Startseite Lebenswissenschaften The role of organic rice farm income on farmer household welfare: Evidence from Yogyakarta, Indonesia
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The role of organic rice farm income on farmer household welfare: Evidence from Yogyakarta, Indonesia

  • Triyono Triyono EMAIL logo , Muhammad Fahmi Faruqi Al Qudsi , Nur Rahmawati , Zuhud Rozaki und Mohd Fauzi Kamarudin
Veröffentlicht/Copyright: 14. Mai 2024

Abstract

The study aims to know the farmer’s income from organic rice farming and farmer household income, to determine the welfare of farmer households. This research was conducted by data collection from 70 farmers’ households. The data analysis was used for the estimation of the farmer household income exchange rate and good service ratio. The results showed that the farmers are not yet prosperous. Further analysis to determine the role of organic rice farming for farming households has received less attention from researchers. Regarding this study, on-farm income derived from organic rice farming has a role as income contribution about 34.71% on the welfare of farmer households, classified as moderate.

1 Introduction

Indonesia is an agricultural country where many people have a livelihood as farmers. Therefore, the agricultural sector is one of the sectors that have a major role in the Indonesian economy. The agricultural sector still plays an important role in economic development [1], namely as a source of income, opening job opportunities, alleviating poverty, and reminding food security [2,3,4].

Land and agroecology are very influential factors in agricultural production. The factors maximized are the cultivation environment, soil nutrients, and land management [5]. Therefore, climate change and soil degradation can cause a decrease in soil capacity so that agricultural production falls [6]. In addition, improper tillage can cause the land to be easily damaged or fragile. The characteristics of fragile land are as follows: (i) low soil fertility level, (ii) high porosity, (iii) frequent droughts and floods, and (iv) high soil acidity. Tillage is the most important factor to achieve the expected agricultural production. Therefore, land processing must be improved by preserving the environment and land quality. Improving land quality should be shown in the physical structure of the land, the chemical composition of the land, and the activity of soil biota that is optimal for plants [7].

Organic rice farming is the management of rice farming without input from chemicals so that it is safer for agricultural land. Fertilizers and pesticides used in the production process are sourced from organic matter. The organic material in question is manure derived from animal manure, plant waste, and by-products such as compost, rice straw, or other plant residues. In addition, pest and plant disease control uses biopesticides or products from natural ingredients derived from plants [8]. Thus, it is expected that organic rice production has advantages not only to have a positive effect on body health but also in the long term as an effort to preserve the environment [9,10]. The implementation of environmentally friendly organic rice farming can increase the production, income, and sustainability of agricultural production [11,12,13].

Sleman Regency is the center of rice in the Special Region of Yogyakarta. There are more certified organic rice farms compared to other regions (BPS, 2016). However, organic rice production in this region is still lower when compared to conventional rice production. Although the price of organic products is relatively more expensive than conventional products, most organic rice production is consumed by farmers themselves or sold to a combination of farmer groups. This is because farmers do not yet have a market for organic rice products [14]. The extent to which the impact of organic rice farming on the welfare of farmer households needs attention in the form of a more in-depth study.

Various studies that have been conducted related to organic farming show that organic farming can protect the environment by increasing soil productivity and producing healthy products because it is free from chemical fertilizers and other chemicals [15,16,17,18,19]. Increasing public awareness of the dangers of chemical content in agricultural products makes organic agricultural products begin to be in demand by consumers [20,21]. Consumers are increasingly aware and selective of the health quality of food products by consuming organic agricultural products [22,23,24,25,26]. However, studies are still limited to aspects of ecological impacts, production, and market potential of organic food. There is no study of the impact of organic farming on the welfare of farmers. In fact, public interest in switching to organic agricultural products can increase farm income for farmers. The level of farm income, apart from being the main determinant of the welfare of farmer households, is also one of the important factors in conditioning economic growth [27]. In addition to farm income, farmer households have sources of income from outside the farm (off-farm) and non-agricultural (non-farm) activity [28,29].

Income is a factor that is directly related to the welfare of farmer households. Farmer welfare can be developed if actions related to financial, social, and human quality improvement are considered, such as providing subsidies, loans, and allowances, providing counseling, and training. Thus, farmer households can be said to be prosperous if household income can meet household needs and other needs [30].

Based on the search of previous studies, we have not found specifically the relationship between organic rice farming and the welfare of farmers as the main actors of these activities. Therefore, this article will discuss the income of organic rice farmers and its role in the welfare of organic rice farmer households as one of the findings in Indonesia. This study aims to assess the income and welfare of organic farmers. This is important for determining government polices concerning organic farming, which currently are still sluggish.

2 Research method

The selection of the research site was carried out using purposive techniques, namely deliberately selecting the area of Sleman Regency, considering the largest number of certified organic rice farmer groups in Sleman Regency in the Special Region of Yogyakarta. Farmer populations were conducted using a census technique where all individuals in the organic rice farmer population were interviewed as respondents. In total, there are 70 organic rice farmers from five farmer groups in four sub-districts in Sleman Regency, namely Sleman, Cangkringan, Pakem, and Berbah Districts.

This research method uses a quantitative descriptive approach, namely analysis of numerical data on farming and farmer household income that can provide a detailed picture of the welfare conditions of organic rice farmer households. The mathematical calculation formula can be described as follows:

To find out the income of organic rice farming in Sleman Regency can be known from the formulation:

(1) NR = TR TCeks,

where NR = net revenue (IDR); TR = total revenue (IDR); and TCeks = total explicit cost (IDR).

The household income of organic rice farmers consists of three components with formulations:

(2) HI = Y 1 + Y 2 + Y 3 ,

where HI = household income; Y1 = on-farm income; Y2 = off-farm income; and Y3 = non-farm income.

Meanwhile, the welfare of organic rice farmer households can be determined from the farmer household income exchange rate (FHIER) and good service ratio (GSR) which are formulated as follows:

(3) FHIER = HI / E ,

where FHIER = farmer household income exchange rate; HI = household income; E = household expenditure; FHIER > 1 shows that peasant households are prosperous; and FHIER < 1 shows that peasant households are not yet prosperous.

(4) GSR = food expenditure non food expenditure ,

where GSR > 1 means that farming households are less prosperous; GSR = 1 means that peasant households are prosperous; and GSR < 1 means that farmer households are more prosperous.

The role of organic rice farming income on the welfare of farmer households can be known from the proportion of farm income to total household income that can be spent on farmer household needs.

(5) The role of on farm income = on farm incom e / total income total income / total expenditure × 100 % .

3 Results and discussion

3.1 Organic rice farm income

Organic rice-farming income is a source of on-farm income in farmer households, and on-farm income is income from farmers’ organic rice farming that contributes to household income [31]. Organic rice-farming income is obtained by calculating the difference between receipts and the total explicit costs incurred by farmers in the process of organic rice farming [32]. The greater the revenue or the smaller the total cost, the higher the farmer’s income will be because the difference is farther.

Table 1 presents the results of the analysis of organic rice farming for two growing seasons in 1 year. The table provides information on organic rice-farming income for IDR 6,662,627 per year. Organic rice production is related to income if production is high and then income will increase. The highest income is found in the Sleman sub-district at IDR 7,971,690, although the total production cost is higher, rice production is also higher. In Berbah District, the lowest farm income is because the cultivated land is relatively narrow, so the organic rice production is also low.

Table 1

Analysis of organic rice farming in Sleman Regency

Description Sleman (2,047 m2) Cangkringan (1,763 m2) Pakem (1,287 m2) Berbah (1,180 m2) Average
Production (kg) 2,308 1,881 1,552 1,290 1,757
Price (Rp/kg) 5,047 5,400 6,400 6,050 5,724
Revenue 11,646,409 10,154,700 9,930,667 7,804,500 9,884,069
Explicit cost
Production inputs
Seed 139,900 135,525 99,333 71,550 111,577
Solid organic fertilizer 1,003,333 875,000 900,000 845,000 905,833
Liquid organic fertilizer 53,667 63,000 142,333 49,250 77,063
Total input cost of production 1,196,901 1,073,525 1,141,666 965,800 1,094,473
Workforce
Tillage 30,625 7,656
Planting 580,000 560,063 422,084 501,875 516,005
Fertilization
Weeding 7,000 1,750
Harvest 747,000 676,500 587,417 583,188 648,526
Total labor cost 1,327,000 1,267,188 1,009,500 1,092,063 1,173,938
Tool depreciation
Hoes 21,246 16,645 23,852 22,835 21,145
Sabit 12,665 12,733 19,266 13,054 14,430
Weed tool 8,200 6,902 10,933 17,906 10,985
Sprayer 12,728 18,927 38,783 33,153 25,898
Sheeting 18,908 25,875 17,952 17,400 20,034
Braid 5.732 1,433
Angkong 1,667 6,292 1,990
Total depreciation cost 81,145 87,374 110,786 104,349 95,914
Others
Land lease 163,334 240,000 106,666 85,000 148,750
Tax 9,666 7,700 21,534 9,850 12,188
Irrigation dues 12,000 25,800 9,450
Rent farm tools 596,666 425,000 293,334 290,000 401,250
Consumption 300,000 285,750 262,666 293,500 285,479
Others cost total 1,069,667 958,450 696,200 704,150 857,117
Total explicit cost 3,674,712 3,386,537 2,958,152 2,866,362 3,221,441
Income 7,971,690 6,768,163 6,972,515 4,938,138 6,662,627

Source: primary data analysis, 2023.

3.2 Farmer household income

There are three types of income sources for farmer households, namely income from organic rice farming (on the farm), income outside organic rice farming owned by farmers but still in the agricultural sector (off-farm), and income from outside the agricultural sector (non-farm) [33]. Table 2 presents the average total household income of organic rice farmers for 1 year in Sleman District. Based on Table 2, we can find out the total household income of organic rice farmers in Sleman District for 1 year. The average total household income of organic rice farmers in Sleman Regency is IDR 19,245,127 per year; if converted per month, the average total household income of organic rice farmers in Sleman Regency is IDR 1,603,760. Farmers do not only depend on organic rice farming income but also from other activities to increase household income. The highest farmer household income is found in Sleman District, while the farmer household income in Cangkringan District is the lowest. Overall, most of the income comes from non-farm. In general, food crop farmers in Indonesia are smallholders, so in most farming households, the largest source of household income comes from outside the farm [34]. This is because income from non-farm activities is indeed quite large, such as teachers, traders, private employees, and self-employed, to retirees. Meanwhile, plantation farmers with more land will benefit more from the expansion of farming [35].

Table 2

Total household income of farmers in Sleman Regency

Sources of income Sleman Cangkringan Pakem Berbah Average
On-farm 7,971,690 6,768,163 6,972,515 4,938,138 6,662,627
Off-farm
Farmworker 1,280,000 4,230,000 1,280,000 2,340,000 2,282,500
Breeder 1,760,000 2,100,000 965,000
Total off-farm 3,040,000 4,230,000 1,280,000 4,440,000 3,247,500
Non-farm
Welding workshop 1,680,000 420,000
Construction workers 800,000 600,000 720,000 600,000 680,000
Event organizer 1,120,000 280,000
Teacher 3,200,000 2,100,000 1.325,000
Merchant 400,000 1,920,000 4,800,000 720,000 1,960,000
Vegetable collector 1,200,000 300,000
Official 4,400,000 1,100,000
Pensioner 2,280,000 570,000
Grocery store 4,800,000 900,000 1,200,000 1,725,000
Business 3,900,000 975,000
Non-farm revenue 10,320,000 5,520,000 12,320,000 9,180,000 9,335,000
Total revenue 21,331,690 16,518,163 20,572,515 18,558,138 19,245,127

3.3 Farmer household welfare

To determine the level of welfare of farmer households, two criteria are used, namely according to the farmer household income exchange rate (FHIER) and GSR. The reason for measuring the welfare of farmer households using two criteria, namely FHIER and GSR, is because each has different indicators to measure the welfare level of farmer households. FHIER is based on the amount of revenue while GSR is based on the amount of expenditure.

3.3.1 FHIER

FHIER is obtained from the calculation of the division between the total income of farmer households and the total expenditure of farmer households [36]. Table 3 shows the total expenditure of farmer households. Farmer households can be said to be prosperous if the calculation results show FHIER > 1 or farmer household income is greater than household expenditure, but if the calculation results show FHIER < 1, farmer households are categorized as not prosperous because household expenditure is greater than household income. The greater the value of FHIER, the higher the level of welfare of farmer households [37]. Table 4 presents the level of farmer welfare according to FHIER and the role of organic rice farming income on the welfare of farmer households in Sleman District.

Table 3

Household expenditure of farmers in Sleman Regency

Household expenses
Sleman Cangkringan Pakem Berbah Average
Food
Rice 2,012,800 1,425,600 1,862,400 1,668,000 1,742,200
Meat, fish, eggs 3,718,400 3,430,200 3,201,600 2,899,800 3,312,500
Vegetables 408,000 537,600 449,600 518,400 478.400
Fruit 640,000 753,600 694,400 741,600 707,400
Drink 1,222,400 781,200 952,000 1,002,000 989,400
Cooking oil 784,000 795,600 967,200 874,200 855,250
Marinades 1,145,600 1,461,600 2,064,000 1,872,000 1,635,800
Cigarette 1,684,800 1,168,800 1,030,400 1,732,800 1,404,200
Fast food 800,000 168,000 41,600 830,400 460,000
Sum 12,416,000 10,522.200 11,263,200 12,139,200 11,585,150
Non-food
Fuel, gas, electric 2,312,400 2,454,600 2,572,000 2,197,800 2,384,200
Tax 408,667 298,117 420,429 470,194 399,352
Communication 1,124,000 1,191,000 2,368,000 1,027,200 1,427,550
Education 1,470,000 147,000 320,000 484,250
Cleaning 920,000 1,093,800 1,043,200 800,400 964,350
Clothe 54,000 20,000 67,500 35,375
Health 282,400 18,000 13,333 16,600 82,583
Social activity 735,093 687,000 1,056,667 811,500 822,565
Others 542,800 382,000 439,333 285,500 412,408
Sum 7,849,360 6,291,517 8,232,962 5,676,694 7,012,633
Total expenditure 20,265,360 16,813,717 19,496,162 17,815,894 18,597,783
Table 4

FHIER analysis of farmer households in Sleman Regency

Sleman Cangkringan Pakem Berbah Average
On-farm 7,971,690 6,768,163 6,972,515 4,938,138 6,662,627
Off-farm 3,040,000 4,230,000 1,280,000 4,440,000 3,247,500
Non-farm 10,320,000 5,520,000 12,320,000 9,180,000 9,335,000
Total income 21,331,690 16,518,163 20,572,515 18,558,138 19,245,127
Food 12,416,000 10,522,200 11,263,200 12,139,200 11,585,150
Non-food 7,849,360 6,291,517 8,232,962 5,676,694 7,012,633
Total expenditure 20,265,360 16,813,717 19,496,162 17,815,894 18,597,783
FHIER 1.05 0.98 1.06 1.04 1.03
Role of on-farm (%) 37.37 40.97 33.89 26.61 34.71

The results of the analysis (Table 4) show that in general, the FHIER is more than one. This shows that organic rice farmers are in a prosperous condition. Only the Cangkringan area of farmers has not prospered because FHIER is less than one. This shows that their households are still unable to meet expenses for household living needs both for food and non-food consumption [37]. Low farm income can be caused by high production costs, but low agricultural production [38]. Therefore, there is a need for input or output-based subsidy programs to increase the income and distribution of farmers’ income [39].

Table 4 shows that the average role of organic rice farming income in household welfare is 34.71%, which means that organic rice farming income contributes 34.71% to the welfare of organic rice farmer households. The sub-district with the largest role of organic rice farming income is Cangkringan District with a percentage of 40.97%, while the sub-district with the lowest role of organic rice farming income is Berbah District with a percentage of 26.61%. This is because the income from organic rice farming in Cangkringan District is above average and the household expenditure of farmers in Cangkringan District is the lowest among other districts. Meanwhile, the Berbah sub-district has the lowest average income from organic rice farming of all sub-districts.

Organic rice-farming households with the prosperous category are indicated by total household income greater than total household expenditure. The source of household income is not only from on-farm or organic rice farming but also from off-farm and non-farm. To improve household welfare, additional income from businesses or other activities is needed outside of the income obtained from farming, so that it will help farmers meet household needs. This can be done through activities of agricultural extension services and farmer-based organizations for technology adoption [40]. Increasing agricultural land area can also be a solution, which is proven to improve the welfare of Wheat farming households in Pakistan and farming households in Klaten, Central Java [41,42]. In contrast, farmers in China who lost farmland showed that their household welfare levels were at low levels [43]. In addition, easy market access can increase the income and welfare of farmer households, such as the results of research on chili farmers in Java, legume farmers in China, peanut farmers in Ghana, corn farmers in Tanzania, and breeders in Ethiopia [44,45,46,47,48]. Innovations in agriculture, the use of agricultural technology, and the use of mobile money applied by farmers in Ghana, Ethiopia, and China can increase agricultural output and household income, as a result of which household expenditure also increases, so that the welfare of farmer households also increases [49,50,51,52,53,54] Therefore, science and technology considering the demand for spices cannot necessarily improve the welfare of farmer households in Indonesia if farmers are still weak in science and technology [55]. Meanwhile, outsourcing agricultural services in China can be a solution to improving the welfare of cotton farmer households by increasing household income and increasing household spending [56].

3.3.2 GSR

GSR is an analysis of the level of household welfare by comparing food and non-food expenditure. If non-food expenditure is greater than food expenditure, farmer households can be said to be prosperous, this is because farmers can meet household food needs so that they can allocate income to non-food needs. Table 5 shows the welfare level of organic rice farmers in Sleman District based on GSR analysis. Based on Table 5, farmer households in Sleman Regency according to the welfare level analysis with the GSR indicator are classified as less prosperous households. This is indicated by the average GSR value of >1, which is 1.69. From all sub-districts in Sleman Regency, it shows that food expenditure is greater than non-food expenditure, this means that the income obtained by farmers from organic rice farming and outside farming is used by farmers to meet food needs so that farmers cannot allocate more income for non-food needs. Thus, food expenditure is the highest expenditure of farmer households [57].

Table 5

Farmer household welfare based on GSR analysis

Expenditure Sleman Cangkringan Pakem Berbah Average
Food 12,416,000 10,522,200 11,263,200 12,139,200 11,585,150
Non-food 7,849,360 6,291,517 8,232,962 5,676,694 7,012,633
GSR 1.58 1.67 1.37 2.14 1.69

In general, the welfare of food crops and horticulture farming households in Indonesia is still low as rice-farming households in Kalimantan [58]. Meanwhile, mango farmers in East Java are also not prosperous [59]. Therefore, the increase in household expenditure for both food and non-food needs must be balanced with an increase in farmer household income [60].

The level of welfare of a society can be said to be good if household income increases and part of the income can be used for non-food consumption needs. Therefore, the expenditure or consumption pattern of a society is determined by the family income obtained [61]. This is based on Engel’s law which states that the greater the income, the smaller the share of income used for food consumption, and the smaller the income, the smaller the share of income used for non-food consumption. If household food expenditure is greater than non-food expenditure, then the farmer’s household is declared less prosperous; if food expenditure is less than non-food expenditure, then the farmer’s household is declared prosperous [62].

In general, respondents with less prosperous categories prefer to use income for food expenditure and have not acted to set aside money for non-food expenses such as housing facilities, health, education, and so on. Meanwhile, respondents with a more prosperous category have the idea that income is not only used to meet food needs but also non-food needs as well. They think that education, health, home facilities, recreation, paying taxes, and more are important. They try to allocate income for food and non-food needs [63].

The distribution of farmer household welfare based on GSR value is presented in Table 6. It can be seen from Table 6 that 7.14% or as many as 5 farmer households in Sleman Regency are classified as more prosperous. This shows that only a small percentage of farming households in Sleman Regency can allocate the total household income obtained for non-food needs, not to meet food needs alone. Meanwhile, farmer households that are classified as less prosperous are much more with a percentage of 92.86% or as many as 65 households, meaning that the total household income obtained by farmers can only be used to meet food needs and then the rest is used for basic non-food needs.

Table 6

Distribution of farmer household welfare based on GSR value

Category Sleman Cangkringan Pakem Berbah Sum
Person % Person % Person % Person % Person %
Prosperous 2 13,33 0 0 3 20,00 0 0 5 7,14
Less prosperous 13 86,67 20 100 12 80,00 20 100 65 92,86
Total 15 100 20 100 15 100 20 100 70 100

Source: primary data analysis, 2021.

4 Conclusions and recommendations

Income from organic rice farming (on the farm) in Sleman Regency for a year amounted to IDR 6,662,627. The household income of organic rice farmers for 1 year sourced from on-farm, off-farm, and non-farm income is IDR 19,245,127. From this income, it has not been able to provide significant welfare for farming households. This is shown by the level of household welfare of organic rice farmers in Sleman Regency based on the FHIER showing 1.03 which means it is prosperous but based on the GSR value shows 1.69 which means less prosperous. Organic rice-farming income contributes to the welfare of farmer households by 34.71%. It means that the role of organic rice farming is enough. Therefore, it is necessary to innovate farming and optimize agricultural resources based on science and technology to increase agricultural production to increase household income and welfare. This innovation necessitates a study of resource optimization and the precise identification of determining elements in order to boost agricultural production, income, and farmer welfare.

Acknowledgments

The authors would like to deliver big gratitude to Universitas Muhammadiyah Yogyakarta for supporting this study.

  1. Funding information: The research was supported by the Universitas Muhammadiyah Yogyakarta’s Institute for Research and Innovation Centre.

  2. Author contributions: All authors accepted the responsibility for the content of the manuscript and consented to its submission, reviewed all the results, and approved the final version of the manuscript. TT – conceptualization, data curation, formal analysis, methodology, and writing (original draft, review, and editing); MFFAQ – data curation, formal, and writing (original draft); NR – project administration and resources; ZR – investigation and supervision; MFK – review and editing.

  3. Conflict of interest: Authors state no conflict of interest.

  4. Ethical approval: This publication does not require ethical approval because it focuses on rice farming activities and does not include any experiments involving human or animal subjects.

  5. Data availability statement: On reasonable request, the corresponding author will provide the datasets created and/or analyzed during the current work.

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Received: 2024-01-26
Accepted: 2024-02-15
Published Online: 2024-05-14

© 2024 the author(s), published by De Gruyter

This work is licensed under the Creative Commons Attribution 4.0 International License.

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