkembangan Neraca Bahan Makanan (NBM) tahun 2010 – 2017. Erfit, E. 2017. Contract Farming Model in Agribusiness. J. Embrio. 4(01): 6-17. Harinta, YW. 2018. Development Study of Garlic Commodity in . Agrisaintifika. Jurnal Ilmu – ilmu Pertanian. 2(2). Hariwibowo, P.A. 2014. Penawaran Bawang Putih di Indonesia. Jurnal Agrimeta. 2(2). Hutajulu, J.P. 2015. Women Role in Agriculture in Rasau Jaya District, Kuburaya Regency. Jurnal Social Economic of Agriculture. 2(4). Kiloes, A.M. and Hardiyanto. 2019. Feasibility Study of Garlic Farming. J. Hort. 29(2): 231 – 240. Munawaroh, L.A., and R. Rijanta. 2020. Sustainability of Garlic Farming: Kledung District, Temanggung Regency. Jurnal Bumi Indonesia. 9(3). Moulia, M and Syarief. 2018. Antimicrobial of Garlic Extract. Jurnal Pangan. 27(1). Sakinah, P., F Jakfar, and Indra. 2019. Factor Effecting Indonesian Import Policy of Garlic Commodity. 4(3). Soekartawi. 2006. Farming System. UI Press. Jakarta. Sugiyono. 2015. Research Methodology of Quantitative and Qualitative Research. Alfabeta. Bandung. Waridjo and Yosefina. 2016. Development Strategy of Garlic Commodity to Improve Farmer’s Income in Miomaffo Barat District. Jurnal Agribisnis Lahan Kering. Agrimor 1(1): 10 – 12.

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