Organic Farming as an Alternative in Improving the Economic Viability and Sustainability of Rice Farms (Study case in North Sumatra, Indonesia) Diana Chalil

  

and Sustainability of Rice Farms

(Study case in North Sumatra, Indonesia)

1) 2)

  

Diana Chalil and Riantri Barus

1)

  

University of Sumatera Utara

2)

University of Nusa Bangsa Abstract

  

In 1984 the use of High Yield Varieties (HYV) regarded as success stories in tackling the

growing food needs. However, the use of HYV needs to be followed by the use of large

amount of chemical fertilizers, which then leads to an increase in fertilizer scarcity and

price. Therefore Indonesian Government provides subsidized fertilizer, especially for

important commodity such as rice. In 2014 the Indonesian Government spent US$ 1.8

million for the fertilizer subsidy. In such a condition, sustainability and economic viability

of conventional rice farming in the future is in question, and organic rice farming is then

widely discussed as an alternative. However, many farmers believe that organic farming is

less profitable because its productivity is relatively low and production costs are relatively

high. To analyze these perceptions, this study was conducted in an organic rice farming

center in North Sumatra. Viability and sustainability of organic rice farming is compared

with those of the semi-organic and conventional ones. The collected farm level data were

calculated by using 2 selling price scenarios namely (1) existing condition selling price and

(2) potential selling price, and 3 cost scenarios namely (1) existing condition expenditure,

(2) expenditure without fertilizer subsidy and (3) opportunity costs. The results show that,

except the cost of fertilizer, all cost components of conventional rice farming similar to

that of the organic rice farming. Conventional agricultural fertilizer costs only about 60%

of that of the organic farming. In fact, the difference is mainly stemmed from the

subsidized fertilizer price enjoyed by conventional rice farmers, which is least provided for

the organic ones. The average productivity of organic rice farming is only about 80% of

  

the conventional farming. Although the decrease in productivity is followed by the

increase in selling price, it is only about 11% and not enough as compensation. Actually,

the organic rice can be sold 2-3 times higher if the rice has been certified. In such a

condition, the ratio of the selling price and the cost per kg of the certified organic rice

could also reach more than 2 times higher than that of the conventional one, with values of

6.75 and 3.28, respectively. Therefore, it can be concluded that with proper management,

organic farming has great potential to improve the sustainability and economic viability of

rice farming.

Keywords: Organic, Conventional, Rice Farming, Viability, Sustainability, Indonesia Introduction

  In Indonesia, rice is the staple food for most of the 250 million population, thus rice

price and availability problems could lead to state instabilities. In relation, the Indonesian

government heavily intervenes with the rice industry, including in the pricing of fertilizer

and dry grain harvest. In 2014 the Indonesian Government spent as much as US$ 1.8

million for the fertilizer subsidy, but no significant improvement have appeared in the rice

price and supply, thus the subsidy began to be considered a burden for government

expenditures.

  However, cutting the subsidies will likely lead to a decrease in the Indonesian rice

production. This is indicated by the cointegrating equation estimation result of the North

Sumatra monthly Urea real price and paddy’s production data (from Ministry of

Agricultural and Statistic Indonesia, 2005-2010) shows a negative relationship between the

variables (Appendix 1). As an alternative, in 2001 the Indonesian government launched

organic farming programs which are expected to reduce the use of chemical fertilizers. The

goal is that in 2010, Indonesia will been able to produce organic rice on a large scale and

  

to export it. In fact, until 2013 the progress is still very slow, with no large scale organic

farms even only for supplying the domestic needs. Many farmers believe that organic

farming is less productive and less profitable, hence reluctant to apply it. Moreover,

organic rice agribusiness still faces various weaknesses and threats such as narrow land

areas, low productivity, low stage of implementation, no farm records, low income, lack of

separate rice milling drying floor and irrigation, low-quality product, lack of marketing

network and the government support, which have not been overcome, while the strength

and opportunities such as farmers’ experience, increasing demand trend, farmer groups and

non-governmental organizations supports, have not been optimized (Safitri and Chalil

2013, 14). In such conditions, the expected role of organic paddy farms in improving the

economic viability and sustainability of rice farms are questioned. This study is designed

to analyze the expected role and hopefully provide useful information for improving rice

farms’ viability and sustainability.

Literature Review

  Organic agriculture is an ecological production management system. This does not

mean that the products are completely free of residues, but minimizing the use of off-farm

inputs and using management practices that restore, maintain and enhance ecological

harmony (USDA 1995 in Gold 2007). It integrates various operation such as organic crop

and livestock operation and spreads the operations, therefore a good organic production

should also be economically sustainable (Kuepper and Gegner 2004). Since economic

viability is a necessary condition for sustainable agricultural and food systems (Ikerd

2007), an organic should also be economically viable. However, many organic farming has

limited economic implications, therefore, it is still questionable whether organic farming is

a viable tool to enhance farmers’ livelihood (Woranoot 2009; Chalil 2014).

  Viability is understood as the ability of a business to survive and prosper over a

long period, which can be measured by the level of profitability and its ability to meet

financial commitments and pay all its liabilities through its assets (Wiebe 2007). These

measurements can be influenced by various factors, such as level of subsidies and ratio of

farm input and grocery food prices. The importance of the subsidies on farms viability can

be analyzed by the impact of abolishing them. In European countries, many farms with

positive income could be negative when all subsidies are cut. On average, 75% of farms in

European countries would be viable if subsidies were to be abolished. However, the level

of dependency to subsidies appears to have huge difference among countries. The worst

country would be left less than 15% farms of the positive income if all subsidies are

removed (Johnston 2010).

  In Canada, depressed farm product prices are found to be the main cause of farm

viability declining. Farm input and grocery food prices have gone much faster than farm

product prices. In addition, extra costs related to the marketing demand, such as

specialized packaging, food traceability, quality assurance programs, food safety

programs, and sundry demands from processors and retailers without compensating return

could also lead to the decrease in farm viability (Scott and Colman 2008). The

compensating returns could be driven if consumers are willing to pay premium prices.

With more distance between consumers and producers, a label is needed as a guarantee,

Therefore, organic certifications become an essential factor. However, the certification

costs are not expensive and the process of certification is not simple, thus farmers need

both financial and technical supports from all stakeholders. Farms viability could also be

influenced by the farm size, off-farm income, domestic expenditure, and productivity of

crops. Among all, farm size and off-farm income appear to be the most significant

discriminating factors (Singh et al. 2009, 274).

  This study was conducted in Desa Lubuk Bayas, Kecamatan Perbaungan

Kabupaten Serdang Bedagai, which is purposively selected as it holds the largest organic

rice land area in North Sumatra (Bitra Indonesia 2013). The data was collected through

depth interviews with 51 organic, semi organic and conventional rice farms, comprising

land area, production, consumption, rice prices, the amount and price of labor, fertilizer,

and pesticides usage, household expenditure, and income from side jobs.

  Farm viability is measured by the net income, revenue-cost ratio and costs per kg

of each of the organic, semi organic and conventional farm. Selling prices are calculated in

2 scenarios namely (a) existing condition selling price and (b) potential selling price.

Potential selling prices are calculated for organic rice by using the certified organic rice

average retail price and the existing ratio of uncertified rice price at farmers’ and retails

level as follows:

=

where P refers to price, the subscript u and c refer to the uncertified and certified organic

rice, and superscript f and r refer to the farmer and retail price levels. Production costs are

calculated in 3 scenarios namely (a) existing condition, (b) without subsidies and (c) with

opportunity costs. “Existing condition” refers to the actual incurred costs, “without

subsidies” refers to the total costs when all subsidies are abolished, and “opportunity

costs” include all the imputed costs including family labors, subsidies and land rent.

  

Sustainability is measured by the difference between the farm revenue and the total of

production costs and household expenses, and the difference between the total farm

revenue and side jobs income and the total of production costs and household expenses.

Household expenditure consists of expenditures on food, children's school needs, water,

  

electricity, fuel, transportation, communication, social activities and health costs. Positive

difference shows a sustainable condition, otherwise unsustainable.

Results and Discussion

  Lubuk Bayas is one of the rice production centers in Sumatera Utara, which has

long been a model for other rice-producing centers. Many innovative programs have been

developed in this village, including the organic rice program. Unfortunately, the

development of the organic rice program is still slow. Since it was first introduced in 2001,

only 9 farms have continuously implemented the organic system (Chalil 2014). Many are

reluctant due to the low production which in turn gives low income. In fact, the “existing

condition” calculation (scenario 1) shows that the average net income of conventional rice

appears to be higher than the semi-organic rice and organic.

Table 1

  Table 1 shows the net income of organic, semi-organic and conventional rice

farming in 3 scenarios. Conventional paddy net income is the highest in all scenarios,

including that “without subsidies”. On average the price of fertilizer subsidy is only about

50% of the non-subsidized, thus conventional farms expend only 50% of their imputed

fertilizer costs. This will greatly affect the net income if the share of fertilizer cost to the

total costs is significant, and the share of the subsidized fertilizer to the total fertilizer is

significant too. In fact, on average conventional farms use 93.24% of subsidized fertilizers,

while that of the semi organic and organic farms only 49.69% and 18.80%, respectively

(Figure 1).

Figure 1

  Organic farms only receive subsidized petroganic fertilizer. They expend

  

IDR 362.179,-/ha (US$ 30.80/ha) and IDR 732.906,-/ha (US$ 62.32/ha) for the subsidized

  

and non subsidized farms, respectively. In addition, organic farmers still need an additional

expenditure as much as IDR 1.564.153,-/ha (US$ 133.01/ha) for manure, which none

being subsidized. In total they use around 5.5 tons/ha organic fertilizer/ha, whereas the

recommended amount is 6 tons/ha. On average the organic farms only use less than

  

IDR 400.000,-/ha (US$ 34.01/ha) of the subsidized fertilizer, while that of the

conventional reach more than IDR 1,000,000/ha (US$ 85.03/ha). In total, the conventional

farms expand more than IDR 3,000,000/ha (US$ 255.10/ha) on fertilizer cost, while the

organic ones only around IDR 1,000,000/ha (US$ 85.03/ha). All of these show that organic

farming could reduce the subsidized dependency in rice farms.

  However, abolishing fertilizer subsidies is unlikely to change the net income of

each farm system. In conventional farms, fertilizer only contributes 16.83% of the total

costs, thus its net income in scenario 2 is still higher than that of the organic farms (Figure

2). Therefore, it can be said that in terms of expenditure organic and conventional farms do

not severely depend on the subsidies.

Figure 2

  In terms of composition, most farmers tend to use the same type of fertilizers with

those of the subsidized ones. In this case, conventional farmers receive 4 subsidized

fertilizers, namely Urea, ZA, SP 36 and NPK, while Ministry of Agriculture Republic of

Indonesia recommends a composition of NPK, Urea, SP36 and KCL. Urea and ZA contain

the same main ingredient, Nitrogen, while NPK have Kalium in the form of KCl. All

farmers use Urea, and more than 70% use SP36 and ZA, while only less than 20% farmers

use KCL (Figure 3). This is likely due to a longer and observable impact of not using Urea,

SP 36 or ZA, such as disruption of crop growth, yellowing leaf and inhibition of grains’

formation. In contrast, the effects of KCl that are more apparent only at the time of harvest,

  

such as the breakage of paddy straw. Moreover, without subsidy, KCL price is much

higher than Urea and SP 36.

  

Figure 3

In general, farmers do not know the recommended amount of each fertilizer.

  

Instead, the usage is influenced by the subsidized fertilizers’ supply or their financial

condition to buy the fertilizers. Table 2 shows the comparison between the fertilizer usage

and recommendation.

  

Table 2

Many suggested that as a trade off to reduce fertilizer costs, organic farms need

more labor usage, hence expend more on labor costs. In fact, Table 3 shows that no

significant difference is indicated among the organic, semi organic and conventional labor

costs, with a total value around IDR 5 million/ha (US$ 425.17). However, most organic

farms use a large amount of family labor. While the semi-organic and conventional farms

use less than 10% of family labor, that of organic farms use more than 50%.

  

Table 3

The main reason for using more family labor is to reduce the production costs,

since organic farms give fewer revenues. However, the family labor usage might also

affect the productivity for at least for two reasons. First, in general paid workers are more

specialized thus more effective than family labor. Second, family labor need to handle

various works within larger areas, thus might affect the quality of their works. In fact, in

this case the average productivity in organic rice farming is only about 80% of the

conventional farming.

  

Table 4

Table 4 shows that organic rice productivity can reach 7.5 tons/ha, which is equal

to the average productivity of conventional rice, but not many can reach it. In theory the

  

transition from conventional to organic farming systems will initially cause a decrease in

the level of productivity. Herawati et al. (2014) suggested that the transition period will at

least take about 2-3 years. On average, organic rice farmers in Lubuk Bayas have

implemented organic farming for more than 4 years. Therefore, theoretically, it should

pass the transition period production level, but this is not the case.

  In addition, Amala dan Chalil (2013) indicated that other factors that might cause

the low productivity of organic rice stems from the inappropriate usage of supplementary

fertilizer. Some farmers reduce the amount to less than recommended, as transporting the

fertilizers need some additional labor costs. Currently, no sizeable road is provided for

vehicles to deliver the fertilizer until the farm sites. Similar things appear in the pesticides

usage, which are reduced due to the lack of supply. Currently, no production input shop

provides the organic pesticides, therefore farmers need to make their own or buy it from

other farmers. In fact, collecting the raw materials for organic pesticides needs additional

time, while farmers often do not have enough time. Moreover, farmers suggest that the

organic pesticides usage is not effective, because it only temporarily repels pests while

many organic farm locations are still not fully separated with the organic ones (Figure 4).

Figure 4

  The decrease in organic farm productivity has been compensated by the increase in

selling price. However the increase is only about 11% or IDR 4,311,- (US$ 0.37)/kg

compared to IDR 3,868,-/kg (US$ 0.33/kg) of the conventional price, which is not enough

as compensations. Actually, the organic rice can be sold 2-3 times or IDR 9,800/kg (US$

0.83/kg) higher if the rice has been certified. However, the certification process is not easy

and needs supports from all stakeholders in all the rice agribusiness subsystems. For

example, organic farms in Lubuk Bayas still use the same irrigation channels with the

conventional ones. Addressing this needs a re-allocation of each different farming system

  

in a stretch of land area, or builds a separate irrigation for the organic farms. Both cannot

be carried merely by farmers. Such a condition makes some farmers reluctant to

implement the organic farming system in a larger scale.

  Without including the fertilizer subsidy (scenario 2), production cost for organic

farm is still higher than the semi organic and conventional due to lack of fertilizer subsides

and the imputed labor costs. In detail, the production cost per kg for organic, semi organic

and conventional system for the 3 scenarios can be seen in Table 5.

  

Table 5

With such cost conditions, the value of R/C ratio for the three types of farming

systems in the 3 scenarios can be calculated in 2 selling price namely the existing and

potential prices. Table 6 shows that the R/C ratio for the existing selling price is greater

than one in all the 3 scenarios.

Table 6

  In existing condition (scenario 1) organic R/C ratio is lower than the conventional

ones. Similar condition appears in the “opportunity costs” (scenario 3), since the organic

use much higher family labor imputed costs. In contrast, organic R/C ratio “without

subsidies” (scenario 2) is slightly higher than the conventional, showing its less

dependency on the fertilizer subsidy.

  The results dramatically change when the revenue is calculated with the potential

selling price. The organic R/C ratios increase far above the conventional R/C ratios in all

scenarios, indicating the importance of certification in improving the viability and

sustainability of organic rice farms.

  

Table 7

If using common criteria, R/C ratio> 1 indicates a feasible condition. In fact, the

R/C> 1 only shows an ability to cover the production costs from the generated revenues. In

  

fact, as a main income source, the farm revenue is not only expected to cover the

production costs but also the household expenditure. Otherwise, parts that is supposed to

be distributed for production costs could be used for household expenditure. If such a

condition continues, the farms sustainability would be threatened.

Table 8

  Table 8 shows that in all scenarios the revenue derived from rice farming has not

been able to meet all expenses for the cost of production and household consumption.

  

Household consumption expenditure is much larger than that of the production costs.

However, with an additional income from side jobs, farmers can cover all of their cost

production and household expenditures; even if the subsidies are abolished (scenario 2) or

the imputed cost are calculated (scenario 3). However, with seasonal farms’ harvest versus

a daily base of household expenditures, some farmers require additional loan capital as can

be seen in Figure 5.

  

Figure 5

In such a condition farmers still plant rice for over 21 years because the rice is also

used for their household consumption (Table 9). Many organic farmers even grow organic

rice only for their family’s consumption, as they believe that organic rice is better for

health than the conventional one.

Table 9 Conclusion and Recommendation

  While there are great potentials of organic farming in improving the viability,

which in turn the sustainability of rice farms, a number of conditions need to be improved.

  

This need to be done through all aspects, including production, selling price, and input

provision and price. The development of organic inputs’ industry could improve their

  

availability and price, which in turn is expected to reduce the production costs and increase

the organic paddy production. To do so, full commitment of all stakeholders, including the

government, researchers and investors is indispensable. The support of price certification

could significantly improve the organic rice selling price. The government with all its

related ministries could assist technically and financially. This includes the provision of all

required infrastructures, such as a separate irrigation for the organic paddy fields.

No Scenario Organic Semi-organic Conventional

  1 existing condition 11,164,329 (US$ 949.35) 11,714,860.23

  (US$ 996.16) 14,345,834.89 (US$ 1,219.88) 2 without subsidies

  10,793,60239 (US$ 917.82) 10,593,725.37 (US$ 900.83)

  13,201,768.33 (US$ 1,122.05) 3 with opportunity costs 5,384,111.81

  (US$ 457.83) 5,551,035.54 (US$ 472.03) 8,041,154.29

  (US$ 683.77) Note: Exchange rate: USD 1 = IDR 11.760 Organic

  No Existing Condition Without subsidies With opportunity costs Revenue (IDR/ha/ season) Cost (IDR/ha/ season) Net Income (IDR/ha/ season) Revenue (IDR/ha/ season) Cost (IDR/ha/ season) Net Income (IDR/ha/ season) Revenue (IDR/ha/ season) Cost (IDR/ha/ season) Net Income (IDR/ha/ season)

  1 13,500,000 7,377,500 6,122,50013,500,000 7,377,500 6,122,500.0013,500,000.0013,827,500.00 (327,500.00) 2 27,687,500 7,059,028 20,628,47227,687,500 7,059,028 20,628,472.2227,687,500.0012,550,694.44 15,136,805.56 3 21,086,538 7,629,808 13,456,73121,086,538 7,629,808 13,456,730.7721,086,538.4612,793,269.23 8,293,269.23 4 22,500,000 7,683,929 14,816,07122,500,000 7,683,929 14,816,071.4322,500,000.0013,033,928.57 9,466,071.43 5 20,936,250 6,705,000 14,231,25020,936,250 6,705,000 14,231,250.0020,936,250.0012,205,000.00 8,731,250.00 6 30,250,000 6,910,417 23,339,58330,250,000 6,910,417 23,339,583.3330,250,000.0011,747,916.67 18,502,083.33 7 7,500,000 6,231,250 1,268,750 7,500,000 6,675,694 824,305.56 7,500,000.0011,509,027.78 (4,009,027.78) 8 24,725,000 10,615,625 14,109,37524,725,00014,990,625 9,734,375.0024,725,000.0020,965,625.00 3,759,375.00 9 17,214,286 6,174,405 11,039,88117,214,286 6,174,405 11,039,880.9517,214,285.7112,304,761.90 4,909,523.81 10 22,140,000 6,589,500 15,550,50022,140,000 6,589,500 15,550,500.0022,140,000.0011,584,500.00 10,555,500.00

  11 9,000,000 6,286,250 2,713,750 9,000,000 6,286,250 2,713,750.00 9,000,000.0011,711,250.00 (2,711,250.00) 12 7,875,000 15,132,500(7,257,500) 7,875,00015,132,500(7,257,500.00) 7,875,000.0020,307,500.00(12,432,500.00) 13 21,044,118 5,927,206 15,116,91221,044,118 5,927,206 15,116,911.7621,044,117.6510,924,264.71 10,119,852.94

  Average 18,881,438 7,717,109 11,164,32918,881,438 8,087,835 10,793,602.3918,881,437.8313,497,326.02 5,384,111.81 Semi-organic

  No Existing Condition Without subsidies With opportunity costs Revenue (IDR/ha/ season) Cost (IDR/ha/ season) Net Income (IDR/ha/ season) Revenue (IDR/ha/ season) Cost (IDR/ha/ season) Net Income (IDR/ha/ season) Revenue (IDR/ha/ season) Cost (IDR/ha/ season) Net Income (IDR/ha/ season)

  1 11,550,000 6,014,000 5,536,000 11,550,000 6,871,500 4,678,500 11,550,000 11,746,500 (196,500) 2 31,250,000 8,342,578 22,907,422 31,250,000 9,319,141 21,930,859 31,250,000 14,178,516 17,071,484 3 26,250,000 7,999,444 18,250,556 26,250,000 8,076,944 18,173,056 26,250,000 12,826,944 13,423,056 4 24,000,000 9,023,333 14,976,667 24,000,000 10,265,833 13,734,167 24,000,000 15,110,278 8,889,722 5 20,986,111 8,337,103 12,649,008 20,986,111 9,824,603 11,161,508 20,986,111 14,699,603 6,286,508 6 21,307,432 7,848,649 13,458,784 21,307,432 8,913,649 12,393,784 21,307,432 13,993,378 7,314,054 7 20,895,000 8,258,500 12,636,500 20,895,000 9,523,500 11,371,500 20,895,000 14,543,500 6,351,500 8 15,400,000 8,510,000 6,890,000 15,400,000 9,882,500 5,517,500 15,400,000 15,032,500 367,500 9 22,200,000 8,385,000 13,815,000 22,200,000 9,695,000 12,505,000 22,200,000 14,970,000 7,230,000 10 17,563,000 7,960,100 9,602,900 17,563,000 9,035,100 8,527,900 17,563,000 14,125,100 3,437,900

  11 22,440,000 7,991,000 14,449,000 22,440,000 9,058,500 13,381,500 22,440,000 13,933,500 8,506,500 12 18,841,667 7,959,167 10,882,500 18,841,667 9,129,167 9,712,500 18,841,667 14,287,500 4,554,167 13 21,880,000 8,715,000 13,165,000 21,880,000 9,922,500 11,957,500 21,880,000 14,897,500 6,982,500 14 19,400,000 7,910,000 11,490,000 19,400,000 9,115,000 10,285,000 19,400,000 14,540,000 4,860,000

  Existing Condition Without subsidies With opportunity costs Net Net Net Revenue Cost Revenue Cost Revenue Cost No Income Income Income

(IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/

(IDR/ha/ (IDR/ha/ (IDR/ha/

season) season) season) season) season) season)

season) season) season)

  15 19,337,500 7,902,500 11,435,000 19,337,500 9,045,000 10,292,500 19,337,500 14,132,500 5,205,000 16 19,005,000 7,893,500 11,111,500 19,005,000 9,088,500 9,916,500 19,005,000 14,133,500 4,871,500 17 6,000,000 9,260,625 (3,260,625) 6,000,000 10,425,625 (4,425,625) 6,000,000 15,988,125 (9,988,125) 18 19,104,167 8,042,292 11,061,875 19,104,167 9,122,292 9,981,875 19,104,167 14,059,792 5,044,375 19 19,823,276 8,298,017 11,525,259 19,823,276 9,638,017 10,185,259 19,823,276 14,564,741 5,258,534

  

Average 19,854,376 8,139,516 11,714,860 19,854,376 9,260,651 10,593,725 19,854,376 14,303,341 5,551,036

Conventional

  Existing Condition Without subsidies With opportunity costs Net Net Revenue Cost Revenue Cost Net Income Revenue Cost No Income

  Income (IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/ (IDR/ha/ season) season) season) season) season) season) season) season) season)

  

1 24,325,658 7,900,965 16,424,693 24,325,658 8,725,965 15,599,692.98 24,325,658 13,600,965 10,724,693

2 20,965,909 7,451,894 13,514,015 20,965,909 8,208,712 12,757,196.97 20,965,909 13,633,712 7,332,197

3 24,375,000 7,894,667 16,480,333 24,375,000 8,969,667 15,405,333.33 24,375,000 13,844,667 10,530,333

4 34,178,571 9,896,429 24,282,143 34,178,571 10,838,393 23,340,178.57 34,178,571 15,781,250 18,397,321

5 21,575,000 7,505,114 14,069,886 21,575,000 8,782,614 12,792,386.36 21,575,000 13,407,614 8,167,386

6 26,562,500 8,268,750 18,293,750 26,562,500 9,793,750 16,768,750.00 26,562,500 14,743,750 11,818,750

7 22,857,500 7,018,512 15,838,988 22,857,500 7,385,179 15,472,321.43 22,857,500 12,293,512 10,563,988

8 21,000,000 7,719,000 13,281,000 21,000,000 8,554,000 12,446,000.00 21,000,000 13,339,000 7,661,000

9 17,380,000 8,269,167 9,110,833 17,380,000 9,021,667 8,358,333.33 17,380,000 13,496,667 3,883,333

10 17,700,000 6,273,889 11,426,111 17,700,000 7,161,389 10,538,611.11 17,700,000 12,378,056 5,321,944

  

11 21,000,000 8,319,792 12,680,208 21,000,000 10,332,292 10,667,708.33 21,000,000 15,538,542 5,461,458

12 21,462,500 7,951,667 13,510,833 21,462,500 8,901,667 12,560,833.33 21,462,500 14,766,667 6,695,833

13 18,375,000 6,745,573 11,629,427 18,375,000 7,886,198 10,488,802.08 18,375,000 13,165,365 5,209,635

14 13,020,000 6,941,250 6,078,750 13,020,000 9,081,250 3,938,750.00 13,020,000 15,537,500 (2,517,500)

15 26,425,000 6,618,056 19,806,944 26,425,000 7,576,389 18,848,611.11 26,425,000 12,938,889 13,486,111

16 29,250,000 7,950,625 21,299,375 29,250,000 9,305,625 19,944,375.00 29,250,000 14,250,625 14,999,375

17 17,857,143 6,541,071 11,316,071 17,857,143 7,558,929 10,298,214.29 17,857,143 12,928,571 4,928,571

18 20,800,000 7,330,000 13,470,000 20,800,000 8,795,000 12,005,000.00 20,800,000 14,095,000 6,705,000

19 17,395,000 7,337,500 10,057,500 17,395,000 8,792,500 8,602,500.00 17,395,000 13,982,500 3,412,500

  

Average 21,921,304 7,575,469 14,345,835 21,921,304 8,719,536 13,201,768.33 21,921,304 13,880,150 8,041,154

  

Organic Semi organic Conventional

Figure 1 Subsidized and Non Subsidized Fertilizer Usage

  Organic Semi organic Conventional Subsidize Without subsidize Subsidize Without subsidize Subsidize Without subsidize

  Subsidized fertilizer 362,179 732,906 1,028,322 2,149,457 1,188,730 2,332,796

  Other fertilizer 1,564,153 1,564,153 1,041,031 1,041,031 86,203 86,203

  Total 1,926,333 2,297,059 2,069,353 3,190,488 1,274,933 2,418,999 18,80 %

  81,20 % Subsidize Non subsidize 49,69

  % 50,31 %

Subsidize Non subsidize

  93,24 % 6,76%

  Subsidize Non subsidize

  

Organic Semi organic Conventional

Figure 2 Fertilizer Cost Share

  Organic Semi organic Conventional Subsidize Without subsidize

Subsidize

Without subsidize Subsidize Without subsidize

  Fertilizer 1,926,333 2,297,059 2,069,353 3,190,488 1,274,933 2,418,999 Others 5,790,776 5,790,776 6,070,163 6,070,163 6,300,536 6,300,536

  Total production cost 7,717,109 8,087,835 8,139,516 9,260,651 7,575,469 8,719,536 24,96 %

  75,04 % Fertilizer Others 25,42

  % 74,58 %

Fertilizer Others

  16,83 % 83,17 %

  Fertilizer Others

Types Semi-organic Conventional Usage Recom. 1) Ratio Existing Recom. 1) Ratio

  75.00 50.00 - 200.00 200.00 -

  66.07

  95.74 75.00 218.19 194.69 132.74

  Average 182.07 141.67

  75.00 100.00 - 225.00 175.00 125.00 - 19 250.00 75.00 100.00 - 200.00 200.00 125.00 -

  50.00 17 200.00 - 87.50 - 267.86 178.57 - - 18 150.00

  75.00 - 250.00 250.00 - - 13 175.00 150.00 100.00 - 312.50 208.33 - - 14 200.00 125.00 100.00 - 250.00 250.00 250.00 - 15 225.00 - 100.00 - 104.17 104.17 104.17 - 16 200.00 100.00 75.00 - 375.00 125.00

  75.00 10 150.00 150.00 100.00 - 125.00 250.00 - - 11 175.00 150.00 65.00 - 375.00 375.00 - - 12 200.00 175.00

  83.33 - - - 8 175.00 200.00 125.00 - 200.00 175.00 - - 9 225.00 150.00 125.00 - 175.00 175.00

  89.29 5 225.00 175.00 125.00 - 225.00 125.00 100.00 - 6 175.00 175.00 100.00 - 250.00 125.00 125.00 - 7 200.00 175.00 125.00 -

  75.00 75.00 223.21 267.86 -

  50.00 2 234.38 - - - 204.55 170.45 - - 3 25.00 - - - 100.00 150.00 100.00 - 4 225.00 175.00

  Urea 182.07 225.00 0.81 218.19 250.00

  0.87 SP 36 141.67

  1

  

KCl (kg)

Urea (kg) SP36 (kg) NPK (kg) KCl (kg)

  Ministry of Agriculture Republic of Indonesia No Semi-organic Conventional Urea (kg) SP36 (kg) NPK (kg)

  1.32 Source: 1)

  50.00

  66.07

  2.50

  30.00

  75.00

  1.95 KCL

  50.00 2.83 194.69 100.00

  50.00

  0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

  100% Urea SP 36 ZA KCl NPK

  100% 79%

  68% 5%

  89% 0%

  10% 20% 30% 40% 50% 60% 70% 80% 90%

  100% Urea SP 36 ZA KCl NPK

  100% 95%

  79% 21%

  37%

Semi organic Conventional Figure 3 Farmers’ Composition based on the Use of Fertilizers

  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)

  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)
  • (US$ 0.00)

  Harvesting

  2,316,069.98 (US$ 196.94)

  2,574,532.35 (US$ 218.92)

  2,463,915.24 (US$ 209.52)

  Sub Total 584,234.71

  (US$ 49.68)

  4,525,339.23

  (US$ 384.41)

  185,471.26

  (US$ 15.77)

  4,936,793.53

  (US$ 419.80)

  410,964.91

  (US$ 34.95)

  4,795,088.62

  (US$ 407.75) %

  11.43

  88.57

  3.62

  96.38

  7.89

  (US$ 4.74)

  Pesticides 55,769.23

  (US$ 15.22) Making

  (US$ 2.63) 58,358.40

  Activity Average Labor Costs Organic Semi Organic Conventional

  family labor paid labor family labor paid labor family labor paid labor Land tillaging

  1,000,000.00 (US$ 85.03)

  1,078,289.47 (US$ 91.69)

  1,032,236.84 (US$ 87.78)

  Nursing 112,014.36

  (US$ 9.53) 26,923.08

  (US$ 2.29) 68,029.87

  (US$ 5.78 30,870.73

  (US$ 4.96) 17,325.36

  (US$ 29.98) 178,979.60

  (US$ 1.47) Planting

  1,105,769.23 (US$ 94.03)

  1,118,421.05 (US$ 95.10)

  1,102,631.58 (US$ 93.76)

  Maintaining 416,451.11

  (US$ 35.41) 76,576.94

  (US$ 6.51) 117,441.38

  (US$ 9.99) 134,679.92

  (US$ 11.45) 352,606.52

  92.11 Note: Exchange rate: USD 1 = IDR 11.760

Season Organic Semi-organic Conventional average range average range Average Range

  5.00

  7.34

  6 0.74 5,430.00 4,505.00

  6.15

  8.43

  5 2.52 21,240.00 15,510.00

  6.00

  6.25

  4 1.80 11,250.00 10,800.00

  7.50

  7 1.00 7,200.00 6,450.00

  3 0.48 3,600.00 2,400.00

  7.81

  9.38

  2 0.64 6,000.00 5,000.00

  3.75

  5.00

  1 2,00 10,000.00 7,500.00

  5.38 Semi-organic No Land area (ha) Production (kg) Productivity (ton/ha) Rainy Dry Rainy Dry

  6.09

  7.20

  0.47 2,843.85 2,648.46

  11 1.00 7,260.00 6,250.00

  5.95

  7.20

  13 1.00 7,200.00 5,950.00

  5.85

  7.02

  12 0.60 4,212.00 3,510.00

  6.25

  7.26

  5.82

  6.45

  7.07

  10 0.50 3,534.00 2,909.00

  6.55

  7.55

  9 0.40 3,020.00 2,620.00

  5.80

  6.60

  8 0.40 2,640.00 2,320.00

  5.89

  Rainy 5.89 2.92 - 7.50 7.08 5.00 - 9.38 7.44 5.25 - 10.71 Dry 5.38 3.06 - 7.50 5.83 3.75 - 7.81 6.12 4.25 - 10.36

  Average

  3 0.52 3,500.00 3,000.00

  5.50

  6.00

  5 0.20 1,200.00 1,100.00

  5.00

  7.50

  4 0.20 1,500.00 1,000.00

  5.77

  6.73

  6.50

  6.25

  6.75

  2 1.44 9,720.00 9,360.00

  5.50

  5.70

  1 0.20 1,140.00 1,100.00

  6.78 Organic No Land area (ha) Production (kg) Productivity (ton/ha) Rainy Dry Rainy Dry

  6.46

  5.64

  6 0.40 2,500.00 2,600.00

  6.50

  5.65

  5.82

  13 0.68 3,840.00 3,500.00

  3.75

  4.50

  12 0.20 900.00 750.00

  4.00

  4.50

  11 0.20 900.00 800.00

  5.32

  10 1.00 5,820.00 5,320.00

  7 0.36 1,050.00 1,100.00

  6.43

  6.79

  9 0.28 1,900.00 1,800.00

  7.50

  7.50

  8 0.40 3,000.00 3,000.00

  3.06

  2.92

  5.15 Average

  Production (kg) Productivity (ton/ha) Land area No (ha) Rainy Dry Rainy Dry

  14 0.40 2,760.00 2,260.00

  6.90

  5.65

  15 0.80 5,820.00 4,820.00

  7.28

  6.03

  16 1.00 7,080.00 5,830.00

  7.08

  5.83

  17 0.16 840.00 640.00

  5.25

  4.00

  18 0.96 6,840.00 5,640.00

  7.13

  5.88

  19 1.16 8,340.00 6,890.00

  7.19

  5.94 Average

  0.92 6,540.32 5,358.11

  7.08

  5.83 Conventional Production (kg) Productivity (ton/ha) Land area No (ha) Rainy Dry Rainy Dry