RESEARCH REPORT YEARLY FUND, 2010 OPTIMALIZATION OF AGRICULTURAL RESOURCES AT DRY LAND AGRO-ECOSYSTEM

RESEARCH REPORT YEARLY FUND, 2010 OPTIMALIZATION OF AGRICULTURAL RESOURCES AT DRY LAND AGRO-ECOSYSTEM By : Henny Mayrowani Sumaryanto Delima Hasri Azahari Nyak Ilham Supena Friyatno Ashari INDONESIAN CENTER FOR AGRICULTURAL SOCIO ECONOMIC AND POLICY STUDIES MINISTRY OF AGRICULTURE 2010

EXECUTIVE SUMMARY INTRODUCTION Back ground The development of agriculture in dry land agro ecosystem (except large-scale plantations) is currently lacking, technological developments and crop productivity in dry land agro ecosystem becomes very slow when compared with what happened on agro ecosystem paddies. In the case with livestock, various innovations to increase productivity are less facilitated. In this study the meaning of dry land agro ecosystem is an area of dry land with the dry climate, where rice farming systems (which theoretically is a minority) also included in it, because it is an integral part of dry land farming systems. Normatively, the performance of agriculture in the region dominated by non-rice food agricultural commodities. Agriculture is an integral part of the economic system as a whole. Its development is influenced by the performance of other economic activities, the nature of inter related implies a mechanism of resource use, especially labor and capital. The economy of dominated dry land areas agro ecosystem is described in the context of sectoral linkages that influence in the formation of output, value added and employment. Optimizing the utilization of agricultural resources that have been studied tend to focus on micro-scope in the sense of farming units at farm level. In accordance with the scope and focus of study, which generated very useful information to design farming systems that generate maximum revenue, and or in line with the principles of conservation farming or sustainability, macro-level analysis to optimize the utilization of agricultural resources need to be done. Objectives The purpose of this study are : (1) To obtain an overview of the economic profile of the region which is dominated by dry land agro ecosystem in the research sites, (2) To identify constraints and potential of utilization of agricultural resources in the region which is dominated by dry land agro ecosystem; (3) To find the optimal solution regarding the utilization of agricultural resources in dry land agro ecosystem dominant region, (4) To formulate policies and programs relevant to optimizing the utilization of agricultural resources, particularly in the dominant dry land agro ecosystem. Research Methods The research location is in Blora Regency, Central Java Province and East Nusa Tenggara Province, which is dominated by dry land and dry climate. Respondents are: (1) farmers with several of patterns of farming, (2) gover nment agencies and the officials who determine and implement the policies and programs, and (3) key informants and expert respondents. This research has two approaches, namely quantitative and qualitative approaches. Source of data is primary and secondary data. Data collected in the two phases: first, in Jakarta and Bogor to collect the secondary data and information, and second, in the research site to collect secondary data and information at the provincial level, district, and primary data. The primary data collected through interviews and through a strategy of FGD (Focus Group Discussion). Quantitative data were analyzed using analysis of the I-O model approach, a simple tabulation, and LGP, while qualitative data related to policy and institutional aspects will be analyzed descriptively. RESULTS Blora Regency, Central Java Province Regional Economic Profile In the region of Central Java Province, the economic profile based on nominal and real GDP is dominated by the manufacturing sector, aggregate agricultural sector and aggregate trade. This 1

indicates that the leading sector in the aggregate economy in Central Java in terms of contribution to GDP is derived from non-agricultural sector. But if you want to optimize agricultural resources, the agricultural sector is still at the second or third order, it can be optimized to encourage non-agricultural sector. In Blora district, in the aggregate profile of the economy dominated by agriculture, commerce, hotels and services sector. Although the contribution of the agricultural sector is quite good, but the position of the agricultural sector in the economy is still low. In the agricultural sector, the dominance of the most prominent sub-sectors is food crops sub-sector followed by forestry and plantation subsector. This show that the government s concerns apparently still maintains food sufficiency for the community and for the sub-plantation sector as an effort to increase revenue. The dominance of forestry sub-sector because of the wide area Perhutani in Blora district. Table I-O, describes in more detail the profile of the economy. Central Java I-O table shows that the dominant sectors in the economy is non-agricultural sectors such as: petroleum processing industry, trade, construction and services. While the agricultural sector is dominated by rice, livestock, fruits, rice milling, and processing of sugarcane. But unfortunately, Blora district does not have the I-O data; therefore, the aggregate sectors can not be explained in more detail. Indications of the sectors that can be developed as trigger the economy in Central Java, if it is considered in the formation of the output. Then the non-agricultural sector that is capable to form of higher output, while the agricultural sector support as the provision of raw materials. This evident from the emergence of secondary agricultural sectors, such as leather processing, rubber and tobacco, as an indication of sector output multiplier. However, if consideration is the capability to move behind and in front of the sector, then in Central Java, sectors that have the ability to attract and encourage other sectors are: rubber, coconut, coffee, rice, beans and fish. Agricultural resources Based on data from BPS (2009), land area in Blora reached 182,059 hectares, of which most of the area of 150,321 ha (82.57%) is dry land. Of the total dry land, about 60.15 percent is forest land. Other type of dry land is the food a crops area with the proportion of 17.46 percent, 9.73 percent is rain-fed rice fields, and plantations covering an area of 2.66 percent. In the terms of utilization of agricultural resources, in the period 2004 to 2008, there is an increase in harvested area of major food commodities, but the productivity does not increase significantly. Positive growth trend of paddy fields have not been able to increase production significantly because it is still very wide fluctuation in harvest area. Commodities that have a substantial positive trend is the sugar cane reached 24 percent per year. The prospect of a stable sugar prices, even become tend to rise, attract the farmers to expand sugarcane planting areas. As a district with dry land agro ecosystem, the cattle populations in Blora occupy top positions in the Province of Central Java. In the year 2009 in Blora cattle population numbering about 218 thousand heads, or 14.3 percent of the total cattle population of Central Java scattered in 35 districts. Constraints feed is a serious problem faced by cattle farming enterprises in improving the business scale or cattle population. It is estimated that existing feed resources in Blora every year only able to accommodate as many as 159,927 animal units. When compared with the existing ruminant livestock population of 168 855 animal units of livestock carrying capacity, the capacity of ruminant livestock in Blora district are not adequate. This problem is lead to a stagnant population growth. The cropping/farming patterns in dry land agro ecosystem vary widely. Farming is done by farmers in Blora regency dry land may include farm crops and livestock enterprises. Farm food crops (rice and upland crops) planted in fields, in rain fed lowland and the land around the forest, and dominant livestock is beef cattle. That are many food crops grown such as, rice (paddy and dry fields), secondary crops (especially corn) and horticulture (such as chili, melons, watermelons). Farming patterns vary depending on the availability of water. In the paddy field, the dominant cropping pattern is paddypaddy- secondary crops/horticulture; on dry land/garden: upland rice-secondary crops/horticulture, secondary crops secondary crops/horticulture and woody plants + secondary crops + forage grass crops. Currently, in the dry land cropping intensity is high enough. Limitations of water in some degree quite coped by farmers and governments with build the infrastructure, irrigation and water-saving cultivation techniques. 2

With a fairly dominant use of forest lands, Perhutani office through CBFM scheme (Joint Forest Management Society) invites Forest Farmers Group to incorporated in Forest Village Community Institution (LMDH) to use forests for food crops (3 years) while maintaining a staple crop (teak). The dominant cropping pattern in this forest land is a corn-corn-fallow, although in some locations of upland rice grown in the forest area is quite successful, with a productivity of 6 tons / ha. Constraints and key issues in farm management is the availability of water, lack of venture capital, and marketing. Therefore, agricultural development programs directed to address the development of agriculture infrastructure (irrigation, farm roads), seed / fertilizer subsidies, and technology of harvest / postharvest. Livestock development programs in Blora district conducted through the aspects of capital and feed, such as, revolving fund for seed cow, revenue sharing scheme institution, establishment of feed mill, a conservation program with growers of grass and forage. Agricultural Resource Optimization Optimizing analysis of agricultural resources in dry lands using LGP, the relevant business objectives of agricultural applied in the model, namely: maximization of farm income, production of rice, corn, soybean and beef; stabilization of income and environmental preservation. Each destination is identified based on the priority scale. To achieve these goals, major obstacles faced are: land, labor and capital. The result of the optimal solution by using the LGP irrigation in paddy fields in both dry land agro ecosystem, are: a) Pattern paddy-paddy-palawija/horticulture + cattle farming with area of 64.2 percent of the total area of paddies this category, b) The pattern of paddy-paddy-palawija/horticulture with area of 29.9 percent, and c) pattern of paddy-pady + beef cattle with area of 6.0 percent. For simple irrigated land and rain fed, pd-hk2/pl pattern is the best prospect. Paddy plant in the rainy season and in the dry season secondary crops and horticultural commodities with primary commodities chili, watermelon, or honeydew and secondary crops such as corn and soybean. This pattern can be developed to about 91 percent of the total area of rain fed lowland raw. Optimal pattern on dry land: agfr1 + pl + ternak is the dominant pattern, woody plants (mainly teak, sengon, turi, and petai china) and forage (elephant grass) and the maize + soybean plants (with 2:1 composition), such that for every 10 hectares of these patterns can produce food which is equivalent to the needs of feed 25 head of cattle. With these patterns can be said that no target can be achieved 100 per cent, due to very limited resources available. Among the seven targets to be achieved, the highest level of achievement is for the production of corn (more than 99 percent). Efforts to stabilize the revenue target, are still far from what was targeted. Of the total revenue a year of Rp. 1 860.40 billion, revenue in the MH is 59.59 percent and MK is 40.11 percent. But this is better than the actual condition that ranges from 60-65 percent for MH and 35-40 percent for MK. East Nusa Tenggara Province (NTT) Regional Economic Profile In the province of NTT, the profile of the economy based on nominal and real GDP is dominated by aggregate sectors of agriculture, services, trade and hotel / restaurant. This indicates that the leading sector is agriculture. Thus, to optimize the agricultural resources of NTT, the farming sector is still the priority sectors that can boost the regional economy. Table I-O, explaining in detail the sectors that provide the dominant contribution. The agricultural sector contributes the highest regional output sequence is animal husbandry sector, fisheries sector, corn, and vegetables. On the lower order, emerge other agricultural sectors, namely: rice, root crops, coffee, and cashew nuts. Seems very logical that the primary agricultural sector which contributes to the formation of regional output value because the sector has become the icon of NTT. Indications of sectors that can be developed as a trigger of the economy and to optimize the utility of dry land in NTT, if consideration is the power to attract and encourage other sectors, there are rice, vanilla, vegetables, tobacco, cotton, and secondary agricultural sector such as sugar, oil / fat, animal slaughtering and processing of cigarette / tobacco. However, to further accelerate the increase 3

in value added, the secondary sectors especially agriculture-based, need to be developed, to encourage other non-agricultural sectors, such as trade, transportation and services. Agricultural Resources Land resources in the province of East Nusa Tenggara is dominated by dry land in accordance with climatic conditions that are also dry (semi-arid). With a land area of 4,734,990 ha of NTT, which serve as land area of 1,808,315 ha of agricultural enterprises or about 38.19 percent of the total land area. Of potential agricultural land, 1,636,493 ha (90.50%) is dry land farming, the remaining 171,822 ha (9.5%) are wetlands. As an island province, NTT has a unique phenomenon of climate and climate variations are very different in each region. This is made possible by agro-ecological conditions NTT namely dry climates because the low annual rainfall of between 602-2996 mm / year. The rainy season usually starts in December and ends in March. Total labor force in NTT in 2008 amounted to 2,086,225 persons. Most of the labor force (69.42%) worked in agriculture, forestry, plantation and fisheries. At present, the NTT is still subsistence farming, absorption of labor is not yet optimally used in agriculture. Intensive agricultural development difficult to develop because of product market competition due to the expensive transportation costs. Distribution to other sectors that contribute to higher GDP should be considered. Over the past 5 years (2004-2008) shows in general an increase in the total area in the most food commodities, except for cassava and sweet potatoes. Especially for corn, the Government of NTT is quite attention to this commodity, as corn will be used as a commodity province icon namely 'NTT as a province of corn', as well as the province of cattle, sandalwood and cooperative. The pattern of exploitation of the dominant food crops are: maize-maize and maize + beans - beans on dry land and rice-corn in paddy field. Technology utilization of food crops in dry land is still very simple. Use of fertilizer is rarely or even not done particularly in dry land. Gotongroyong system still prevailing in society, especially in land management, so as to reduce the cost of farming. Cultivation of plantation commodities in NTT are still dominated by smallholders business pattern. From the plantation area of about 634,083 ha, 99 percent are smallholders with relatively simple cultivation. The average productivity of the plantation commodities in NTT in the period 2004-2008 generally showed a relatively low and volatile. Commodities traded include: coffee, cocoa, cashew nuts, vanilla, jatropha, and palm. Large livestock population in NTT is dominated by cattle (Bali type) with an average population of more than 500,000 cattle. While a small ruminant in NTT is dominated by goats and pigs are spread evenly in almost all districts, while the sheep population is concentrated only in some areas only. The distribution of the population is influenced by the culture and food availability. The pattern of livestock (cattle) farming, the majority do with the system off (on pasture). Only about 30 percent who do general maintenance in cages for fattening. Cattle breeding business, is generally not a main activity, but most of breeders are food crop farmers. Constraints in livestock development are : the reduction in grazing livestock as a source of livestock feed, agricultural waste has not been put as a feed, water limitations, and priority outpouring of family labor on food crops so as to reduce livestock business. Various studies have been done to improve the productivity of cattle. But as long as there is no breeder who does what he recommended. Another important issue to be considered related to livestock business in NTT are still high mortality of livestock births since the birth peak occurred in July-September (dry season). The death rate in the dry season can even reach over 50 percent. Agricultural Resource Optimization In accordance with the conditions of existing resources and targets to be achieved, the program of agricultural development in NTT is focused on three main programs: (1) improving food security, (2) improving the welfare of farmers, and (3) the development of agribusiness. The main program is supported by other support programs such as improving marketing of agricultural products / plantations, increased application of agricultural technology, and empowerment of agricultural extension. 4

Economic conditions in NTT is very thick with the local culture, geographical conditions of the vast archipelago, making it difficult to obtain the required data with good accuracy, is the reason that LGP can not be applied to the province of NTT. Optimization can be approached with analyzed the data and information and the results of Input-Output analysis. Optimizing dry land agricultural resources of NTT must consider several important aspects as follows: (a) The condition of agricultural resources of NTT are "vulnerable" (solum shallow, low rainfall, river discharge and water flow is very extreme), (b) Most of the farmers have own land that is relatively broad with the pattern of exploitation that has not been intensive and tend to be subsistence, (c) Employment of agricultural labor is relatively expensive and difficult to obtain and limited capital, (d) Surplus agricultural production, particularly food crops is relatively small, (e) The growth of industrial sector and services is relatively slow, (f) Demand of agricultural products originating from West Timor itself (internal NTT), less developed, and (g) The cost of distributing goods and services are relatively expensive because the configuration of the region consists of several islands and port facilities inadequate. From the description above, the optimization of agricultural resources in NTT can be effective through direct and indirect approaches simultaneously. Direct approach through increased farming productivity by improving farming technology based on local technology. Indirect approach is to increase the aggregate demand. Increased incomes will drive demand to increase agricultural products. POLICY IMPLICATIONS Policy objective Optimizing the utilization of agricultural resources in the region which is dominant on dryland agroecosystem. Basic considerations Urgency to give the priorities to develop dryland farming, associated with the following aspects : increase in agricultural production, poverty alleviation, improvement of trade benefits both through the creation of foreign exchange (exports) and foreign exchange savings (reducing imports), realization of the commitment to bring justice, and increasing economic growth in the, because empirically Outer Java Island dominated by dryland agroecosystem. Content of policy Ongoing support from central / local Government in the form the development budget for empower farmers towards independence, developing infrastructure, and programs related to disaster mitigation and advocacy related to adaptation to climate change should be a priority. Development of mix-farming (food crops + livestock) is a strategic choice to increase farmers' income. In addition, the development of primary and secondary agricultural business should also be considered to support the regional economy based on agriculture. Especially for NTT Provinces, an effective way in optimization of agricultural resources is through a direct approach (through increased productivity farming by improving farming technology based on local technology) and indirect (increasing aggregate demand through the development of leading sector in the industrial and services sectors, such as : tourism ) simultaneously. 5