A Study of the Value Chain of Cassava (Manihot esculeta) in Toba

Samosir District for the Analysis of Increasing Its Value Added to

Stakeholders

Rut Tambun

and Yosef Manik

Engineering Management Study Program, Institut Teknologi Del, Laguboti, North Sumatera, Indonesia

Keywords: Value Chain Analysis, Supply Chain and Value Added

Abstract: The purpose of this study is to map out the value chain of cassava (Manihot esculeta) and to measure the

extent to which the cassava commodity in Toba Samosir District could affect the economics of the relevant

stakeholders. The method used in this research is descriptive-explorative with value chain mapping analysis

as the main problem solving tool. The sample population used in this study are all stakeholders along the

cassava supply chain in Toba Samosir Regency. From the study, we obtain three models of supply chain of

cassava, namely: (i) supply chain where cassava is consumed without processing, (ii) food supply chain

model, and (iii) cassava supply chain is processed into grade B tapioca flour. Afterward, a value chain

mapping was conducted to determine the margins of each node in the supply chain. The value chain map

reveals that the value engineering of cassava commodities is not yet optimal, where the final product produced

from the supply chain is still far below the potential possible value. Therefore, from this research

recommended some value-added improvement strategy, for example, diversify the product of cassava

derivative that is more valuable that is grade A tapioca flour and mokaf flour.

1 INTRODUCTION

Production of cassava (Manihot esculeta) in Toba

Samosir Regency occupies the sixth position in North

Sumatera Province. However, Toba Samosir

Regency still has great potential to develop cassava

commodity, because the area of land that is not

cultivated in Toba Samosir Samosir is bigger than

land area which is already managed. At this time the

area of land that is not managed in the District reached

33.392 Ha. From the demand side, in Toba Samosir

Regency there is a tapioca flour mill with 10ton / hour

capability. Total demand for tapioca flour at PT

Hutahaean is about 1000-1200 tons / month or

equivalent to cassava supply of 4000-4800 tons /

month. However, due to supply constraints, PT

Hutahaean is only able to get the supply of cassava as

much as 3400 tons / month.

Along with the development of cassava based

processing industry in Toba Samosir regency in

recent years, people's desire in producing cassava as

one of agriculture commodity also increases. This is

reflecting by the increase of the cassava production in

last 3 years (BPS, 2015). However, there is currently

no systematic study that maps the value chain and

measures the extent to which this sector affects the

economies of the respective stakeholders. Therefore a

research that can describe and analyze the

performance of supply chain and value chain of

cassava commodity in Toba Samosir regency is

needed. This study aims to determine the role and the

importance of each stakeholder in the cassava

industry and create a value chain of cassava that can

provide added value for the stakeholders.

2 METHODOLOGY

The method used in this research is descriptive-

explorative, research with problem solving which is

explored widely about things that influence the

happening of something based on the fact that

happened in the field. The research technique used in

this research is survey, which is direct observation to

know the actual condition of research object. In

addition to the survey also conducted interviews,

which are direct questions and answers to relevant

agencies such as agriculture and farmer groups and

Tambunan, R. and Manik, Y.

A Study of the Value Chain of Cassava (Manihot esculeta) in Toba Samosir District for the Analysis of Increasing Its Value Added to Stakeholders.

DOI: 10.5220/0010042603350340

In Proceedings of the 3rd International Conference of Computer, Environment, Agriculture, Social Science, Health Science, Engineering and Technology (ICEST 2018), pages 335-340

ISBN: 978-989-758-496-1

335

stakeholders such as farmers, collectors, retailers,

cassava processing industries, distributors, retailers

and consumers about the situation or reality that

occurred in the field, the more the number of

respondents then the data obtained will be more valid

a. Sampling method

The sampling method was done by snowball

sampling, the sampling was done gradually, the

first thing to do was to determine the key

informant in the cassava farmer who can give

information and this person also used as informant

to identify other person as sample which is

considered can give information. Based on

snowball sampling method obtained 48

respondents which consist of 30 farmers, 10

middlemen, 7 retail traders and 1 tapioca industry.

b. Data analysis

Value chain analysis refers to a series of activities

required to present a product or service starting

from a conceptual stage, followed by several

stages of production, to delivery to end-

consumers and destruction after their use

(Kaplinsky & Morris, 2000).

c. Value chain mapping

Identify each part of the production process and

identify where steps can be eliminated or

improved. Improvements made aim to cut

production costs or increase productivity (Porter,

1985).

d. Value chain analysis

This analysis aims to identify opportunities for

value enhancement on the value chain map.

Improved value chains can be performed on

various sides such as processes, products,

resources and functions. Value chain

improvements aim to improve efficiency, product

diversification, resource optimization and

establish the most important activities in the value

chain.

3 RESULT AND DISCUSSION

3.1 General Overview of the Study

1. Location and geographical state

Toba Samosir is a regency in North Sumatra

Province with Balige as its capital. Toba Samosir

Regency consists of 16 districts and 244 sub-

districts. Toba Samosir Regency covers an area of

2,021.80 km

and is located between 2°03' and

2°40' North latitude and between 98°56' and

99°40' East longitude.

2. Social economic and environmental policies

According to Toba Samosir's central statistics

agency in 2014, over the past three years

economic growth in Toba Samosir has always

been positive. In 2013 the amount of GDP per

capita Toba Samosir district reached Rp 28.24

million with an increase rate of 12.36%. Tobacco

PDRB contributes 1.24% to the formation of

GRDP of North Sumatra. The large population of

Toba Samosir Regency depends on the

agricultural sector. Agriculture becomes the

mainstay sector for Toba Samosir Regency in

moving the local economy. In 2016 this sector

contributed significantly in the formation of

GRDP Regency Toba Samosir, which is about

34.93%. Toba Samosir regency is one of

producing centers of rice, corn, cassava, and

andaliman in North Sumatra.

3. Production and productivity of cassava in Toba

Samosir district

Production of cassava in Toba Samosir Regency

fluctuated where there is a decrease or increase in

the number of production each year. Based on

data obtained from BPS in 2005-2016 shows that

the production of cassava in Toba Samosir

Regency has a positive trend and move

exponentially. The exponential movement means

that cassava production will increase

continuously. In 2010-2012 a significant increase

in cassava occurred due to the presence of a

tapioca starch factory in Toba Samosir Regency,

PT Hutahaean. However, in 2012-2014 cassava

production has decreased very sharply. This

happens because of the prolonged dry season that

occurred in 2013-2014. While the productivity of

cassava in Toba Samosir Regency has a positive

trend and experienced a linear growth, this means

that cassava productivity will increase in the long

term. Increased productivity of cassava in Toba

Samosir District is caused by several factors

among others the use of superior seeds and the

increasing ability of the community in processing

cassava farming.

3.2 Supply Chain Mapping

According to (Chopra & Meindl, 2001) the supply

chain consists of all parties involved, directly or

indirectly, to meet customer demand. Based on data

that have been collected from the interview and

observation obtained 3 models of supply chain of

cassava commodity in Toba Samosir Regency (Fig.

1).

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Technology

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Figure 1: Cassava supply chain mapping

The description of the three models of supply chain is

as follows:

4 Model of cassava supply chain without processing

The simplest supply chain model is the

unprocessed cassava supply chain, in this chain

there are only 3 actors namely farmers, small

traders and consumers. Small traders act as

intermediaries between farmers and consumers.

The economic value of cassava in this supply

chain model is low, this is because cassava does

not undergo processing. Estimated around 2%

supply of cassava in Toba Samosir Regency goes

into this model.

5 Model of processed food supply chain of cassava

This supply chain model consists of five actors,

namely farmers as suppliers of raw materials,

middlemen as cassava collectors from various

farmers, food industry that acts to process cassava

so as to have a higher economic value, retailers act

as distributors of processed products of cassava to

consumers and consumers act as end-product

users. In this supply chain there is an increase in

the economic value of cassava, as it has

undergone processing. Examples of processed

products of cassava contained in Toba Samosir

Regency are crisps and wet cakes. It is estimated

around 6% supply of cassava in Toba Samosir

regency goes into this model.

6 Tapioca supply chain model

This supply chain is the most complex chain. It

can be seen from the number of actors who play a

role and the production process of its products. In

this supply chain there are 8 actors, namely

farmers, middlemen, tapioca factories,

distributors, industries with tapioca flour raw

materials, retailers and consumers. In this supply

chain model the economic value is higher than in

the previous supply chain model. In this model

cassava will be processed by PT Hutahaean into

tapioca flour with a large scale of 800-850 tons /

month. The products produced will be distributed

by the distributors to other places and tapioca

flour based industries. It is estimated around 92%

supply of cassava in Toba Samosir Regency goes

into this model.

3.3 Value Chain Mapping

Based on the above supply chain map, we get a

value chain for each model of supply chain of

cassava commodity in Toba Samosir Samosir

(Fig. 2)

A Study of the Value Chain of Cassava (Manihot esculeta) in Toba Samosir District for the Analysis of Increasing Its Value Added to

Stakeholders

337

Figure 2: Cassava value chain mapping

In the value chain of cassava in Toba Samosir

Regency, there are several actors ranging from

farmers, cassava processing industry to retail traders

(retailers). Farmers in this value chain function as the

party that produces cassava. In general, farmers grow

cassava for additional income, this is due to the low

economic value of cassava compared to other crops

such as rice, corn and coffee. However, since the

establishment of PT Hutahaean in Toba Samosir

Regency can increase the desire of the community in

planting cassava. The second perpetrator is the

collector, in the cassava value chain, the middleman

or the collector acts as an intermediary between the

farmer and the industry or the farmer with the

consumer. The middlemen will generally collect the

cassava directly to the location where the farmers will

then sell it to consumers or industries with higher

selling prices.

One of the actors who play an important role in

the cassava value chain is the cassava processing

industry. Industry plays a significant role in absorbing

cassava produced by farmers and processed into

products with higher economic value. Furthermore,

products processed by the industry will be distributed

through distributors to the next industry or to retailers.

And the next actor retailers or retail traders, retail

traders are traders who conduct buying and selling

activities directly to consumers. In addition to the

actors directly involved in the cassava value chain

there are some actors who are not directly involved

but have a role in supporting the improvement of the

cassava value chain that is the government. The

government through the agricultural service strongly

supports the development of cassava agriculture with

the provision of superior seeds and agricultural

equipment and agricultural machinery. The

agricultural service through farmer groups scattered

in each village became a place of farmers in

channeling the aspirations of farmers and farmers to

obtain agricultural knowledge through extension

activities.

3.4 Value Added Calculation

The concept of added value is one of value

development that occurs because of inputs that are

treated on one commodity (Agni, 2013). Value added

is calculated from value added during the production

process and marketing process (Hayami, et al., 1986).

Based on the results of interviews conducted on

actors contained in the value chain regarding the costs

required in the process of cassava production and the

profits derived from the sale of cassava products, it

can be calculated the value added obtained by each

supply chain actor in the cassava commodity value

chain system.

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Table 1: Added values for each node in cassava supply chain in Toba Samosir

Variables Unit Farmer Middleman Traders Tapioca industry

Output kg 25,000 10,000 200 12,500

Input kg 1,450 1,200 20 50,000

Direct labo

40 4 2 150

Conversion factor

17.2413 8.333333 10 0.25

Direct labor coefficient

0.02758 0.003333 0.1 0.003

Price of output Rp/kg 750 850 2,250 6,500

Direct labor wages Rp/HOK 60,000 50,000 50,000 55,000

Reception and profit

Raw material price Rp/kg 10,500 3,600 1,500 750

Other input Rp 107.8 150 100 41.1

Output value Rp/kg 12,931. 7,083.333 22,500 1,625

a.Value added Rp/kg 2,323.2 3,333.333 20,900 833.9

b. Value-added ratio

18% 47% 93% 51%

c. Revenue of labor Rp/kg 1,655.1 166.6666 5,000 165

d. Share of labor % 71% 5% 24% 7%

e. Profit Rp/kg 668.06 3,166.666 1,5900 778.9

f. Profit rate % 29% 95% 76% 93%

Reproduction of owners of

factors of

roduction

Margin Rp/kg 2,431.0 3,483.333 2,1000 875

a. Income of labo

% 68% 5% 24% 6%

b. other inputs % 4% 4% 0% 5%

rofit % 27% 91% 76% 89%

Based on the results of interviews at the study site, it

is known that cassava does not have a stable price, the

price is determined through negotiation between the

seller and the buyer. In addition, the price of cassava

also depends on its quality. Based on the analysis

(table) that the added value in each supply chain in

the value chain system is different.

3.5 Challenges for Development and

Commercialization of Value Chain of

Cassava in Toba Samosir Regency

a. Market opportunities and access to market

The destruction of infrastructure in areas far from

urban areas makes the actors in the value chain not

optimal in developing cassava commodities. This

is due to the difficult access to agricultural areas

and the high cost of transportation

b. Low diversification of cassava

In general, cassava in Toba Samosir Regency is

only used as animal feed, direct consumption and

raw material of tapioca flour. Whereas cassava is

a commodity that has many derived products, so

that will produce a high value product if

experiencing proper processing.

c. Lack of community awareness in managing

cassava farming

In general, cassava farming areas in Toba Samosir

district are poorly maintained, this is due to the

low level of awareness and ability of farmers to

cultivate cassava farming.

3.6 Recommendations for Increasing

Value Added Strategies for

Stakeholders

1. Facilitate the access of farmers to the market, this

is realized through the government by improving

the infrastructure of remote areas such as

Amborgang villages.

2. To diversify the products of cassava, cassava is

processed into high-value products such as

improving the quality of tapioca flour that is

currently into grade A, cassava processing into

mocaf meal

3. Increase the ability of each actor in the chain,

such as giving superior seeds to farmers and

A Study of the Value Chain of Cassava (Manihot esculeta) in Toba Samosir District for the Analysis of Increasing Its Value Added to

Stakeholders

339

providing agricultural extension and the use of

new technology in industrial processes.

4. Establishment of village-owned small-size

enterprise so as to increase people's creativity in

processing cassava.

4 CONCLUSION

Based on the analysis of value chain of cassava

commodity in Toba Samosir Regency is divided into

3 parts namely supply chain mapping, value chain

mapping and value added calculation. Mapping of

supply chain of cassava in Toba Samosir Regency,

there are 3 model that is, cassava supply chain model

without processing process, food supply chain model

and tapioca flour supply chain model. Actors

involved in the supply chain model include farmers,

middlemen, retailers, industry, retailers, and

distributors. However, the effort to develop the added

value of cassava commodity in Toba Samosir

Regency has not been optimal yet. From the results of

value-added analysis conducted can be seen that

farmers get the lowest added value and retail traders

get the highest added value. To be able to increase the

value in the value chain can be done on the side of the

process, products and functions. On the side of the

process can be done with the use of technology in

processing, improving on the product side can be

done with diversification while on the side of the

function can be done to produce a positive impact for

value chain actors.

REFERENCES

Agni, K., 2013. Rantai Nilai (Value Chain) Agribisnis Labu

di Kecamatan Getasan Kabupaten Semarang,

Semarang.

Chopra, S. & Meindl, P., 2001. Supply Chain Management.

5th ed. USA: Pearson.

Hayami, Y., Kawagoe, T., Morooka, Y. & Siregar, M.,

1986. Agriculture Marketing and Processing in Upland

Java a Perspective from a Sunda Village.

Kaplinsky, R. & Morris, M., 2000. A Handbook for Value

Chain Research.

Porter, M. E., 1985. Competitive Advantage: Creating and

Sustaining Superior Performance. United States of

America: Free Press.

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