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International Journal of Business and Economy (IJBEC) eISSN: 2682-8359 [Vol. 2 No. 1 March 2020]
Journal website: http://myjms.mohe.gov.my/index.php/ijbec
CHARACTERISTICS OF RED CHILI PEPPER SMALLHOLDERS AND THE DETERMINANTS OF
TECHNICAL INEFFICIENCY
Novyandra Ilham Bahtera1*, Rati Purwasih2 and Yulia3
1 2 3 Agriculture, Fisheries and Biology Faculty, Bangka Belitung University, Bangka, INDONESIA
*Corresponding author: [email protected]
Article Information:
Article history:
Received date : 10 December 2019 Revised date : 7 February 2020 Accepted date : 9 February 2020 Published date : 1 March 2020
To cite this document:
Bahtera, N., Purwasih, R., & Yulia, Y.
(2020). CHARACTERISTICS OF RED CHILI PEPPER SMALLHOLDERS AND THE DETERMINANTS OF TECHNICAL INEFFICIENCY.
International Journal Of Business And Economy, 2(1), 1-9.
Abstract: Central Bangka has been decided by Ministry of Agriculture Republic of Indonesia as the location of the national agriculture development program especially in red chili pepper. However, its productivity is still considered at the low level. It assumes that its business is technically inefficient. The objectives of the study are to identify the characteristics of red chili pepper smallholders and the determinants of technical inefficiency. Structured questionnaire and face-to-face data collection methods were employed to gain the primary data from 43 red chili pepper smallholders in Central Bangka, Bangka Belitung Islands Province, Indonesia. The descriptive analysis was applied to identify the profile of smallholders while the stochastic frontier analysis with the Maximum Likelihood Estimated was used to discover the determinants of technical inefficiency. The study showed that the average age of smallholders were 42 years old, attained primary school level, had 3 household sizes and were beginner in red chili pepper farming activity. Furthermore, it found that the participation level in farmer group meeting, having part-time job and the frequency in attending the farmer field school were the determinants of technical inefficiency. The finding of the study was crucial as it could be used by policy maker to offer the better agriculture development program to achieve the goals.
Keywords: Agriculture Development Program, Red Chili Pepper, Socio-Economic Profile, Technical Inefficiency.
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1. Introduction
The program of agriculture productivity improvement of the red chili pepper in Central Bangka Regency is an implementation of policy maker. They decide the regency as the location of national agriculture development area prioritizing in horticulture commodity. The program has been started since September 2017. One of the objectives of the program is to stabilize the inflation rate (Widyastuti, 2018). The success of the program is expected to increase the productivity of red chili pepper. This is due to the fact that the productivity of red chili pepper is considered as low. 35.6 quintal per hectare is the productivity of red chili pepper in Central Bangka (Table 1) while about 200 quintal per hectare is the ideal productivity of red chili pepper. It is vivid that its productivity should be improved drastically.
Table 1. The Production, Harvested Area, Productivity of Red Chili Pepper in Central Bangka Regency, January - August 2017
No District Production
(quintal)
Harvested Area (ha)
Productivity (quintal/ha)
1 Koba 40 2.21 18.19
2 Pangkalan Baru 491 15.15 32.41
3 Sungaiselan 190 8.03 23.66
4 Simpangkatis 313 4.60 68.04
5 Namang 120 2.00 60.00
6 Lubuk besar 200 6.05 33.06
Total 1,354 38.04 35.60
Source: Dinas Pertanian Provinsi Kepulauan Bangka Belitung (2017)
Characteristics of smallholders can be used as the parameter in measuring whether the farming activity is considered as technically efficient or not. Alwarritzi, Nanseki, & Chomei (2015) states that the socio characteristics of oil palm smallholders such as education level and age can affect the technical efficiency. It goes the same with Anggraini (2015) who argues that the technical efficiency of cassava farming activity is influenced by the characteristics of smallholders such as farming experience, household size, credit access, and extension. These affect the management skills to produce the agriculture commodity so that it can influence the efficiency level of farming activity (Anggraini, 2016). Thus, the study aims to identify the characteristics of red chili pepper smallholders and to analyse the determinant of its technical inefficiency.
2. Literature Review 2.1 Productive Efficiency
Profit maximizing is the purpose of the business (Khan, 2017). It relates with the productive efficiency. The process of production is inefficient when technical and allocative inefficiency occur (Ellis, 2003). The technical inefficiency happens when the business cannot achieve the maximum productivity while the allocative inefficiency experiences due to suboptimal of the input use so that the output is not well-achieved (Sumaryanto & Siregar, 2003).
Saptana et al (2010) explains that the managerial skills in farming activity is reflected from the ability in using the modern agricultural technology. The skills are based on the educational attainment and the farming experience of smallholders. The higher level of education of the smallholder is, the more adaptive in the technology they are. It indicates that the productivity of educated smallholders should be higher than the uneducated one as they tend to be more adaptive in receiving, applying and developing the cutting-edge technology than another one. Moreover, the farming experience can equip the smallholders in increasing the smallholders’ performance in farming activity (Gusmawati et al., 2014).
3. Problem Statement
The study on the technical efficiency has been done in many places on many agriculture commodities such as cassava in Lampung (Angraini, 2015); maize in Ethiopia (Kitila & Alemu, 2014); potato in East Java (Rizkiyah, Syafrial, & Hanani, 2014); and rice in Central Sulawesi (Nirmawati &
Tangkesalu, 2014) as well as in Maluku (Bahasoan, 2013) while it is inadequate study of technical efficiency in red chili pepper. Thus, the study attempts to fill in the unavailable study about technical inefficiency of red chili pepper in Central Bangka Regency.
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4. Method
4.1 Data Collection
Structured questionnaire was designed by conducting the face-to-face data collection method to collect the data and information from 43 red chili pepper smallholders in Central Bangka Regency.
The questionnaire consisted of question asking the socio characteristics of smallholders such as age, education, farming size, year of farming, side job, the participation level in participating the agricultural extension, frequency of attending the farmer group meeting and the frequency of attending the farmer field school. The respondents were asked by the trained enumerators using the five-point likert scale type of questions ranging from strongly disagree to strongly agree.
Four villages in Central Bangka Regency were chosen as the location of research which were Belilik, Sungkap, Keretak and Trubus. Those villages were chosen as they were the location of agriculture productivity improvement program. The Purposive sampling was used in collecting data to 43 respondents using survey method. The research began from March 2019 to August 2019. The distribution of respondents is shown in Table 2.
Table 2. The Number of Smallholders in Four Villages, Central Bangka No Name of Farmer
Group
Village Amount of Member (persons)
Amount of Red Chili Pepper Smallholder (persons)
1 Air Danau 2 Belilik 33 18
2 Berkah Tani Sungkap 5 5
3 Sukamaju Keretak 22 12
4 Citra Trubus 8 8
Total 43
Frontier was used as the analysis tool in answering the research question. Cobb-Douglas production function with maximum likelihood estimated was applied in analyzing technical inefficiency of red chili pepper production. The main factors of technical inefficient were analyzed using the equation as follows (Coelli et al., 1998):
5 5 4 4 3 3 2 2 1 1 0
i z z z z z
U = + + + + + Ui = Technical efficient score
z1 = Amount of family member (persons)
z2 =Frequency of attending the agricultural extension (times) z3 = Frequency of attending the farmer group meeting (times) z4 = Side job (0 = no, 1 = yes)
z5 = Participating in farmer field school (0 = no, 1 = yes)
The expected estimating parameter: 1,2,3,5 0,4 0
5. Results and Discussion
5.1 Characteristics of Red Chili Pepper Smallholders
There were four variables that showed the characteristics of red chili pepper smallholders which were age, education, family size and farming experience. The following described the four variables.
5.1.1 Age
The age played an important role in the farming activity. The age of red chili pepper smallholders was between 26 and 62 years old. The distribution of the smallholders’ age in Central Bangka Regency was shown in Table 3.
Table 3. The Distribution of Respondents by Age
Age (year) Respondent (Persons) Percentage (%)
24-30 4 9.30
31-37 7 16.28
38-44 13 30.23
45-51 15 34.88
52-58 3 6.98
59-65 1 2.33
Total 43 100
Based on table 3, almost one third of the respondents were between 34 and 44 years old while only 2.33 % were 59-65 years old. 42 years old was the average age of the respondents. It explained that the red chili pepper smallholders were at the productive age (O’Connell, 2013). They were expected to be well-managed in farming activity.
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5.1.2 Educational Attainment
The educational attainment could be broken into three: formal, informal and non-formal. The study focused on the formal one which was from elementary school to bachelor degree. The distribution of the educational attainment of respondents was shown in the Table 4 below.
Table 4. The Distribution of Respondents by Educational Attainment
Education Respondent (Persons) Percentage (%)
Packet A 1 2.33
Elementary School 21 48.84
Junior High School 10 23.26
Senior High School 9 20.93
Diploma 1 2.33
Bachelor Degree 1 2.33
Total 43 100
Table 4 figured that the majority of respondents graduated from elementary school accounted 48.84%. The lowest number of educational attainments was packet A, diploma and bachelor degree.
Packet A meant those who did not go to the regular school instead having formal certificate by passing the national final test for elementary school. It was clear that the level of education of the red chili pepper smallholders was considered as low. This was the disadvantage experienced by smallholders as the lower level of education was the more difficult, they were in acquiring and implementing the innovation.
5.1.3 Household Size
The farming activity of red chili pepper smallholders was supported by labour from both family member and non- family member. The amount of household size ranged from zero to five. The distribution of Respondents by household size was presented at the following table.
Table 5. Distribution of Red Chili Pepper Smallholders by Household Size Household Size (Person/s) Respondent (Persons) Percentage (%)
0 3 6.98
1 2 4.65
2 10 23.26
3 19 44.19
4 6 13.95
5 3 6.98
Total 43 100
Three was the dominant household size of respondents (table 5).One was the least household size of respondents. The amount of household size explained the potential labour in the respondent’s family. The more household size of the respondent was the higher potential labour in the family of respondent was to support the farming activity.
5.1.4 Year of Experience
The year of experience in the study was about the time spent as the red chili pepper smallholders from the beginning of the farming activity until the interview was conducted. The year of experience was between 1 and 32 years. The distribution of respondents by the year of experience was shown in Table 6.
Table 6. The Distribution of Respondents by the Year of Experience Experience in Red Chili Pepper Farming Activity
(year/s)
Respondent (Person/s)
Percentage (%)
1-6 31 72,09
7-12 6 13,95
13-18 1 2,33
19-24 3 6,98
25-30 1 2,33
31-36 1 2,33
Total 43 100,00
Table 6 showed that most of the respondents were from one to six year of experience which counted 72.09% of respondents. The average year of experience in farming activity was seven.
The more year of experience of smallholders was, the more farming knowledge the smallholders acquired (Anggraini, 2016). It could equip the smallholders in implementing good agricultural practices. This would provide a positive impact to the success of farming activity.
Production was one of indicators of the well-managed farming activity.
5.2 Determinant of Technical Inefficiency in Red Chili Pepper Farming Activity
There were five variables used to analyze the determinant of technical inefficiency: family member, attending an agricultural extension, attending a farmer group meeting, part-time job and attending a farmer field school (Table 7). Three of them influenced the technical inefficiency which were the attending a farmer group meeting, part-time job and the attending a farmer field school. On the other hand, family member and attending an agricultural extension did not affect the technical inefficiency. It was with the confidence level at α = 25%.
Table 7. Estimating Results on the Effect of Technical Inefficiency towards the Red Chili Pepper Farming Activity
Variable Coefficient Std.Error t-Ratio
Family member -0.19 0.31 -0.61
Attending an agricultural extension -0.16 0.49 -0.32
Attending a farmer group meeting -0.10 0.08 -1.28*
Part-time job 3.56 0.97 3.67*
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Table 7 showed that the attending a farmer group meeting significantly influenced the technical inefficiency of respondent with the parameter score -0.10. It indicated that by attending a farmer group meeting it could potentially reduce the technical efficiency. The discussion of the meeting was about to implement the good agricultural practices such as how to apply a proper amount of fertilizer, to exterminate diseases and pests and other related farming activity. Consequently, information about good agricultural practices related with red chili pepper was disseminated correctly. Thus, the tendency of technical inefficiency could be decreased.
Another determinant of technical inefficiency of red chili pepper farming activity was part-time job.
It showed with the parameter score 3.56 at α = 25% of confidence level. It indicated that part-time job of the respondent could raise the technical inefficiency. Smallholders tent to have less focus on farming activity when they had more job to be prioritized.
Finally, the attending of farmer field school significantly influenced the technical inefficiency of red chili pepper farming activity with the parameter score -2.39. It showed that the frequency of attending a farmer field school could potentially decrease the technical inefficiency. Some of the lesson materials taught in the farmer field school were the use of seed, fertilizing method and plant protection.
6. Conclusion
The main objectives of the study are to identify the characteristics of red chili pepper smallholders and to determine factors that affect the technical inefficiency of red chili pepper production in Central Bangka Regency. The study discovered that the red chili pepper smallholders was 42 years old on average, acquired education at primary level, had three family members and were considered as new in red chili pepper farming activity. Furthermore, the determinants of technical inefficiency were the attendance in farmer group meeting, having side job and the attendance in farmer field school. The findings are meaningful and beneficial for the policy maker to ensure the program can be well achieved.
7. Acknowledgement
We thank to the Ministry of Research, Technology, & Higher Education for the financial support on the process of fieldwork activities under the scheme of Penelitian Dosen Pemula / Research Grants for Beginner Lecturer. We also would like to thank LPPM (Lembaga Penelitan dan Pengabdian Masyarakat / Institute for Research and Community Services) of Bangka Belitung University for the moral and administrative support so that the research can run well.
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