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376
COMPETITIVENESS AND IMPACT OF GOVERNMENT POLICIES
ON THE DEVELOPMENT OF PEOPLE'S ARABICA COFFEE
PLANTATIONS PARTNERSHIP PATTERN IN SOLOK REGENCY
1
Faidil Tanjung,
1
Rafnel Azhari,
2
Erwin
1
Lecturer at the Department of Agricultural Socioeconomics, Andalas University
2
Lecturer at the Department of Anthropology, Andalas University
faidilt@yahoo.com
ABSTRACT
This study aims to analyze the competitiveness of Arabica coffee commodities and analyze the impact of
government policies on Arabica coffee commodities in Solok Regency. This research data analysis method
uses the Policy Analysis Matrix (PAM). The results showed that the Arabica coffee plantation business in
Solok Regency has competitiveness both in terms of competitive advantage and comparative advantage,
where the value of the ratio of private costs and domestic cost ratios obtained is less than one, namely 0.48
and 0.41. For the impact of the Arabica coffee output policy, the private price of Arabica coffee is lower
than the social price. The impact of the production input policy causes the private price of tradable input to
be higher than the social price, and the impact of the input-output policy causes a decrease in the producer
surplus, meaning that there is no economic incentive to increase Arabica coffee production. The suggestion
from this research is expected that farmers can increase the productivity of Arabica coffee than the
government is expected to expand the planting area and facilitate the provision of superior seeds. The
government is also expected to stabilize the selling price of Arabica coffee at the farmer level.
Keywords: Arabica Coffee, Competitiveness, Policy Analysis Matrix
This article is licensed under CC BY-SA 4.0
INTRODUCTION
The development of people's arabica coffee plantations (cultivated by farmers) in Solok
Regency has increased, where previously they worked on robusta coffee. This development is
supported by the Solok Regency Government in the form of providing superior seeds,
assistance with production facilities (such as fertilizers), and technical assistance for Arabica
coffee cultivation. On the other hand, the presence of the Solok Radjo cooperative helps
farmers in developing Arabica coffee plantations through a partnership pattern.
Arabica coffee from West Sumatra Province which is famous in foreign countries is coffee
from Solok Regency. This coffee has received a geographical identification certificate because
it is classified as a specialty coffee or a typical coffee product from Solok Regency that will not
find similarities in taste with coffee in other regions. This coffee has the advantage of a strong
aroma in the aroma of the spices, lemon flavor, and chocolate flavor. This advantage makes
Solok Regency arabica coffee specially categorized from other regional arabica coffee (Putri
et al., 2018).
The development of community arabica coffee plantations in Solok Regency is
experiencing a high intensity of planting carried out by farmers and young agricultural
entrepreneurs and supported by the Solok Regency government in the form of quality seed
assistance, agricultural input assistance and arabica coffee cultivation training, as well as the
presence of the Solok Radjo cooperative which helps develop people's arabica coffee
plantations through a partnership pattern. Initially in this area, robusta coffee plantations were
Competitiveness and Impact of Government Policies on the Development of People's Arabica
Coffee Plantations Partnership Pattern in Solok Regency
377 2, 2., Januari 2023
most cultivated by farmers and along with the development of prices and considerable market
demand, and supported by farmers' understanding of the agroclimatic of this area that is suitable
for the development of arabica coffee, many people switched to developing arabica coffee
including young agricultural entrepreneurs.
Based on the description stated above, this study aims to: (1) analyze the competitiveness
of arabica coffee in Solok Regency through competitive advantages and comparative
advantages and (2) analyze the impact of government policies on arabica coffee commodities
in Solok Regency.
METHOD
Research on the competitiveness and impact of government policies on the development
of arabica coffee was carried out with a regional approach in the arabica coffee production
center area in Solok Regency, West Sumatra Province. The location selection was carried out
intentionally (purposively) in the three largest sub-districts of arabica coffee in Solok Regency,
namely Danau Kembar District, Gumanti Valley District, and Bukit Sundi District. The study
time is four months (July-October 2022). The sampling method used in this study was cluster
random sampling where the population was divided first into groups based on area/region or
cluster, then samples from that group were selected. The total sample was 75 farmers spread
across each sub-district with a total of 25 sample farmers per sub-district.
The research approach used is Dominant-less Dominant (Creswell, 2012). The qualitative
approach is positioned as less dominant and the quantitative approach is positioned as
dominant. This study used primary data and secondary data. Primary data were obtained from
direct observations (surveys) of farmers and field facts using questionnaires. Secondary data
were obtained from various literature, data on agricultural agencies, plantations, and the Central
Statistics Agency of Solok Regency. The data analysis method used for a qualitative approach
is a descriptive method, which describes the implementation of local government support and
the involvement of the Solok Radjo Cooperative as a farmer partner in working on arabica
coffee, and an overview of the implementation of arabica coffee cultivation. The quantitative
approach uses Policy Analysis Matrix (PAM) to determine the competitiveness and impact of
government policies in the development of people's arabica coffee plantations in Solok
Regency. Policy Analysis Matrix (PAM) to identify the influence of government intervention
and its impact on commodity systems. The commodity system that can be influenced includes
four activities, namely farm production, delivery of farm products to processors, processing, and
marketing (Monke & Pearson, 1989).
Table 1. Policy Matrix Analysis
Description
Income
Cost
Advantage
Input Tradable
Non-
Tradable
Input
Private Pricing
A
B
C
D
Social Pricing
E
F
G
H
Divergence Effect
I
J
K
L
Source: Pearson et al., 2005
Competitiveness and Impact of Government Policies on the Development of People's Arabica Coffee
Plantations Partnership Pattern in Solok Regency
378 2, 2., Januari 2023
Information:
Domestic Resource Cost Ratio: DRCR=G/(E-F)
Nominal Output Protection Coefficient: NPCO = A
/ E
Nominal Input Protection Coefficient: NPCI = B/F
Effective Protection Coefficient: EPC = (A – B) /
(E – F)
Profit Coefficient : PC = D / H
Subsidy ratio for SRP producers: L/E
RESULTS AND DISCUSSION
1. Overview of Research Locations
Solok Regency with a temperate climate zone is located at an altitude of 700-1,500
meters above sea level with temperatures ranging from 17.1 ° C-22 ° C in addition to being
used as a cultivation land for coffee plants is also suitable for other plantation crops such as
tea, quinine, coffee, rubber, chocolate, and horticultural crops. The area and production of
plantation crops in Solok Regency besides being dominated by coffee plants was also followed
by the development of chocolate plantation plants with a planting area of 3,966.50 hectares and
production of 1,610.50 tons.
Solok Regency is a plateau with an altitude of 284m –1,458m above sea level, located
at positions 00°32' and 01°46' South Latitude, and 100°25'− 101°41' East Longitude. The area
of Solok Regency is in the form of a land area of 3,738 km². Land area and percentage
according to the type of use in Solok Regency in 2019 which is dominated by state forests,
community forests, moorlands and gardens, uncultivated land, paddy fields, and plantation land
as much as 1,184 ha which has increased from 2018 which is 10,149 ha. In 2017, the largest
smallholder plantation crop was in Solok Regency, namely coffee commodities with a
production of 2,045.77 tons or a decrease of 17.09 percent from the previous year, this decrease
in production was caused by rainfall that disrupted the flowering period of coffee plants.
Gumanti Valley District has four Nagari, namely Nagari Alahan Panjang with an area
of 88.76 km², Nagari Sungai Nanam with an area of 164.54 km², Nagari Salimpat with an area
of 80.03 km², and Nagari Air Dingin with an area of 126.39 km². The production of smallholder
plantation crops based on the types of commodities in the Gumanti Valley District that are
cultivated is cinnamon, sugarcane, coffee, and cloves. Twin Lake Subdistrict is located at
00°57'48" and 01°07'45" South latitude 100°36'55" and 100°44'55" East Longitude, with an
area of 70.10 km². Rainfall in Danau Kembar District is 2,438 mm/yr and is at an altitude of
1,200 meters above sea level. The total population in Danau Kembar District is 19,893 people
with a population density per km
2
of 283.78. The Twin Lake Subdistrict consists of two
countries, namely Simpang Tanjung Nan IV and Kampung Batu Dalam. The area of plantation
Competitiveness and Impact of Government Policies on the Development of People's Arabica
Coffee Plantations Partnership Pattern in Solok Regency
379 2, 2., Januari 2023
land in Danau Kembar District is 94.00 hectares with a percentage of 0.49 percent. Based on
production for plantation commodities in Danau Kembar District, coffee commodities are
second only to tea plantation commodities.
Astronomically, Bukit Sundi Subdistrict is located between 00°54'16" and 00°58'59"
South Latitude 100°40'36" and 100°46'09" East Longitude. Bukit Sundi Subdistrict consists of
6 Nagari with an area of 99.90 km². Nagari in Bukit Sundi District are Nagari Kinari, Nagari
Parambahan, Nagari Dilam, Nagari Muara Panas, and Nagari Bukit Tandang. The type of land
use in Bukit Sundi District on plantation land is with an area of 710 hectares and a percentage
of 6.49 percent, namely commodities cultivated are rubber, cinnamon, coconut, pecan, cloves,
cocoa, and coffee.
2. Characteristics of Arabica Coffee Farmer Respondents
The arabica coffee plantation business in Gumanti Valley District has been going on
for a long time, in addition to other horticultural businesses. The characteristics of arabica
coffee farmers in this study area include several aspects that are seen from the age of the farmer,
the level of education, the area of land cultivated, the source of livelihood or the main type of
work, business experience, the number of dependents, and the status of land ownership.
The area of land cultivated by farmers for arabica coffee plantations varies from 0.5 ha
– 2.5 ha. In general, farmers strive for arabica coffee with an area of 0.5 ha – 1.5 ha and only
a small part (10%) strive for arabica coffee above 1.5 ha. Farmers who work on arabica coffee
are aged 25-65 years, and more dominated by farmers aged 25-50 years (80%), and the rest are
over 50 years old. The level of education of farmers, generally with a high school education
level and below, and only 10% with a higher education level (D1 –S1).
The age characteristics of farmers classified as productive in the arabica coffee business
show that arabica coffee plantations in this area are considered important because they can
affect the implementation of the arabica coffee plantation business. Most farmers have made
the arabica coffee business the main livelihood besides the horticulture business for the needs
of their families. The capital to strive for arabica coffee comes from own capital which is set
aside from the results of the horticultural business. In general, farmers work on arabica coffee
on land with their own status.
The main type of work aspects Arabica coffee farmers place that the arabica coffee
plantation business they are engaged in is the main job. In general, (90%) of arabica coffee
plantation business farmers are the main workers, and only a small percentage (10%) declare
it to be another occupation. According to farmers, if they put the arabica coffee plantation
business as the main job, then they will be in the garden a lot and more intensive in maintaining
their gardens and the costs incurred will be lower.
3. Implementation of Arabica Coffee Cultivation
The implementation of arabica coffee cultivation by farmers is carried out starting with
land clearing. The land intended for arabica coffee cultivation is new land (vacant land / no
cultivation) and or land that was previously planted with horticulture. Tillage takes 5 – 7 days,
depending on the land area, the type of previous use, and the amount of labor used. The average
use of labor carried out in land processing is 4 days of work (HOK) with a wage of Rp. 70,000
/ HOK. The land processing carried out includes clearing the land to be used as a planting area.
The next activity is the creation of planting holes with a size of 40cm x 40 cm x 40 cm with a
Competitiveness and Impact of Government Policies on the Development of People's Arabica Coffee
Plantations Partnership Pattern in Solok Regency
380 2, 2., Januari 2023
distance between holes of 2.5 x 2.5 meters. The planting holes that have been made are given
compost (manure) of as much as 5 kg per planting hole.
Planting arabica coffee seedlings is carried out by planting holes that have been fed
with compost. The seeds used are superior seeds obtained from breeding arabica coffee seeds
and seeds assisted by the local government and or seeds produced by the Solok Radjo
Cooperative. The Solok Radjo Cooperative is always present to assist farmers in the use of
seeds and planting carried out by farmers. The amount of labor required for this planting is 3
HOK with a wage of Rp. 75,000 / HOK.
Maintenance of arabica coffee plants is carried out through fertilization, weeding,
pruning, and control of plant pests and diseases.
a. Fertilization
The cultivation of arabica coffee requires fertilizer as a plant nutrient. In addition to
inorganic fertilizers, such nutrients are obtained from compost or organic fertilizers. Coffee
plants need nutrients such as nitrogen and phosphorus. Plant needs in the form of elements
including nitrogen, phosphorus, potassium, calcium, magnesium, iron, boron, and manganese
can be obtained through organic fertilizers (manure). The need for coffee plant fertilizer
depends on the age of the coffee plant which requires different nutrients. Plants that are
relatively young (not yet producing) while plants that are already producing require more
nutrients than NPK elements in a ratio of 2: 2: 2. (Murtiningrum et al., 2014).
Based on the results of research, the fertilizers used by farmers are manure, Urea
fertilizer, and NPK fertilizer. The amount of fertilizer doses used is still irregular which is
carried out by farmers depending on the availability of funds to buy fertilizer and the
availability of fertilizer itself. The most widely used dose is manure which doses up to 100kg
for each farmer's land area, but manure is widely used during the first years, namely in the
planting process. The prevailing manure price in the research area is Rp. 400/kg, the contents
of each sack of manure are 50kg.
Urea and NPK fertilizers used by farmers are obtained from fertilizer stalls around their
coffee plantation business. For manure obtained from the Solok Radjo Cooperative, local
farmers and manure providers in this area. The use of manure carried out by farmers in
accordance with the recommendations of the Solok Radjo Cooperative is different according
to the age of the plant. In the early days, namely the cultivation of arabica coffee seedlings, it
is recommended to apply 5 kg of manure for each planting hole. The dose of fertilizer used for
each sample is different, there is 10 kg for each plant hole within a period of one year. For a
sufficiently large amount of plants, the dose of fertilizer used is as much as 40kg for one year.
For the following year, many sample farmers do not use manure.
According to Rukmana (2014: 134), fertilizer needs are determined by two main
factors, namely nutrient intake by plants and nutrient supply in the soil. Coffee plants take
nutrients from the soil for vegetative growth as important as fruit formation because coffee
fruits are only formed on lateral branches that are products of vegetative growth. Nutrient
extraction varies depending on the type or variety of coffee.
Fertilization aims to meet the nutrient needs of plants and improve soil conditions so
that the root can grow well and can absorb nutrients in sufficient quantities. The types of
inorganic fertilizers that are often used for coffee plants are Urea, SP-36 and KCl which are
applied twice a year, namely at the beginning and end of the rainy season. In addition, organic
Competitiveness and Impact of Government Policies on the Development of People's Arabica
Coffee Plantations Partnership Pattern in Solok Regency
381 2, 2., Januari 2023
fertilizers such as manure and compost are also applied. Fertilizing is carried out at the
beginning of the rainy season simultaneously with the application of artificial fertilizers.
b. Weeding
Weeding activities carried out by farmers aim to clean weeds and disturbing plants
around arabica coffee plants, because the presence of these nuisance plants or weeds affects
the growth of coffee plants. According to Budiman (2012), weeding activities are activities of
raising, removing, and controlling the growth and development of weeds found in coffee plants.
Weeds are removed because they are considered a nuisance for coffee plants in absorbing
nutrients, in other words, weeds are unwanted plants, therefore weeds must be eradicated,
especially around coffee plants. Farmers use hoes or machetes to clean the disturbing plants
around the coffee plant, weeds are sprayed first with toxins and then cleaned using a hoe or
machete. The type of poison used by the sample etani is seen on top. Another function of
weeding is to facilitate fertilization, pruning, and harvesting activities, therefore weeding
activities must be carried out regularly, but farmers cannot carry out activities regularly.
Weeding is carried out from the third year to the final year. Pruning, weeding, and pest
control activities are summarized in maintenance activities with the amount of labor used in
general as much as 7-8 HOK/hectare.
c. Pest and Disease Handlers
The pests that currently plague the Arabica coffee business of cooperative member
farmers are flies, leaf rust, and stem borers, according to farmers, these pests and diseases
greatly affect the decline in production. The Stem Borer pest (Zeuzera coffee) attacks arabica
coffee plants by entering the coffee stem and making holes in the coffee stem so that the plant
breaks easily. This pest attack greatly affects the decline in production. This pest control is
quite simple and in accordance with what arabica coffee farmers of cooperative members do
by removing infested plants and burning them.
The diseases that attack are fruit rot and stem rot. The disease directly reduces
production on coffee plantations, the countermeasures are also simple, namely by taking plants
that are attacked by the disease and then burning them or soaking them with fungicides.
Overcoming pests and plant diseases requires good synergy between the government through
field extension workers and research institutions, in finding optimal solutions in overcoming
these pests and diseases. In addition, farmers must also actively update their knowledge in
trying to grow arabica coffee.
d. Harvesting
From the results of the research conducted, arabica coffee farmers who are members of
the Solok Radjo cooperative on average start harvesting coffee at the age of 2 and 2.5 years,
this is faster than the theory that usually arabica coffee begins to bear fruit when entering the
age of 2.5 years to 3 years. According to farmers, this is because the variety used is a high-
yielding variety, namely Siragar Utang. Harvesting time is carried out once a week with a yield
of 5-10 Otherwise in the harvest season, harvesting is carried out once every two weeks. For
the labor used, it is as many as two people with a wage of Rp.75,000 / day. Harvesting can be
completed in one day. When the harvest season comes, the labor force used is as many as 3
people.
In the harvest season, coffee must be quickly picked otherwise the fruit will fall to the
ground. The harvest usually takes place in January, February and March then the second
Competitiveness and Impact of Government Policies on the Development of People's Arabica Coffee
Plantations Partnership Pattern in Solok Regency
382 2, 2., Januari 2023
harvest of June, July and August This harvest schedule can also be sooner or later depending
on weather conditions that affect the flowering of the arabica coffee harvest for the Gumanti
Valley District area is in July or after Eid al-Fitr. Timeliness of harvesting should also be
observed fruits are taken only if they are fully ripe which is characterized by the fruit turning a
red color. If it is not fully cooked, it will reduce the quality of the coffee to be sold and will
reduce its selling value.
During the harvest season, farmers bring additional labor to pick these coffee fruits
because if they are slow to pick, the coffee will fall to the ground, but if not in the harvest
season, the farmers themselves do the harvest while weeding or pruning. Harvesting is done
morning to evening, and picking arabica coffee fruits is simpler than robusta coffee, this is
because the trees from arabica coffee are relatively low-low and easy to reach by hand without
having to climb. Picking is done by taking ripe fruit one-on-one, farmers usually wear basket
bags or sarongs to collect freshly picked fruits, after which they are freshly collected into sacks.
4. Competitiveness Analysis of Arabica Coffee in Solok Regency
Analysis of competitive advantages and comparative advantages is used to determine
the competitiveness of the arabica coffee business, namely the ability of a producer to produce
products efficiently so that it is superior to compete with other producers on the same
commodity in the international market. (Pearson, 2005) states that measuring the
competitiveness of a commodity can be done with two approaches that include the level of
profit and efficiency.
Private profitability is the production value (production x selling price), the selling price
is based on the price received by farmers, which is Rp.6,500/kg. The selling price received by
farmers is higher than the price set by traders, which is 5,250 / kg because farmers sell their
products in the form of Cheery through the Solok Radjo Cooperative (as a farmer's partner).
This is one of the benefits of the Solok Radjo Cooperative which guarantees the selling price
of farmers' Arabica coffee. For social profitability, the selling price of arabica coffee is based
on the shadow price, which is Rp.7,000.50/kg. Based on the private analysis and social
analysis, it shows that the arabica coffee plantation business in Solok Regency is profitable as
evidenced by private acceptance and social acceptance of positive value.
Financially, the arabica coffee plantation business in Solok Regency is profitable which
is characterized by a positive private profit (greater than 0) of Rp. 66,377,797.57 Tanjung et al
(2021) explained that the arabica coffee plantation business in Solok Regency is financially
profitable as shown by the IRR of 22.4% greater than the interest rate that is 13%. Furthermore,
the arabica coffee plantation business is also economically viable which is shown by the social
benefits obtained from Rp. 82,499,294.06 (positive value). Furthermore, it can be seen in Table
2 below.
Competitiveness and Impact of Government Policies on the Development of People's Arabica
Coffee Plantations Partnership Pattern in Solok Regency
383 2, 2., Januari 2023
Table 2. Policy Analysis Matrix (PAM) Arabica Coffee Solok Regency
Description
Income
Cost
Advantage
Tradable
Input
Input Non-
Tradable
Private Pricing
A
B
C
D
133,789.299,22
3.829.900,45
63.581.600,98
66.377.797,57
Social Pricing
E
F
G
H
44.091.075,26
2.890.850,60
58.700.900,60
82.499.294,06
Divergence
Effect
I
J
K
L
-10.301.776,04
939.049.85
4.880.700,38
-16.121.496,49
The third row in the PAM table above shows the divergence between private and Social
prices. The divergence obtained in the arabica coffee business by farmers is negative, namely
for revenues of –Rp.10,301,776.04 which implicitly indicates tax or resource transfer that
reduces system profits. Profit divergence –Rp.16,121,496.49 which is the sum of all transfer
impacts, both positive and negative on the income and cost of the arabica coffee business.
Meanwhile, divergence in tradable inputs and non-tradable inputs has a positive value of Rp.
939,049.85 and Rp.4,693,973.56. One of the causes of divergence is market failure.
As previously explained, the Arabica Coffee business has private profits and social
benefits that are both greater than zero. This means that the presence or absence of government
intervention in the business is financially and economically beneficial or has competitiveness
and efficiency levels both at the business level and at the regional level.
3.1. Competitive Advantage Analysis
Competitive advantage analysis serves as a tool to measure private profits calculated
based on market prices (actual prices) occurring at the farmer level where those prices are
indicative of government intervention. Competitive advantage is determined by the value of
Private Profitability (PP) and the value of the Private Cost Ratio (PCR).
From Table 2, a factor ratio value can be generated in the PAM of arabica coffee for
the people of Solok Regency as shown in Table 3 below.
Table 3. Value and factor ratio in PAM Arabica Coffee of the people of Solok Regency.
Description
Notation
Value / Ratio
Private Benefits
D = A – B – C
66.377.797,57
Social Gains
H = E – F – G
82.499.294,06
Transfer Output
I = A – E
-10.301.776,04
Transfer Input
J = B – F
939.049.85
Factor Transfer
K = C – G
4.880.700,38
Net Transfer
L = D – H = I – (J + K)
-16.121.496,49
Private Expense Ratio
PCR = C/(A-B)
0,489242037
Domestic Resource Cost Ratio
DRCR = G / (E – F)
0,415728096
Nominal Output Protection
Coefficient
NPCO = A / E
0,928505107
Nominal Input Protection
Coefficient
NPCI = B /F
1,324835137
Competitiveness and Impact of Government Policies on the Development of People's Arabica Coffee
Plantations Partnership Pattern in Solok Regency
384 2, 2., Januari 2023
Coefficient of Effective Protection
EPC = (A – B) / (E – F
0,920390878
Profit Coefficient:
PC = D/H
0,804586249
Subsidy Ratio For Producers
SRP = L / E
-0,111884074
In the PP indicator, the value of profits received by farmers in the arabica coffee
plantation business is positively valued, namely Rp.32,285,406.18, which means that the
arabica coffee plantation business is worth working on. Where PP>0, it means that the arabica
coffee commodity is able to expand because it has profits that are received directly by farmers.
The results of the analysis for arabica coffee commodities obtained a PCR coefficient
value of 0.489, meaning that to get an additional output value of one unit, an additional
domestic factor cost of 0.489 is required. The PCR value shows that the arabica coffee
plantation business carried out by farmers is efficient and has a competitive advantage. This is
also in line with the research of Murtiningrum et al (2014) which states that Rejang Lebong
Regency with a coffee business has a PCR value of 0.37, and research Irfanda (2020) gets a
PCR value for coffee businesses in Teeter Village, Temanggung Regency, which is 0.55. In
other words, these two studies also have the ability economically to finance and produce coffee
efficiently and financially the coffee produced can compete in domestic and international
markets.
3.2. Comparative Advantage Analysis
Comparative advantage is related to economic viability, which is to assess economic
activity for society as a whole regardless of who is involved in that economic activity. Analysis
of the comparative advantage of arabica coffee commodities in Solok Regency can be
measured by indicators of Social Profitability (SP) value and Domestic Resource Cost Ratio
(DRCR) value.
The value of social benefits obtained in the arabica coffee business by farmers is Rp.
82,499,294.06. The value of social benefits, which are positive values greater than zero,
indicates that the arabica coffee business in Solok Regency is profitable and worthy of efforts
under conditions without government intervention and has a comparative advantage. Arabica
coffee business in Solok Regency has a Social Profitability (SP) value of Rp. 82,499,294.06,
this value is greater than the value of Private Profitability (PP) which is Rp. 66,377,797.57.
The greater SP value of PP means that the arabica coffee business in Solok Regency is more
profitable when there is no government intervention both on inputs and outputs than there is
intervention from the government.
The DRCR value for the arabica coffee business by farmers is 0.415. The value of
DRCR<1 also shows that arabica coffee commodities are more profitable if cultivated
domestically than imported from abroad. This condition is caused because the costs required
can be greater if importing than producing yourself. The DRCR value of arabica coffee in this
study was 0.415. Compared to the DRCR value in arabica coffee research in North Tapanuli
Regency, which is 0.25, it shows that the arabica coffee plantation business in North Tapanuli
Regency has a higher comparative advantage compared to the arabica coffee business at the
research site.
4. Analysis of the Impact of Government Policies on Arabica Coffee Commodities
The purpose of government policy in trade is usually to protect domestic producers. If
the price of imported products of similar commodities is lower than domestic production, it
Competitiveness and Impact of Government Policies on the Development of People's Arabica
Coffee Plantations Partnership Pattern in Solok Regency
385 2, 2., Januari 2023
will weaken the competitiveness of domestic commodities because consumers will tend to buy
foreign products at lower prices. As a result, demand for domestic products will decrease and
have implications for declining domestic production and local producer incomes. By using
PAM, it can be known how much impact government policies have on the arabica coffee
business in Solok Regency. Through PAM, it can be known the government's policy on inputs,
outputs, and inputs in a commodity.
4.1. Government Policy on Output
Government policies in the form of subsidies or taxes on an agribusiness commodity
can have a positive or negative effect on the perpetrators. Indicators of the impact of
government policies on output can be seen using TO (Transfer Output) and NPCO (Nominal
Protection Coefficient Output) values.
The value of TO is -Rp.10,301,776.04, meaning that the private price of Solok arabica
coffee is lower than the social price. This condition shows that government intervention in the
output of these businesses is more beneficial to consumers because consumers buy prices that
are lower than the actual price.
The NPCO value obtained from the calculation results is 0.9285. This indicates that
there are government policies that cause the private price of arabica coffee to be lower than the
social price. This gives rise to the transfer of incentives from producers to consumers where
consumers buy at a price cheaper than the price they should pay and producers receive a price
smaller than the price they should receive.
One of the factors that allegedly caused the private price of arabica coffee to be lower
than the social price was the implementation of a Value Added Tax (VAT) of 10 percent for
the delivery of agricultural products produced from the agricultural, plantation, and forestry
businesses.
4.2. Impact of Government Policy on Inputs
Policies in the form of input subsidies given to producers are expected to stimulate
producers to use these inputs in order to increase production and productivity. The existence
of this government intervention can be seen in the amount of Input Transfer (IT), Nominal
Protection Coefficient Input (NPCI), and Transfer Factor (TF). The type of tradable input
used in arabica coffee plantations is inorganic fertilizer consisting of Urea, KCL, NPK, and
SP36 fertilizers.
The value of IT in the business of arabica coffee by farmers is positive. This indicates
the transfer of income from farmers to tradable input producers amounting to Rp. 939,7049.85
per hectare. The positive divergence value for tradable inputs is due to the fact that the social
price of tradable inputs is lower than their private prices. This condition is caused by tradable
inputs used by Arabica coffee farmers are non-subsidized inputs.
The NPCI value in the arabica coffee business by farmers is 1,324. This indicates the
existence of protection against the input producers used. This protection affects the sector that
uses these inputs where users are harmed by the high price of inputs and cause high production
costs. The impact of the tradable input policy on these two types of arabica coffee business
results in higher production costs because farmers have to buy fertilizer at a price higher than
the efficiency price.
The TF value in the arabica coffee business by farmers is positive, namely
Rp.4,880,700.38. A positive TF value indicates that the price of non-tradable inputs issued by
Competitiveness and Impact of Government Policies on the Development of People's Arabica Coffee
Plantations Partnership Pattern in Solok Regency
386 2, 2., Januari 2023
the government at the private price level is higher than the price of non-tradeable inputs issued
at the social price level.
4.3. Impact of Government Policy on Input-Output
The impact of input-output policies can be explained through the analysis of the
Effective Protection Coefficient (EPC), Net Transfer (NT), Profitability Coefficient (PC), and
Subsidy Ratio for Producers/Subsidy Ratio to Producers (SRP).
From the PAM analysis, the EPC value is 0.920 small from one. The EPC value is small
from one, indicating that the government's policy towards input-output has not been effective
or hindering farmers in the arabica coffee business which means that there is no government
policy towards domestic commodities.
The value of NT is negative, namely –Rp.16,121,496.49. Indicates that there is a
decrease in producer surplus in arabica coffee output. This indicates that there is no economic
incentive to increase coffee production so that surplus producers are reduced by Rp.
16,121,496.49 per hectare per year.
A PC value of 0.804 indicates that the private profit received by the farmer is smaller
than his social gain of 80.4%. This shows that farmers as producers have to spend 80.4% of
funds on consumers, so overall government policies do not provide incentives to producers and
make the profits received by farmers lower than without government policies.
The results of the SRP value analysis, -0.11, show that the government policy that has
been in force so far has caused arabica coffee farmers to incur higher production costs by 11%
of the opportunity cost.
CONCLUSION
Based on the results of the research shown by the PAM analysis, it can be concluded
as follows:
1. The business of arabica coffee by farmers in Solok Regency has competitiveness shown
from competitive advantages and comparative advantages. This is known from private profits
and social benefits that are of positive value, namely Rp. 66,377,797.57 and Rp.82,499,294.06.
Furthermore, the PCR and DRCR values are less than one, namely 0.65 and 0.48 which
indicates that arabica coffee companies in this area have competitive advantages and
comparative advantages.
2. The impact of government policies on the output of arabica coffee in Solok Regency causes
private prices to be lower than social prices. This can be seen from the negative TO value,
which is –Rp.18.508.225,04. The impact of government policies on inputs causes private prices
of tradable inputs to be high compared to social prices which can be seen from the positive IT
value of Rp.709,068.76. The impact of government policies on input-output causes a decrease
in producer surplus, which means that there is no economic incentive to be able to increase
production as seen from the negative NT value of –Rp.23,911,267.36.
Recommendations
Based on the analysis of competitiveness and the impact of government policies on the
arabica coffee business by farmers through a partnership pattern, can be suggested
recommendations from the results of the study as follows:
Competitiveness and Impact of Government Policies on the Development of People's Arabica
Coffee Plantations Partnership Pattern in Solok Regency
387 2, 2., Januari 2023
1. Farmers as producers to increase the productivity of arabica coffee and pay attention to
garden management, cultivation techniques, the use of inputs, and marketing of arabica
coffee products.
2. Farmers to always partner with the Solok Radjo Cooperative in carrying out cultivating,
processing, and marketing activities of products so that the income of arabica coffee
farmers increases through increasing coffee production and guaranteeing high selling
prices.
3. The Solok Regency Government is expected to encourage farmers to increase planting
area, provide superior seeds and assistance in production facilities as well as training
farmers in the cultivation and processing of products.
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