The Analysis of Leading Subsector Paddy Commodities in South

Sumatera Province (LQ Analysis)

Siti Rohima, Anna Yulianita, Nengsi Puspita Dewi

Faculty of Economics, Universitas Sriwijaya, Palembang, Indonesia

Keywords: Leading Commodity, Location Quotient, Base Sector, Non-Base Sector

Abstract: The purpose of this study to analyze the leading commodities of paddy plants in the South Sumatera

Province. In this study refers to two types of paddy plants, which are Wetland paddy and Dryland paddy..

The method is using (LQ) analysis and secondary data. With the LQ formula, an index will be produced to

determine a regency/city including base or non-base on paddy plants, if LQ> 1 (Leading Sector), LQ = 1

(Self-Sufficiency), LQ <1 (non-Leading sector). The results of study show that regencies or cities that have

a low total of wetland paddy production included in the basic categories are: Lahat Regency, Musi Rawas

Regency, East OKU Regency, Ogan Ilir Regency, Empat Lawang Regency, Palembang City, Pagaralam

City. Non-Base Sector categories are OKI, Muara Enim, Musi Banyuasin, South OKU, and Lubuklinggau

City. The category of base-sector for Dryland paddy production is Ogan Komering Ilir Regency, then Ogan

Komering Ulu Regency, Muara Enim Regency, Prabumulih City, Musi Banyuasin Regency and Lahat

Regency. Non-base sector categories are South OKU Regency, Musi Rawas Regency, Banyuasin Regency,

East OKU Regency, Ogan Ilir Regency, Empat Lawang Regency, LubukLinggau City, Palembang City,

Pagaralam City.

1 INTRODUCTION

1.1 Background

The agricultural sector is an important sector and

is a major driver in the economy of regencies/cities

in South Sumatra Province. One strategy that can be

used in regional economic development through the

development of paddy leading commodities. The

development of leading commodity-based regions is

expected to spur the growth of a region which in

turn can increase people's income. Utilizing superior

regional potential, optimally and integrated potential

is a condition that needs to be considered so that the

welfare and prosperity of the community can be

achieved (Mubyarto, 2000).

Determination of commodity as a leading

commodity in regional must be adjusted to the

potential of natural resources and human resources

owned by the region. Commodities selected as

regional leading commodities are commodities that

have high productivity and can provide added value

so that they have a positive impact on people's

welfare. In addition, the determination of regional

leading commodities must also consider the

contribution of a commodity to economic growth

and aspects of equitable development in an area

(Syahroni, 2005)

Leading commodities in the agricultural sector,

especially paddy, can be used as a basis for

determining the priority of agricultural development.

Agricultural development aims to improve the yield

and quality of production, increase income and

living standards of the community. The aim of

decent agricultural development is placed as a top

priority for the achievement of food self-sufficiency.

Agricultural development strives to develop the

existing potential, namely utilizing natural resources

optimally. Main commodity in a region different,

with excellent potential areas can be illustrated by

the region's ability to produce, create value,

utilization of resources in real time, provide

employment, generate income for the community,

have prospects for improving productivity and

investment as well as having the power sai ng high

(Bappeda, 2014) . The agricultural sector has an

important role both at the national and regional

levels, such as in economic development in a

country while most of the Indonesian population still

Rohima, S., Yulianita, A. and Puspita Dewi, N.

The Analysis of Leading Subsector Paddy Commodities in South Sumatera Province (LQ Analysis).

DOI: 10.5220/0008437601330140

In Proceedings of the 4th Sriwijaya Economics, Accounting, and Business Conference (SEABC 2018), pages 133-140

ISBN: 978-989-758-387-2

133

depend on their lives. This is because the

agricultural sector contributes significantly to

national income and national food providers. Food

as one type of physiological needs occupies the first

herarchy in the types of basic human needs. Food is

said to be a basic need for every human being

everywhere, because it is related to human survival,

growth and development.

Location Quotient (LQ) is a method based on

sector theory base to calculate relative comparisons

of value added contribution of a sector in a region to

the value added contribution of the sector concerned

nationally or to a higher level (Rusastra et al. 2000).

The use of the LQ method can find out the value of

the added value of each sector that represents

whether the sector is a superior commodity or not.

The concept of LQ states that the quantity of LQ

on a commodity is greater than one (LQ> 1) then the

commodity is a base commodity that has the

advantage of meeting the needs of other regions.

This commodity has the potential to be developed

and can become a foundation for regional economic

development. Conversely, if the LQ is smaller than

one (LQ<1), it indicates that the commodity is non

leading commodities. These commodities do not

have advantages and tend to import from other

regions because they do not meet the needs of their

own regions.

1.2 Research purposes

Analyze leading commodities of paddy plants in

regencies / cities in South Sumatra Province.

1.3 Literature Review

1.3.1 Featured Commodities

The comparative advantage of a commodity for a

country or region is that the commodity is relatively

leading to other commodities in the region

(Mawardi, 1997). In this case, the definition of

leading commodity is in the form of comparison and

not in the form of real added value. The comperative

advantage is an economic activity that is

comparatively more profitable for regional

development. While the leading sector is a sector

that has comparative advantages and competitive

advantages with similar sector products from other

regions and provides great value for benefits.

Leading sectors also provide large value-added and

production, have a large multiplier effect on other

economies, and have high demand both in local

markets and export markets. Excellent commodities

are the mainstay commodities that have a strategic

position to be developed in an area. This strategic

position is based on technical considerations (soil

and climate conditions), socio-economic and

institutional conditions. (Handayana, 2003).

This determination is important considering that

the availability and capability of resources (natural,

capital and human) to produce and market all

commodities that can be produced in a region

simultaneously is relatively limited. On the other

hand, in the current free market era, at the local,

national and global market level, only commodities

that are

cultivated efficiently in terms of technology

and socio-economics and have comparative and

competitive advantages that are able to compete

sustainably with the same commodities from other

regions. In simpler terms what is meant by superior

commodities is a commodity that is feasible to

cultivate because it provides benefits to farmers both

biophysically, socially and economically. Certain

commodities are said to be biophysically feasible if

the commodity is cultivated in accordance with the

agroecological zone, socially feasible if the

commodity provides opportunities for business, can

be done and accepted by the local community so that

it has an impact on employment. While

economically feasible means that the commodity is

profitable.

1.3.2 Location Quotient (LQ)

Some methods for sorting between base activities

and non-base activities are direct methods, indirect

methods, mixed methods, and location quotient

methods (Tarigan R, 2005). In this study, the

location quotient (LQ) method is used, this LQ

method is a comparison between the relative share

of "i" commodity production at the provincial level

to the total production in the Province with the

relative share of "i" commodity production at the

national level against total production in National

level. If you want to describe it to the district level, it

means that the commodity "i" at the district level

compared to the total production in the district is

then compared again with the production of "i"

commodities at the Provincial level against the total

production at the Provincial level, and so on.

Secondary data analysis from the Central Statistics

Agency (BPS) included data on production,

harvested area, area of immature plantations, planted

area , old / damaged plants. Production is the main

indicator in LQ calculation, because the production

of a commodity is the final resultant of all

cultivation systems. If the production of a

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commodity is high and tends to increase every year,

then it is assumed that the commodity is in great

demand by the community, which has an impact on

real income increases. High interest in this

commodity will certainly be followed by better care

than other commodities with lower production.

2 METHODOLOGY

For determining, the selection of an area for the

development of a rice crop, the government needs to

study the potential of each region, using this rice

sector base sector can help in decision making. The

method used in this study is a method of analyzing

secondary data using Location Quotient (LQ)

analysis and in-depth interviews. LQ analysis

techniques to determine the ability of an area in a

particular sector. Basically, this technique presents a

relative comparison between the ability of a sector in

a known area with the ability of the same sector in a

wider area. Based on basic definition of economic

theory, LQ techniques can be used to determine the

leading sectors with GRDP data per sector while for

leading commodities in the region in the form of

production data.

LQ technique can also be used to map regional

leading commodities, data commonly used to

identify leading commodities, namely production

data, so it can be assumed that the LQ technique

shows the comparative advantage of a commodity

based on its production by using an economic model

that measures relative concentration through the

concentration of the relative LQ (Isserman, 1977; M.

Miller M. & Wright, 1991; Sayago-Gomez & Stair,

2015; Ron Hood., 1998) and regression analysis.

The LQ formula is as follows:

LQ =













……………………….....................………...(1)

Based on the formula then each respective

commodity is lowered as follows:

LQ =







/







/



…………..................…........(2)

LQ calculation model for district rice in South

Sumatra.

N_Sek Ber Kab = Number of district / city rice

commodity food production

_ SECTION ON CITY = Total number of

district / city commodity food production

N_ Ber Sum = Number of provincial

rice food commodity production

_ Sum Pngn = Total Province

commodity food production

With the LQ formula, an index will be produced

to determine a sub-district including base or non-

base in a food crop sector. if LQ> 1 (Base Sector),

LQ = 1 (Self-Sufficiency), LQ <1 (Non-Base

Sector).

3 DISCUSSION

The role of the agricultural sector can help

improve the economic growth of an area, moreover

it is one of the most dominant food commodities for

most Indonesian people where rice is a food

ingredient that is easily converted into energy, in

addition to containing enough nutrients and boosters

for the body. To reach the adequacy of food

originating from rice / rice, the government, both

since the Dutch colonial period and after

independence and until now, has implemented

various policies in line with population growth.

One of the Indonesian government's

development programs today is the development of

the region which is focused on regional development

by accommodating the characteristics and

capabilities of each region. Development in an area

will be more optimal if it is based on the

introduction of leading commodities and its proper

use while maintaining sustainability environment (

Marina et al, 2018)

According to Nugroho (2016) with using also

input-output after knowing leading commodities, the

policy is related to the findings of the Input-Output

approach that is related to affordability and

accessibility to inputs, the development of farmers

on input use (education and information), as well as

the price stabilization of rice and its derivatives.

Whereas related to the spatial aspect, soft

infrastructure plays an important role in

strengthening internal capacity of farmers and

instructors. Hard structure shows that need to restore

irrigation systems, and facilitate the use of better

seeds and fertilizers. In increasing production, an

increase in productivity is carried out through a

variety of new technologies ranging from seed

supply, till the post-harvest land processing, also

increasing cropping area and harvested area through

an increase in the rice cropping index. Similarly,

South Sumatra provincial and district /city has a rice

production quantities varied as table 1

The Analysis of Leading Subsector Paddy Commodities in South Sumatera Province (LQ Analysis)

135

Table 1: Amount of Rice Production / ton/ Regency / City of South Sumatra Province 2010-2016

No. Regency/City 2010 2011 2012 2013 2014 2015 2016

Ogan Komering

Ulu (OKU)

Regenc

56621.51 68872.5 89505.35 87747.98 71241.91 69488 54624.81

Ogan Komering

Ili

enc

748815 572915 1116970 1059668 1125760 624017 603075.7

Muara Enim

Regenc

151755 133643.8 127701.3 120340.8 93864.34 77629.43 84486.35

4 Lahat Regency 153253.78 157608.5 124500 153555 150850 159669 161404.7

Musi Rawas

Regenc

274325 280331 144232 203628 250504 276918 277569.3

Musi Banyuasin

Regenc

294693.488 265573 224654 260148 239665 249851 265026.9

Banyuasin

enc

795550.8 820337.7 882548.8 943104 915442 1236750 1455995

OKU Selatan

Regenc

127841 84283 125421 162691.1 174595 202658 222300.7

OKU Timur

Regenc

768288.8 896377.7 708263.3 730147 717651.9 864437 4862

Ogan Ilir

enc

201267 200112 173057 226937 216624 175929 217875

Empat Lawang

enc

105273 124463 123907 115430 140526 123746 128973.8

12 Palembang City 25052 20538 28828.7 29628.72 19099 25912 26087.51

13 Prabumulih City 4937.18 1131237 980 925.04 2825.5 1623 1569.20

14 Pagar Alam City 31816.91 50323.08 29299 33474.04 48259.22 43040 45720.94

Lubuk Linggau

Cit

24186.89 25539.6 14965.27 22444.46 0 25208 0

Source: BPS Publication City

District of South Sumatra Province in 2010-2016

Figure 1: Number of Rice Production Regencies / Cities in South Sumatra 2010, 2016

Figure 1 shows the amount of paddy production

in 2010 and 2016 in the Regency / City of South

Sumatra, from the figure it can be seen that there is a

quite significant increase and a decrease in each

Regency / City of South Sumatra Province. In 2010,

East OKU was the Regency that had the most

number of paddy and field rice production, while

Prabumulih City was the city that had the least

500000

1000000

1500000

2000000

2010

2016

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136

amount of rice production. In 2016 the Banyuasin

Regency was the district that produced the highest

number of rice plants and the City of Lubuklinggau

did not produce paddy plants. From Figure 1 above,

it can also be concluded that the average amount of

rice production in the regency / city has experienced

an increase and decrease, it can be caused by factors

that affect the production of rice plants themselves.

South Sumatra has 11 regencies and 4 cities that

have different natural resources. One of the natural

resources owned by each regency / city in South

Sumatra is rice crops which are known that rice

crops are food crops that are used as a source of

daily staple food needs. The following is a Table of

Average Contributions of Rice Production in

Districts/Cities in South Sumatra in 2010-2016.

Table 2: Average Contribution of Total Paddy Production Regency / City of South Sumatra Year 2010-2016

No. Regency / City Contribution Value (%)

1. Ogan Komering Ulu (OKU) Regency

1.75

2. Ogan Komering Ilir Regency 20.71

3. Muara Enim Regency 2.78

4. Lahat Regency 3.75

5. Musi Rawas Regency 5.73

6. Musi Banyuasin Regency 6.37

7. Banyuasin Regency 25.18

8. Ogan Komering Ulu Selatan Regency 3.94

9. Ogan Komering Ulu Timur Regency 16.13

10. Ogan Ilir Regency 5.00

11. Empat Lawang Regency 3.05

12. Palembang City 0.62

13. Prabumulih City 3.42

14. Pagar Alam City 0.99

15. Lubuklinggau City 0.39

Source: BPS, South Sumatra Province Regency / City in Figures 2010-2016 (processed data)

That can be seen from the table above.

Banyuasin regency is The first regency of 15

regencies/cities in South Sumatera Province which

gives the highest contribution in paddy production,

which is 25.18% in the period 2010-2016, followed

by Ogan Komering Ilir and Ogan Komering Ulu

Timur Regencies 20.71% and 16.13%. Whereas the

City of Lubuklinggau is the City that gives the

smallest contribution in rice production, which is

0.39%, and is followed by the City of Palembang

and the City of Pagaralam which has not contributed

1% to the total production of paddy plants which are

0.62% 0.98% in south Sumatera province. This is

the structure of rice plants in their respective

regions.

There are two types of paddy plants in South

Sumatra Province, namely Wetland paddy and

Dryland paddy. Location Quotient Analysis is used

to find out which District / City is in South Sumatra

Province which has a number of rice production

categories which can be categorized into both

leading and non-leading sectors. In this LQ analysis,

determining the amount of production that has a

LQ> 1 can be categorized into the base / superior

sector and if LQ<1 Value is categorized into non-

base. The following are the results of the Location

Quotient (LQ) analysis in the District/ City of South

Sumatra Province from 2010-2016.

The Analysis of Leading Subsector Paddy Commodities in South Sumatera Province (LQ Analysis)

137

Table 3: Location Quotient (LQ) Average Calculation Results, Total Wetland Paddy Production, Regency/City of South

Sumatra Province 2010-2016

From the results of the average calculation of the

LQ analysis above, it is found that there are 7

districts / cities that have a number of wetland paddy

production which is included in the base sector

category, namely: (1) Lahat Regency, (2) Musi

Rawas Regency, (3) OKU Timur Regency, (4) Ogan

Ilir Regency, (5) Empat Lawang Regency, (6)

Palembang City, (7) Pagaralam City. Of the seven

Regencies / Cities above the City of Palembang and

the City of Pagaralam which had the highest LQ

value of 1.17 this was due to the non-production of

other types of paddy other than the type of paddy.

Regency / City of South Sumatra Province

whose total production of Wetland Paddy Plants

included in this basic sector category has good

potential to be maintained and improved again. So

that, increasing the number of production activities

from this sub-sector will also affect economic

activities from other sectors. This sector also has a

prominent role in the province of South Sumatra.

LQ> 1 shows that the role of sector i is quite

prominent in the area and often as an indication that

the area is surplus in product i and exports it to other

regions. This area is able to export products to other

regions or abroad because they are able to produce

these products cheaper and more efficiently.

Regency/City in South Sumatra Province which is

not included in the base sector category for the total

production of wetland paddy plants but nonbasis

where the LQ value of the production of wetland

paddy is less than 1 is OKI Regency (0.73), Muara

Enim (0.87), Musi Banyuasin (0.89), OKU Selatan

(0.72), and Lubuklinggau City for (0.85) are almost

close to 1, which means that the amount of paddy

rice production can still be developed into a base

sector. However, for Banyuasin, Prabumulih, and

Ogan Komering Ulu Regencies which have the

lowest LQ value, that is equal to (0.16) for

Banyuasin Regency and Prabumulih City and the

LQ value is (0.31) for Ogan Komering Ulu Regency,

which means that the Regency / City has not been

able to meet their needs. for wetland paddy plants

and the potential to import from other regions.

The average Dryland paddy production LQ

calculation shows that there are 6 Regencies / Cities

in South Sumatra Province which are included in the

base sector category for Dryland paddy plants

production where the LQ value of the total paddy

crop production is more than 1. The highest regency

with LQ value (28.9) are Ogan Komering Ilir

Regency, then Ogan Komering Ulu Regency with

LQ values ( 9.62 ), Muara Enim Regency (5.37),

Prabumulih City ( 3.71 ) , Musi Banyuasin Regency

( 2.10 ) , and Lahat regency ( 1.17 ) which means

that the area has been able to meet the production

needs of paddy plants and can conduct doing the

activity of export to other regions. For

Regencies/Cities that are not included in the base

sector category means the amount of field rice

production in the area has not been able to meet the

needs of the area and is likely to require the

production of dryland paddy plants from other

regions are OKU, Musi Rawas, Banyuasin, OKU

Timur, Ogan Ilir, Empat Lawang, Lubuklinggau

City, Palembang and Pagaralam.

Base Sector

LQ>1

Non Base Sector

LQ<1

1. Lahat Regency

2. Musi Rawas Regency

3. OKU Timur Regency

4. Ogan Ilir Regency

5. Empat Lawang Regency

6. Palembang City

7. Pagaralam City

1. Ogan Komering Ilir Regency

2. Ogan Komering Ulu Regency

3. Muara Enim Regency

4. Musi Banyuasin Regency

5. Banyuasin Regency

6. Ogan Komering Ulu (OKU) Selatan Regency

7. LubukLinggau City

8. Prabumulih Cit

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Table 4: Location Quotient (LQ) Average Calculation Results Total, Dryland Paddy Production, Regency / City of South

Sumatra Province 2010-2016

Base Sector

LQ> 1

Non-Basis Sector

LQ <1

1. Ogan Komering Ilir Regency

2. Ogan Komering Ulu Regency

3. Muara Enim Regency

4. Prabumulih City

5. Musi Banyuasin Regency

6. Lahat Regency

1. OKU Selatan Regency

2. Musi Rawas Regency

3. Banyuasin Regency

4. OKU Timur Regency

5. Ogan Ilir Regency

6. Empat Lawang Regency

7. Lubuk Linggau City

8. Palembang City

9. Pa

aralam Cit

Source: (processed data , 2018

4 CONCLUSION

The leading commodity of paddy plants can be

used as a basis for determining the priority of

developing agricultural crops that should be

developed and are the main foodstuff for the people

of Indonesia. In South Sumatera there are two types

of paddy Plants that are developed, namely Wetland

paddy and Dryland Paddy. Using Location Quotient

Analysis (LQ) to find out which District / City is in

South Sumatera Province which has a total

production of Wetland paddy plants that can be

categorized into both base and nonbased sectors .

Paddy plants that are developed are Wetland paddy

and Dryland Paddy. Based on the LQ calculation

that the area included in the base sector for Wetland

paddy plants is Lahat Regency, Musi Rawas

Regency, OKU Timur Regency, Ogan Ilir Regency,

Empat Lawang Regency, Palembang City,

Pagaralam City. Areas with non-base categories are

OKI Regency (0.73), Muara Enim (0.87), Musi

Banyuasin (0.89), OKU Selatan (0.72), and

Lubuklinggau City (0.85) close to 1 which means

that the amount of wetland paddy production can

still developed into a base sector. However, for

Banyuasin, Prabumulih, and Ogan Komering Ulu

Regencies which have the lowest LQ value which is

equal to (0.16) for Banyuasin Regency and

Prabumulih City and the LQ value is (0.31) for Ogan

Komering Ulu Regency .

Regency / City of South Sumatra Province which

is included in the base sector category for dryland

paddy production where the LQ value of the total

production of dryland paddy is more than 1. The

highest regency with LQ value (28.9) is Ogan

Komering Ilir Regency, then Ogan Komering Ulu

Regency with LQ values (9.62), Muara Enim

Regency (5.37), Prabumulih City (3.71), Musi

Banyuasin Regency (2.10), and Lahat Regency

(1.17). Non-base sector categories are OKU Selatan

Regency, Musi Rawas Regency, Banyuasin

Regency, OKU Timur Regency, Ogan Ilir Regency,

Empat Lawang Regency, LubukLinggau City,

Palembang City, Pagaralam City . Having known

the district / city including the base and non-base

categories, it is easier to carry out an increase in the

production of paddy. So that the objectives of

agricultural development improve the yield and

quality of production, increase the income and

standard of living of the community can be realized.

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