Effect of Different Rubber Market System on Farmer’s Income in South Sumatra Province, Indonesia

Abstract

Indonesia is the second biggest natural rubber producer in the world; however its processed rubber has low quality and price. This is because the rubber plantation most cultivated by non estate plantation (smallholding plantation). Central government of Indonesia has developed some policies to overcome this problem and one of them is to establish the Processing and Marketing Unit of Rubber material or PMUR ('UPPB') since 2008. However until 2014 only a few farmers (around 5%) had sold their products with PMUR and most farmers sell their products through traditional marketing channel. This study's aims are to discuss how big impact the existing of new marketing channel (PMUR) to farmer's income is. Study conducted in two districts (Banyuasin and Musi Rawas) of South Sumatera Province, which represent two kinds of marketing channels, those are the auction market system and the partenership market system. Sampling taken of 64 farmers (as respondents), represent participant and non participant of new market system. Data collection was done in April to September 2017. The result of this study shows that there are significantly different income for farmer's participants (PMUR) and non participants (non PUMR). The farmer's income at the auction system is higher (abaout 57%) and the farmer's income at the partnership system is higher (about 64%) than traditional marketing system. However income of both new marketing systems or PUMR (auction and partnership systems) are not significantly different. KEY WORDS Auction, partnership, rubber, income, processing and marketing unit.

Partnership Impact on Production and Income of Indonesia Rubber Farmers

“…Partner farmers will receive marketing guarantees/distribution results and have different price guarantees from non partnership farmers. This result is consistent with the research of Husin et al, (2017) which shows that partnership rubber farmers earn 68% of their income, much higher than 64% of non partnership farmers. This very significant difference is very beneficial for rubber farmers.…”

“…Production costs, fertilizer costs, average costs, marketing costs, rubber prices, net income and gross income are also different. As for the difference of opinion by Husin et al (2017), the income gap between farmers with and without partnership is significant. The income of partner farmers is more than that of non-partnered farmers.…”

Identification of Obstacles and Drivers of Smallholder Rubber Farmers to Become Members of A Processing and Marketing Unit in Indonesia

“…The farmers' income of PMU members who applied auctions and partnerships was 53% and 64% larger than farmers in traditional marketing systems. However, incomes of either new marketing system are not significantly different (Husin et al, 2017). This study was supported by (Agustina et al, 2017) that organized marketing system has changed the quality of raw rubber produced by smallholders and increases the farmers' share as well.…”

“…These data show that many smallholders still sell through non-PMU channel, especially within the traditional marketing system. However, many studies have found that income, price, and efficiency of PMU marketing channel were more profitable for smallholders than non-PMU marketing channel Herdiansyah, Nurmalina, &Winandi, 2015;Husin, Yulius, Dessy, & Antoni, 2017;Sujarwo, 2015;Syarifa, Agustina, Alamsyah, &Nugraha, 2016). Therefore this study aims to provide answers to the following research question: Which factors mainly affect smallholders' choice of a PMU or non-PMU marketing channel ?.…”

“…This proves that the purchase price of middlemen was still quite attractive to smallholders. Nevertheless, a study by Husin et al (2017) showed that there were significant differences between the prices for farmers who were PMU members compared to non-PMU members. This means, even though the price of rubber on non-PMU channels is lower, but not too much different.…”