Maize Farming Analysis and Determinant Factors of Maize Price in The Upland of Timor Island, East Nusa Tenggara

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1 Maize Farming Analysis and Determinant Factors of Maize Price in The Upland of Timor Island, East Nusa Tenggara Helena da Silva dan Bambang Murdolelono East Nusa Tenggara Assessment Institute for Agricultural Technology Jl.Timor Raya Km.32 Naibonat-Kupang-NTT ABSTRACT. Maize farming in Timor Island, East Nusa Tenggara have developed in almost village and sub-distrit. Based on NTT ststitical data 2010, upland area for maize farming was 136,870 ha. Average land ownership was ha and maize productivity was very low (2,53 t/ha) or lower than national productivity average. Maize production mostly for household consumption (food security) and only small amount sold for the market wich make maize price in the local market is quite expensive. The objectives of the research are: (1) to describe maize farming cost structure (2) to describe production and maize farming income from the upland, (3) determinat factors of maize price in Timor Island and farmer share. The reserarch was conducted through survey method and respondents have been chosen randomly. Data collected using questionnaire for farmers and traders. Data was collected consists of production, cost, yield, price in farm gate price and income. B/C ratio, price transmission elasticity, and market integrated analysis was used for data analysis. The results shows that: (1) The cost for maize production in Timor Island ranges Rp 1,800,000-2,400,000/ha with production ranges t/ha. 75% of maize production ( ton) has allocated by farmer for household consumption and the rest for market, (2) Price transmission elasticity is smaller than one or not equal to 1 which means that the market is not purely competitive; the market is more dictated by trader. (3). Average farmer share was low or only 12.5% from retail price, which consists of production cost (10.96%), farmers profit (13.08%). Key words: farming analysis, maize price, Timor Island. Introduction Maize farming development is highly determined by how high the farmers income within a cycle of maize plantation. The Sistem of maize farming at farmers level is basically determined by the factors such as the unfix price and the fix price which involve farming production factor. The unfix price consists of fertilizer, labor, seeds providing and capital. Those factors can influence the success of maize farming, meanwhile the fix price which comprises tax, land rent and equipments are one of the factors which influence the income level and the success of farming activities. So the unfix price and fix price which include production factor are all efforts that given to plantation and let them grow and produce well. (Adisarwanto et al. 2000). Introducing the new technology should have a special superior comparing with common activity which is conducted by the farmers mainly in connection with the achieved income in terms of production quantity, labor and risk of efforts. Farmers have any basic consideration which prominent in running farming activities namely adequate needs of food and nutrition for family within a year beside fulfill any other needs such as things and services. Those needs could be achieved by selling the farming production or any family income out of farming activities (off dan non farm activities). The length of maize farmers in dry land is Timor island approximately months and only once a year, so that a part form dry land, maize also can be planted on wet area by using water of irrigation. Maize farming in Timor Island, East Nusa Tenggara have developed in almost village and sub-distrit. Based on NTT ststitical data 2010, the width of dry land in Timor island is 374,606 ha. From the total wide above, it can be clearly seen that upland area for maize farming was 136,870 ha. Opportunity in increasing the maize production is still great potential, as there is 237,736 ha dry land that can be developed with extending agricultural area. Maize production also can be increased through the improvement of the technological production at farmers level, considering production is still low. The national average of maize production is 2.5 t/ha (Puslitbangtan 1998) and production average of dry land in Timor island is t/ha (BPS Propinsi NTT 2010). However, based on the research, it shows that maize production can achieve 4-5 t/ha with free from essence, and hybrid maize can be produced 7 9 t/ha in conducive climate. 167

2 Proceeding International Maize Conference The increasing of productivity can not be quarantined the increasing of the farmers income proportionally. So in the frame of increasing the farmers income, it is necessary to strengthen the marketing system for the sake of profit for farmers. (Mosher 1984). Considering the characteristic of maize is easily broken. Production area is spread and the location of production centre is far from consumption centre. Therefore farmers sell maize quickly in order to get reasonable price for them. This causes farmers get expensive price, on the other side, farmers get production very low. In line with that in order to increase the farmers income, the marketing system should be taken into account for farmers profit. The low price for farmers can affect the motivation farmers to produce maize. Therefore the analysis for marketing efficiency is conducted soon in order to give great alternative in the frame of increasing the income for farmers of maize. One of marketing aspect that should be taken into account for marketing efficiency and increase the farmers income is identifying the market performance. Through market performance, it is known clearly how the margin in the market is share price accepted by farmers, share cost and profit among involved marketing institution, how the returning level of capital among marketing institution. Objective of research: (1) Describing maize farming cost structure (2) Describing production and maize farming income from the upland, (3) Identifying determinats factors of maize price in Timor Island and farmer share Methodology Respondent in the analysis of marketing system consists of maize farmers and related stakeholders in the market (in research location and out of research location), the number of farmer respondent is 60 respondent which is done simple random sampling. Related stakeholders was taken by snowball sampling technique. Method used to analyze the efficiency of marketing system is qualitative descriptive and quantitative descriptive to know the structure of market, market attitude, and marketing performance, whereas quantitative analysis (statistical) is used analyze the margin of market, marketing integration, and analysis of price transmission elasticity which was counted by using double regression model and simple regression. Result and Discussion Characteristic of Maize Farming in Timor Island Table 1 shows average of dry land owning in Timor island to run maize farming which is gained 0.69 ha/hh. Generally, farmers work in dry land with mix plant pattern, where less than 75% from the total area is used to maize and the rest is for cassava and beans. By taking portion of 75%, this means that opportunity for each family only use 0.52 ha/hh, with the average of maize production at farmers level reach 2.5 t/ha. So each farmers can produce maize and reach 1.3 t/ha. It is assumed that if farmer only sell 25% from maize production to the market, so the number of maize production which spread at the market only 0.33 ton multiplied by 252,943 farmers = 82,206 t/annum. Several result of research indicates that average of maize needs for NTT is 41 kg/kapita/annum, where this number shows clearly that NTT in general and Timor Island specifically. Timor island has lack of maize production, and this can cause the price of maize production in the market is very expensive. Production and Maize Price in Timor Island Average of maize cost production of farmers in Timor island approximately between Rp 1,800,000 2,400,000/ha. It is also known that the use of tools for production is very minimum and the greatest cost is for labor. By using such minimum cost, farmers only produce composit maize t/ha whereas hibrida maize is t/ha (Table 2). Based on the Figure 1, it can be seen that average of maize price in Timor island within period of observation such as from January 2011 until March 2012 was Rp. 4,037/ Table 1. Amount of farmers and average of maize farming in Timor Island. District Ownership of Amount of farmer field (ha) farmers (persons) Maxi- Mini- Average mum mum Kupang 86, Timor Tengah Selatan 103, Timor Tengah Utara 24, Belu 38, Total 252,

3 kg, with the highest sale price of maize reaches the level Rp. 6,000/kg, this happened during January However the peach of the highest price happened in Desember January, this condition happened because on such months average of extra food for household very less and all farmers just start to plant maize in field. Table 2. Average of maize production cost/ha in Timor island. Production Value of Maize variety cost variable Production production (Rp/ha) (ton) (Rp/ha) Hybrid 2,400, ,125,000 OPV s 1,800, ,312,300 Maize price in Timor island become so high comparing with other region because of many factors such as, the change of extreme climate, thus farmers got fail in planting and cultivation or harvest. Generally, consumption pattern for Timorese community depend on maize as main food, and it becomes the needs for maize increasingly comparing with maize production by farmers. Margin of Business Administration Based on available variety of business administration channel, the distinction of activities cost done by business administration institution and the profit level, long and short of business administration channel will affect the big margin of each business administration channel. Figure 1. Average of maize price in some crowded market in Timor Island. Figure 2. Average of maize price at farmers level concerning sale time. 169

4 Proceeding International Maize Conference Figure 3. Average of sale price at retailer/collector concerning with sale time. Figure 4. Average of sale price of maize at some retailer in Timor island based on sale period. Result of research shows that marketing channel which happened such as from farmers, collector, retailer, and any involved institution. It can be seen that only retailer with margin distribution 37.6%, which consists of cost (18%) and profits (19.6%.) the cost (18%) is used for transport (6.3%), labor( 5.4%) and reduction (1.2%), place rent and retribution (4.5%). Figure 2 describes the sale price at farmers level based on sale time such as on great cultivation, the middle of season and early of rainy season. It is clearly seen that average of retail price of farmers at early of great cultivation Rp 2,395/kg, the middle of season Rp 2,850/kg and early of plant season 3,235/kg. The description of such retail price indicates that during cultivation farmers got mach maize and they usually want to sell quickly in order to fulfill their household s need, the impact is the price of maize is very cheap comparing with at the middle and the end of season where stock of maize is very less and they prefer to fulfill the household s need rather than for sale. Figure 3 indicates that sale price at collector/retailer based sale time, namely great cultivation/harvest, the middle season and early of rainy season. It can be clearly seen that average of retail price for farmers at early of cultivation/harvest Rp 3,365/kg, average price at the middle 170

5 of season Rp 3,740/kg and at early of plant season Rp 4,165/kg. Share that accepted by retailer at sale period based on sale period is Rp 850, Rp 770/kg, and Rp 810/kg with cost of transport is Rp 120/kg. Figure 4 shows that price happened at some big markets in Timor island such as, price average during cultivation/harvest is Rp 4,365/kg, at the middle of season 4,610/kg and at early of rainy season Rp 5,300/kg. This similar condition happened at market price where share which accepted by trader in each market is Rp 920, Rp 790, and Rp 855 with cost of transport more than Rp 80/kg. From the result of research achieved in the field, share which accepted by farmers as producer of maize only 23.8% that gained from cost of production is 11.4% and profits for farmers 12.5%. This happened because of (1) Number of farmers as producer is more than traders who directly involve in business administration (2) Farmers are usually lack of market information where price can not be determined by their own but depend very much on market condition at that time (3) Capital force of traders is highly greater rather than farmers capital so that the means of transport and market are dominated by traders. Elastisity Analysis of Price Transmision To know the form of competition that happened in NTT by the elastisity of price transmission. Result of analysis achieved the equal regression Model of relationship between farmers as producer of maize and collector: Y = ,191,606X. Based on result of analysis, it is known that elasticity of price transmision (Et) is 3.42 This value is greater than one which means the change of price from 1% at producer level become 3.4% at consumer level. In many cases elasticity price transmision for agriculture commodity which the value is less than one or unequal with one. This indicates that it happened market which is bad competition or imperfect market. Conclusion 1. Cost structure of maize farming for upland/dry land is, means of production which consists of seeds, fertilizer, medicine and labor that average Rp 2,100,000/ ha. 2. Production and maize farmers income in NTT average is 2,650 t/ha with the acceptance Rp 8,281,250/ha, where maize price in the market is average Rp 3,125/ kg. 3. Average of Farmer shareis low, that is only 12.5 % from retail price, which covering cost of production (11%) and profits for farmers (13.8%). The increasing of farmer share can be done through the increasing of bargaining position of farmers, so that it is hoped that the structure of market leads to perfect competition. References Adisarwanto, T. and Yustina Erna Widyastuti Meningkatkan produksi jagung. Jakarta: Penebar Swadaya. Biro Pusat Statistik Kabupaten Gorontalo dalam angka 2004 PEMDA Kabupaten Gorontalo: BPS. Downey, W.D. and S.P Erickson Agribussines manajemen. Second Edition. New Delhi: Mc. Graw Hill Inc. Gunawan, S Visi pembangunan pertanian ke depan. Jakarta: Pustaka Sinar Harapan. Harun Ekonomi perilaku konsumen. Yogyakarta: BPFE. Lae Agriculture. economics and resources manajement. New Delhi: Printice Of India. Soekartawi Ilmu usaha tani dan penelitian untuk pengembangan petani kecil. Jakarta: UI Press. Tibayan and Romero Market structure. Tomek, W.G and K. Robinson Agricultural conduct and performance of copra product price. Cornel Univercity Press, Marketing system in selected towns of bicol London. Region. MS Thesis. UPLB. Philipina. 171