Analysis of Factors Affecting Farmer Revenues in the Horticulture

Agriculture Sector in Pematang Silimakuta District of Simalungun

Regency: Case Study on Chili Farmer Income

Nurul Hayati Ikhsani

, Muhammad Fitri Rahmadana

and Sahyar

Faculty of Economics, State University of Medan, Medan-Indonesia nurul .

hayatiikhsani @ gmail.com

Keywords: Land Size, Input Costs, Labor, Farmer Experience and Income Farmer

Abstract: This study aims to determine the factors of land area, input costs, labor and farmer's experience affecting the

income of farmers in the horticulture sector in the District of Pematang Silimakuta, Simalungun Regency.

This study uses primary data by interview method using questionnaires and secondary data obtained from

the Central Statistics Agency (CSA) of Simalungun Regency. The tools used to process the data are Eviews

9. The sample used in this study consisted of 80 farmers in Pematang Silimakuta District, Simalungun

Regency. The data analysis technique in this study uses OLS (methodOrdinary Least Square), classic

assumption test and statistical test. The results showed that: 1) labor has a significant effect on the income of

chili farmers; 2) land area, input costs and farmer experience have no effect but are significant to the income

of chili farmers; 3) the results of OLS estimates show the coefficient of determination (R2) by 55%, this

means that any increase in each variable 1% then it will affect the income of farmers. Chili is a horticultural

plant that has potential in the District of Pematang Silimakuta, Simalungun Regency which can increase

farmers income.

1 INTRODUCTION

The development of an identical agricultural

sector with national economic development, the

agricultural sector is not identical to the Ministry of

Agriculture, but identical to the agribusiness system

is the broad meaning possessed by three (3) RI

Ministries, namely the Ministry of Agriculture, the

Ministry of Maritime Affairs and Fisheries, and the

Ministry of Forestry. The Agriculture Sector in the

calculation of Gross Domestic Product (GDP) is

supported by five (5) subsectors, namely the Food

Crops and Horticulture sub-sector, Plantation

subsector, Livestock subsector, and Forestry sub-

sector. In accordance with the mandate of the 1994-

2004 Constitution of the Republic of Indonesia as a

grand strategy for Indonesia's economic

development in a holistic manner, is agribusiness led

development. Horticulture plants have a very

important position in people's lives and the country's

economy. In people's lives, their role as a source of

nutrition. Whereas in the economy it has a high

economic value seen from the resources on

increasing foreign exchange (Sigar, 2001).

Agricultural development in Simalungun has an

important and strategic role in national and regional

development. The role of the agricultural sector is

not only for food security, but also contributes

significantly to employment opportunities, sources

of income and the regional economy. In this regard,

the results of development in the agricultural sector

can be seen in the table below:

512

Ikhsani, N., Rahmadana, M. and Sahyar, .

Analysis of Factors Affecting Farmer Revenues in the Horticulture Agriculture Sector in Pematang Silimakuta District of Simalungun Regency: Case Study on Chili Farmer Income.

DOI: 10.5220/0009504305120516

In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science (UNICEES 2018), pages 512-516

ISBN: 978-989-758-432-9

Table 1: Harvest Area of Vegetable Plants by District and

Vegetable Types in 2015 Simalungun

Source: Central Statistics Agency (CSA) of Simalungun

Regency, 2015

Table 2: Production of Vegetable Crops and Vegetables

According to the District at Simalungun 2015

Source: Central Statistics Agency (CSA) of Simalungun

Regency, 2015

Vegetable horticulture plants are potential

horticultural plants in Simalungun District during

2015 production reached 211,562 tons. Especially in

Pematang Silimakuta sub-district is one of the

central production areas with the production of

superior cabbage/cabbage with an area of 18,197 ha,

potatoes with an area of 8089 ha and chillies

covering 4427 hectares.

The production of superior commodities in the

Pematang Silimakuta sub-district such as

cabbage/cabbage, potatoes and chilli which are

included in the vegetable category is also expected

to be able to contribute significantly to efforts to

increase horticultural products. Looking at the

economic value of cultural commodities, then if

developed in a commercial farming system can

increase farmers income.

2 THEORY FRAMEWORK

According to Rostow (Suryana, 2000) economic

growth is the transformation of a traditional society

into a modern society, through stages: traditional

societies, preconditions for take off, maturity stage,

and high consumption society. While the economic

base theory states that the main determinant of

economic growth in a region is directly related to the

demand for goods and services from outside the

region (Arsyad, 1999). Or it can also be said that the

base sector is able to encourage regional economic

growth (Tarigan, 2007).

Production is an activity to increase benefits by

combining the factors of production of capital, labor,

technology, managerial skills. Production is an

effort to increase benefits by changing forms,

moving places, and saving (Soeharno, 2007).

Farming income is the difference between

revenue and all costs in increasing income, so

farmers must try to increase production in order to

obtain an increase in income by maximizing

production factors, especially labor, which is one of

the factors that greatly influence family farming

(Soekartawi, 1995).

3 METHODOLOGY

This study was carried out in the Agropolitan Area

of upland vegetable farming in Simalungun District

especially in Pematang Silimakuta District. When

the research was conducted in August 2017 to

completion. The purpose of this study was to

determine land factors, input costs, labor and

farmer's experience affecting the income of chili

farmers in the horticultural agriculture sector in the

District of Pematang Silimakuta, Simalungun

Regency. The types of data collected are primary

data obtained directly from respondents who have

been determined in this case sourced from chili

farmers, and secondary data sourced from the

Central Statistics Agency (CSA) of Simalungun

Regency.

To answer the problems in this study, several

analytical methods are used, as follow :

a. OLS (Ordinary Least Square) method is used to

determine the magnitude of the change effect of

an independent variable on thevariable

dependent.

Analysis of Factors Affecting Farmer Revenues in the Horticulture Agriculture Sector in Pematang Silimakuta District of Simalungun

Regency: Case Study on Chili Farmer Income

513

b. The classic assumption test is used to detect the

presence or absence of normality,

heteroscedasticity, autocorrelation, and

multicollinearity in terms of estimation because

if there is a deviation from the classic

assumption, the t test and F test previously

performed are invalid and can statistically

confuse the conclusions obtained.

c. Statistical Tests are used to plan, collect, analyze,

interpret data. This statistical test consists of

R2test, F-test, and t-test.

4 RESULTS AND DISCUSSION

The normality test aims to test whether in a

regression model, the dependent variable, the

independent variable, or both have a normal

distribution or not.

Source: Data Processed with Eviews 9

Figure 1: Normality Test Results

Based on the results of the normality test in the

figure above, it is obtained that thevalue

probabilityof Jarque-Bera is 0.000000 < α = 0.05.

Thus it can be concluded that the data from the

variables in this study are not normally distributed.

Furthermore, heteroscedasticity tests are conducted

to test whether there is a regression model where

there is an inequality of residual variance from one

observation to another.

Table 3.:Heteroskedasticity Results

Based on the results of heteroscedasticity tests in the

table above, shows that the Probability F-Statistics

value amounting to 0.636377 > α = 0.05. This means

that there are no symptoms of heteroscedasticity in

this research model.

Then the multicollinearity test is used to test whether

there is a relationship between the independent

variables in the model.

Table 4: Multicollinearity Test Results

Variabel

PLP

1.00000

0 0.627506 0.441643 0.063612

0.62750

6 1.000000 0.839598 -0.032929

0.44164

3 0.839598 1.000000 -0.039281

PLP

0.06361

2 -0.032929 -0.032929 1.000000

Source: Data Processed with Eviews 9

Based on the table above, it can be seen that there is

no relationship between independent variables with

values greater than 0.9 or each independent variable

R2 <0.9. So it can be concluded that the variable

data in this research model does not have

multicollinearity.

The results of the regression analysis of the

estimation model with themodel Ordinary Least

Square (OLS)used in this study can be seen in the

table below:

Table 5: Results of the OLS Method Estimation (Ordinary

Least Square)

Source: Data Processed with Eviews 9

Based on the estimation results as shown in the

table above a constant value is obtained (a)

36,22375; b

1 in the

amount of 0.180627; b

of -

1,982256; b

of b2.798248 and

0.565002 for in

order to obtain the regression equation:

Log PP = Log a + b

Log LL+ b

Log BI+ b

Log TK + b

PLP Log+ e

Log PP = Log 36,22375 + b

Log

0,180627+ b

Log -

1,982256+ b

Log 2,798248

+ b

Log 0.565002+ e

UNICEES 2018 - Unimed International Conference on Economics Education and Social Science

514

Where the variable land area, input costs, labor

and farmer experience have a significant influence

on the variable income of chili farmers in Pematang

Silimakuta District, Simalungun Regency.

Based on the results of the estimation of the

research model with the OLS model, the R

value is

0.55, which means that 55% of the independent

variables namely land area, input costs, labor

experience and farmers can explain the dependent

variable, farmers income, while the remaining 45%

is explained by others outside the model.

The results of the partial significance test (t-test),

as follow :

a. Land Area

Based on the results of partial significance test

(t-test) obtained t-statistic value of 0.457 where the

probability level is 0.6489, it can be concluded that

the land area variable has no effect but significant to

farmers income. The area of vegetable land owned

by farmers is a factor in showing the size of the

production produced. If the farmer's land area is

large enough, then the economic opportunity to

increase production and income will be greater

(Soekartawi et al., 2002). The status of the land in

this research area is generally self-owned land.

Based on the results of the study indicate that the

chili area cultivated by farmers is quite varied. The

largest land area of farmers is 1 Ha. While the

average land area of farmers in the study area is 0.2

Ha. This means that the potential of farmers land

area is still low due to the large land area of farmers

under one hectare. This shows that agriculture in the

research area is still a subsystem scale. The

agricultural produce is only enough to support the

daily needs of the farmer's household.

b. Input Cost

Based on the results of the partial significance

test (t-test) obtained a t-statistic value of -4,014

where the probability level is 0,0001, it can be

concluded that the input cost variable does not have

an effect but is significant on farmer income. The

input costs used by farmers have varying costs. The

most cost of input chili is between Rp. 2,000,000 up

to Rp. 4,000,000 per planting season per year. The

chili input costs in the study area are highest, namely

Rp. 13,700,000 per planting season per year with a

land area of 1 ha, while the lowest cost of chili input

is Rp. 1,120,000 per planting season per year with a

land area of 0.8 ha.

c. Labor

Based on the results of the partial significance

test (t-test) obtained a t-statistic value of 5.919

where the probability level is 0.0000, it can be

concluded that the labor variable has a significant

effect on farmer income. Most of the workforce in

this study are labor in the family. The types of work

carried out by farmers in this study are land

cultivation, planting, fertilizing, maintenance and

harvesting. Based on the results of the study, the

average number of farm workers is 20 people per

day. The highest number of farmer workers is 50

people per day with a land area of 1 ha and the

smallest number of workers is 4 people per day with

a land area of 0.08 hectares. There were 5

respondent farmers who did not use wage labor in

their farming activities, namely farmers who used

labor in the family.

d. Farmer Experience

Based on the results of the partial significance

test (t-test) obtained a t-statistic value of 1.048, it

can be concluded that the farmer's experience

variable does not have an effect but is significant on

farmer's income. The duration of farming or farmer's

experience is not based on the age of the farmer

because someone who has been cultivating for a

long time is very careful in absorbing new

technology offered from outside, whereas farmers

with relatively little experience tend to more easily

absorb new technology and try the new technology

more quickly. the farm they manage. Thus, farming

experience will reflect a person's behavior in his

farming activities (Soekartawi, 1995). Based on the

results of the study, the average experience of

farmers was 6 years with the age of the oldest

farmers, namely 58 years old with the level of

elementary education and the age of the youngest

farmers, namely 25 years old with the level of

elementary education. The experience of most

farmers is 10 years with the age of the oldest

farmers, namely 61 years old with the level of junior

high school education and the youngest age of

farmers, namely 31 years old with junior high school

education.

The results of the estimation of the overall

significance test (F-test) are known that the results

of the F-statistic estimation are 22.30664 at the level

of α = 0.05, which means simultaneously all the

independent variables in this research model are land

area, input costs, labor and experience farmers have

a significant influence on the dependent variable,

namely the income of chili farmers in the District of

Pematang Silimakuta, Simalungun Regency.

Analysis of Factors Affecting Farmer Revenues in the Horticulture Agriculture Sector in Pematang Silimakuta District of Simalungun

Regency: Case Study on Chili Farmer Income

515

5 CONCLUSION, IMPLICATION

AND LIMITATION

Based on various tests and data analysis, from this

study several conclusions can be obtained, as follow:

1. Partially (t-test) there is one variable that

directly affects the income of chilli farmers,

namely labor used in farming production

activities. While the other three variables is land

area, input costs and farmer experience have no

effect but are significant to the income of chili

farmers. While overall (F-test) it is known that

all independent variables is land area, input

costs, labor and farmer experience have a

significant influence on the dependent variable,

is the income of chilli farmers in Pematang

Silimakuta District, Simalungun Regency.

2. OLS estimation results indicate that the

regression coefficient is positive that there is at

variable land, labor, and the experience of

farmers, while the value of the regression

coefficient is negative contained in variable

input costs, where the value of the coefficient of

determination (R2) equal to 55%. This means

that every increase in each variable 1%, it will

affect the income of farmers.

Suggestions that can be given based on the results of

this study are :

1. To increase the income of chili farmers, the

government or the private sector must direct

farmers in terms of marketing the harvests

obtained, as well as how to use technology in

the field of marketing both in quality and

quantity. So that the income obtained by chili

farmers has increased.

2. The chili farmers to obtain a sufficient level of

income for living needs should form and

participate in farmer groups that can assist in the

marketing of crops and exchange of knowledge

and information among chili farmers.

3. For the next researcher, it is expected to be able

to develop the research that I have done to see

other factors that influence the income of chili

farmers.

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Soeharno. (2007). Microeconomic theory. Yogyakarta:

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Soekartawi. (1995). Analysis of Farming. Jakarta:

University of Indonesia.

Soekartawi. (2002). Principles of Agricultural Economics.

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Suryana, (2000). Development Economics: Problems and

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