IDENTIFICATION STUDY OF FOOD SECURITY AND CONSUMER PREFERENCES TO SOYBEAN CONSUMPTION In An Effort to Develop Policy As An Input For National Midterm Development Planning 2015 - 2019 NATIONAL DEVELOPMENT PLANNING AGENCY/BAPPENAS DEPARTMENT OF AGRICULTURE AND FOOD

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TABLE OF CONTENTS

TABLE OF CONTENTS ................................................................................................................................. 2 LIST OF TABLE ............................................................................................................................................... 4 LIST OF FIGURES ........................................................................................................................................... 7 CHAPTER 1. INTRODUCTION ................................................................................................................... 9 1.1. Background ......................................................................................................................................... 9 1.2. Purpose ............................................................................................................................................... 10 1.3. Benefit ................................................................................................................................................. 10 1.4. Material Scope .................................................................................................................................. 11 CHAPTER 2. FRAMEWORK OF STUDY............................................................................................... 13 2.1. Alur Kerangka Berfikir .................................................................................................................. 13 2.1.1. Problems Identification ..............................................................................................................................14

2.2.

Research Hypothesis ..................................................................................................................... 15

2.2.1. Balancing Loop ...............................................................................................................................................16 2.2.2. Reinforcing Loop ...........................................................................................................................................16

CHAPTER 3. RESEARCH METHODOLOGY ........................................................................................ 18 3.1. Research Type and Approachment .......................................................................................... 18 3.2. Research Procedure ....................................................................................................................... 18 3.3. Population and Samples ............................................................................................................... 18 3.4. Data Collection Techniques......................................................................................................... 19 3.5. The Techniques of Data Processing and Analysis .............................................................. 20 3.6. Study Sites.......................................................................................................................................... 21 3.6.1. Province Level ................................................................................................................................................21 3.6.2. Regency Level .................................................................................................................................................24

3.7.

Operationalization of The Concept .......................................................................................... 38

3.7.1. Supply Side ......................................................................................................................................................38 3.7.2. Demand Side ...................................................................................................................................................39

CHAPTER 4. THE DEFINITION, CHARACTERISTICS, AND GENERAL CONDITIONS OF FOOD SECURITY ........................................................................................................................... 41 4.1. Food Security Definition .............................................................................................................. 41 4.2. The General Condition of Staple Food .................................................................................... 45 4.2.1. 4.2.2. 4.2.3. 4.2.4.

General Condition of Soybean Trade System ....................................................................................47 The General Condition of Business Operator ....................................................................................48 The General Condition of Price Formation .........................................................................................50 The General Conditions of Food Preference and Consumption Patterns ..............................51

CHAPTER 5. STUDY RESULT ................................................................................................................. 52 5.1. Strategic Capability of Soybean Production ......................................................................... 52 5.1.1. Shifting Issues Season and Rainfall Fluctuations of the Strategic Capability of Soybean Production .......................................................................................................................................................52 5.1.2. Soybean Crop Productivity .......................................................................................................................56 5.1.3. Basic foundation Soybean Production Systems ...............................................................................61

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5.2.

National Soybean Demand Estimates Household and Consumption Preferences on the Quality of Food Soybeans ............................................................................................... 66

5.2.1. The Estimated Demand of Household Soybean Consumption ...................................................66 5.2.2. Consumption Preferences on Soybean Food Products Quality and The Prediction of Food Quality Needed in Middle-Upper Economic Class Household in The Next Five Years .....71

5.3. 5.4.

The Estimated Demand for Soybeans in Industry.............................................................. 79 Supply Chain as an Inventory Response and Production Response Flow ................ 81

5.4.1. The Mechanism of Soybean Price Formation ....................................................................................83 5.4.2. The Perception of Independence and Stability of Soybean Supply ..........................................86 5.4.3. The Fact About Normative Supply Chain Management Application of Staple Food .........90

CHAPTER 6. CONCLUSIONS AND RECOMENDATIONS ............................................................... 93 6.1. Conclusion ......................................................................................................................................... 93 6.2. Recommendation for RPJMN 2015 – 2019 ........................................................................... 97 6.2.1. Policy Direction..............................................................................................................................................97 6.2.2. Strategy and Priority Focus ......................................................................................................................97 6.2.3. Target and Indicator ....................................................................................................................................98

BIBLIOGRAPHY ........................................................................................................................................... 99

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LIST OF TABLE

Table 3.1. The Respondent of Research Category ................................................................. 19 Table 3.2. National Rice Production ...................................................................................... 21 Table 3.3. National Soybean Production ............................................................................... 21 Table 3.4. National Corn Production ..................................................................................... 21 Table 3.5. National Onion Production ................................................................................... 22 Table 3.6. National Chili Production ...................................................................................... 22 Table 3.7. National Hot Chili Pepper Production ................................................................... 22 Table 3.8. National Sugar Cane Production ........................................................................... 23 Table 3.9. National Crude Palm Oil (CPO) Production ........................................................... 23 Table 3.10. National Beef Production .................................................................................... 23 Table 3.11. Rice Production in West Java .............................................................................. 24 Table 3.12. Rice Production in East Java ................................................................................ 24 Table 3.13. Rice Production in Central Java ........................................................................... 25 Table 3.14. Rice Production in South Sulawesi ...................................................................... 25 Table 3.15. Rice Production in North Sumatra ...................................................................... 25 Table 3.16. Soybean Production in East Java......................................................................... 26 Table 3.17. Soybean Production in Central Java.................................................................... 26 Table 3.18. Soybean Production in West Nusa Tenggara ...................................................... 26 Table 3.19. Soybean Production in West Java ....................................................................... 27 Table 3.20. Corn Production in East Java ............................................................................... 27 Table 3.21. Corn Production in Central Java .......................................................................... 27 Table 3.22. Corn Production in Lampung .............................................................................. 27 Table 3.23. Corn Production in South Sulawesi ..................................................................... 28 Table 3.24. Corn Production in North Sumatra ..................................................................... 28 Table 3.25. Onion Production in Central Java........................................................................ 28 Table 3.26. Onion Production in East Java............................................................................. 29 Table 3.27. Onion Production in West Java ........................................................................... 29 Table 3.28. Onion Production in West Nusa Tenggara .......................................................... 29 Table 3.29. Chili Production in West Java .............................................................................. 30 Table 3.30. Chili Production in North Sumatra ...................................................................... 30 Table 3.31. Chili Production in Central Sumatra .................................................................... 30 Table 3.32. Chili Production in East Java ............................................................................... 31 Table 3.33. Sugar Cane Production in East Java .................................................................... 31 Table 3.34. Sugar Cane Production in Lampung .................................................................... 31 Table 3.35. Sugar Cane Production in Central Java ............................................................... 32 Table 3.36. Sugar Cane Production in West Java ................................................................... 32 Table 3.37. Palm Oil Production in Riau ................................................................................ 33

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Table 3.38. Palm Oil Production in North Sumatra ............................................................... 33 Table 3.39. Palm Oil Production in South Sumatra ............................................................... 33 Table 3.40. Palm Oil Production in Central Kalimantan ........................................................ 33 Table 3.41. Palm Oil Production in Jambi .............................................................................. 34 Table 3.42. Beef Cattle Production in Lampung .................................................................... 34 Table 3.43. Beef Cattle Production in East Java..................................................................... 35 Table 3.44. Beef Cattle Production in Bali ............................................................................. 35 Table 3.45. Beef Cattle Production in West Nusa Tenggara .................................................. 35 Table 3.46. Location of Supply Survey According to Its Commodity Category ..................... 36 Table 3.47. Composition of Population in 8 Demand Site Area Location.............................. 38 Table 3.48. Operationalization of Supply Side Concept ......................................................... 39 Table 3.49. Operationalization of Demand Side Concept ...................................................... 39 Table 4.1. Land Area and National Soybean Production ....................................................... 47 Tabel 5.1.a. Varitas Bibit Kedelai yang di tanam pada musim tanam 2012-2013 ................. 58 Tabel 5.1.b. Jenis Pupuk ynag Digunakan .............................................................................. 59 Tabel 5.1.c. Penggunaan Bahan Kimia ................................................................................... 59 Tabel 5.1.d. Hama yang sering menyerang, menurut responden penelitian ........................ 60 Tabel 5.2. Konsumsi Kedelai dan Produk Turunannya per kapita (Kg/Tahun) – SUSENAS 2013 ....................................................................................... Error! Bookmark not defined. Tabel 5.3. Konsumsi Kedelai dan Produk Turunannya per kapita (Kg/Tahun) untuk Kategori Responden Menengah Atas .......................................... Error! Bookmark not defined. Tabel 5.4. Presentase Penduduk Menurut Pengeluaran Per Kapita Sebulan. Error! Bookmark not defined. Tabel 5.5.a. Proyeksi Konsumsi Kedelai Berdasarkan Kebutuhan Rumah Tangga Golongan Menengah Atas ............................................................. Error! Bookmark not defined. Tabel 5.5.b. Proyeksi Konsumsi Kedelai Berdasarkan Kebutuhan Rumah Tangga Golongan Menengah Bawah ......................................................... Error! Bookmark not defined. Tabel 5.6.a Tabel Preferensi Konsumen Terhadap Substitusi Kedelai (saat harga normal) Berdasarkan Jumlah Pendapatan.................................. Error! Bookmark not defined. Tabel 5.6.b Tabel Preferensi Konsumen Terhadap Substitusi Kedelai (saat harga mahal) Berdasarkan Jumlah Pendapatan.................................. Error! Bookmark not defined. Tabel 5.6.c. Tabel Preferensi Konsumen Terhadap Substitusi Kedelai (saat pasokan langka) Berdasarkan Jumlah Pendapatan.................................. Error! Bookmark not defined. Tabel 5.7.a. Komposisi Permintaan Rumah Tangga terhadap Produk Berbahan Dasar Kedelai ....................................................................................... Error! Bookmark not defined. Tabel 5.7.b. Permintaan Kedelai untuk Industri ....................... Error! Bookmark not defined. Tabel 5.7.c. Ringkasan Permintaan Konsumen Industri ........... Error! Bookmark not defined. Tabel 5.8. Persentase Tempat Konsumen Rumah Tangga Membeli Kedelai dan Produk Turunannya ................................................................... Error! Bookmark not defined. Tabel 5.9. Harga Jual Beli Kedelai Bertangkai dan Biji Kedelai . Error! Bookmark not defined.

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Tabel 5.10.a. Biaya Pengiriman dan Distribusi Lokal (per-satu kali pengiriman) ............. Error! Bookmark not defined. Tabel 5.10.b. Biaya Pengiriman dan Distribusi Antar Kota (per-satu kali pengiriman) .... Error! Bookmark not defined.

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LIST OF FIGURES

Figure2.1. Research Flow Chart ............................................................................................. 13 Figure 2.2. The Movement of Staple Commodities Price in Indonesia (2013) ...................... 14 Source: Ministry of Trade 2013 ............................................................................................. 14 Figure 2.3. General Hypothesis Model .................................................................................. 15 Figure 4.1. Food Security Sub Systems .................................................................................. 43 Figure 4.2. Food Availability Sub Systems ............................................................................. 43 Figure 4.3. Food Access Sub Systems .................................................................................... 44 Figure 4.4. Food Utilization Sub Systems ............................................................................... 45 Figure 4.5. Business Operator in Soybean Trade System ...................................................... 49 Figure 4.6. Soybean Price in 2013 .......................................................................................... 50 Figure 5.1.a. Three Regions Climate Indonesia, Area A (thick curve) - Monsoon Region, Region B (dashed curve) - Semi-Monsoon Region and Area C (dashed curve separated) - Regional Antimonsun ............................................................................ 52 Source: Aldrian, 2003 ............................................................................................................. 52 Figure 5.1.b. Annual Rainfall Cycle of Each Region ................................................................ 53 Figure 5.1.c. Average Temperature (° C) and Rainfall (mm / month) in Indonesia 1901-2009 .................................................................................................................................... 53 Figure 5.2.a. National Soybean Productivity Description *: is a temporary data Source: BPS (Accessed December 31, 2013) .................................................................................. 56 Figure 5.2.b. National Soybean Productivity Sources: Primary and Secondary Data Processed .................................................................................................................................... 57 Figure 5.3.a. Basic System Basic Foundations Soybean Production Sources: Primary and Secondary Data Processed ......................................................................................... 62 Figure 5.3.b. Potential Yields per hectare expectations by Farmers Sources: Primary Data Processed ................................................................................................................... 63 Figure 5.3.c. Yields per hectare Simulation Results Sources: Primary Data Processed ........ 63 Figure 5.3.d. Farmers Gain Ratio Sources: Primary Data Processed .................................... 64 Figure 5.3.e. Rainfall levels Sources: Primary Data Processed ............................................. 65 Figure 5.3.f. Early Season Planting Period Sources: Primary Data Processed ..................... 66 Gambar 5.4. Tren Konsumsi dan Produksi Kedelai Nasional (juta ton) ... Error! Bookmark not defined. Gambar 5.5.a.Persepsi Konsumen Rumah Tangga (Berdasarkan Pendapatan Bulanan) Terhadap Kualitas Kedelai Lokal ................................... Error! Bookmark not defined. Gambar 5.5.b. Persepsi Konsumen Rumah Tangga (Berdasarkan Pendapatan Bulanan) Terhadap Kualitas Kedelai Impor .................................. Error! Bookmark not defined. Gambar 5.5.c. Persepsi Konsumen Rumah Tangga (Berdasarkan Pendapatan Bulanan) Terhadap Keterjangkauan Harga Kedelai Lokal ............ Error! Bookmark not defined.

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Gambar 5.6.a. Preferensi Konsumen Terhadap Substitusi Kedelai (saat harga normal) . Error! Bookmark not defined. Gambar 5.6.b. Preferensi Konsumen Terhadap Substitusi Kedelai (saat harga mahal) ... Error! Bookmark not defined. Gambar 5.6.c. Preferensi Konsumen Terhadap Substitusi Kedelai (saat pasokan langka)Error! Bookmark not defined. Gambar 5.7. Prioritas Substitusi Kedelai Konsumen Rumah Tangga ...... Error! Bookmark not defined. Gambar 5.8. Rantai Pasokan Kedelai (existing) ........................ Error! Bookmark not defined. Gambar 5.9. Pembentukan Harga Kedelai Bertangkai dan Biji Kedelai .. Error! Bookmark not defined. Gambar 5.10. Tantangan Rantai Pasokan Kedelai .................... Error! Bookmark not defined. Gambar 5.11.Dimensi Ketahanan Pangan Kedelai ................... Error! Bookmark not defined. Gambar 5.12.a.Perceptual Map Ketahanan Pangan Menurut KonsumenError! Bookmark not defined. Gambar 5.12.b.Perceptual Map Ketahanan Pangan Menurut Pengusaha .... Error! Bookmark not defined. Gambar 5.12.c. Perceptual Map Ketahanan Pangan Menurut Konsumen .... Error! Bookmark not defined. Gambar 5.12.d. Perceptual Map Ketahanan Pangan Menurut Pengusaha ... Error! Bookmark not defined. Gambar 5.13. Sumber Pasokan Bahan Pangan Pokok di Indonesia Tahun 2010 ............. Error! Bookmark not defined.

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CHAPTER 1. INTRODUCTION

1.1.

Background

As an agricultural country , Indonesia is an agricultural product manufacturers the 10th largest in the world . Agricultural sector contributed 15persen to Gross Domestic Product ( GDP ) and 38persen on employment ( OECD , 2012 ) . Given the highly strategic sector for Indonesian food , food policy is made must have a solid foundation and a logical consideration for closely related to the stabilization of the economic, political and state security . The food crisis that emerged in recent decades as the main reason for creating the food sector policies that apply comprehensively in the medium and long term in Indonesia . Indonesia still has a lot of potential in the agricultural sector . First , there are many fertile land that has not been used optimally , which is only 47 million hectares of fertile land that has been used on 110 million hectares of land that has the potential to be cultivated agricultural areas . Second , the average population growth of more than 1 percent in each year ( BPS , 2013) shows the large number of potential consumers in Indonesia . The positive trend continued to increase economic growth may indicate that the purchasing power of consumers to meet their food needs has also increased . Unfortunately , with the current state of these opportunities can be a threat to Indonesia . Starting in 2010 , the rate of production of food commodities started to decline ( BPS , 2012 ) . In 2011 , the rate of production of dry unhusked ( MPD ) that will be processed into rice only able to achieve the amount of 65.76 million tonnes or 1.07persen lower than in 2010 . On the other hand , corn decreased worse , which is 5.99 percent lower than in 2010 , or about 17.64 million tons of dry shelled ( dried corn - JPK ) . And not much different from the corn , soybean production down 4.08 percent compared to 2010 or simply by 851.29 thousand tons of dry beans . It shows the lack selarasan between Indonesian population growth with food needs . Food production capability as a supplier of food supply is not able to meet the accelerating demand for food . In the end , based on the simple law of supply and demand , lack of supply resulted in rising prices of basic needs . The facts that have been presented previously could have been caused by several factors . Natural Factors is one external factor that can not be controlled by humans . Shifting seasons and rainfall fluctuations cause uncertainty in crop ( Ministry of Agriculture , 2011 ) . Another factor that often occurs is a decrease in the number of households engaged in agriculture . In 2013 , the number of agricultural households fell to 26.13 million , or less than 11persen of the total population of Indonesia . The decrease of 5:04 million households in a decade or less than about 1.75 percent annually . This is expected because working in the agricultural sector is no longer able to meet the needs of decent living for farmers . Although market prices for agricultural products is high, the presence of long supply chains caused only advantage possessed

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by distributors and wholesalers, and not by farmers . As a result , a lot of agricultural land owned by farmers converted into a variety of commercial land that can support the basic needs shelter farm families or sold to another party who then transform farmland into land for other industries . Other threats could also be caused by changes in consumer preferences towards food . Imported products tend to offer more competitive prices with better quality , so that local products can not compete in price and especially in terms of quality . Matters are further complicated when the demand for imported products increased . The high number of imports make the country lose its power to maintain the quality of local products as well as strength in the eyes of the international competition . Facing many problems in terms of food security , as well as to prepare a development plan in the field of food and agriculture in Indonesia for the next 5 years , it is necessary to formulate a policy document that analyzes the patterns of supply and demand ( household consumption and industrial ) in the agricultural sector . To prepare the policy document , the Directorate of Food and Agriculture in cooperation with the National Development Planning Agency of Japan International Cooperation Agency ( JICA ) conducted a study on " Food Security and Identification Study Consumption Preference of the Staple Food Ingredients " through an analysis of several factors, including natural factors ( shifting seasons and fluctuations rainfall ) , productivity , and supply chain management in response to demand food that is affected by the consumption preferences varied . The staple food that goes into this study include rice , soy , beef , palm oil , sugar , chili , onion , and corn . The study is a primary data mining with the following goals and benefits 1.2.

Purpose

This study has several objectives including: 1. Analyze the strategic capability of production to develop policy recommendations in an effort to increase national food production capacity. 2. Provide an overview and estimates of national food demand both by individual households (direct consumption) or by the food processing industry (indirect consumption). 3. Develop analysis of consumer preference towards quality of food, especially for people with middle and upper economic class that can be used to predict the quality of food that is required in the next 5 years. 4. Analyzing the supply chain, supply response, and the response of production to develop recommendations to bridge the supply side and the demand side. 1.3.

Benefit

This study is expected to provide benefits in the form of reports / papers / studies as input to the formulation of policy direction, strategy and focus priorities, targets and indicators in the framework of the preparation of the Medium Term Development Plan

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(RPJMN) 2015-2019 related to food security in answering consumption preferences staple food. 1.4.

Material Scope

The scope of the material that will be the focus of discussion on the assessment of food security and identification studies of consumer preferences related to food konsumsimeliputi rice , beef , soy , palm oil , corn , sugar cane , chili , and onions merah.Masing one of the staple foodstuffs strategic capabilities will be analyzed related to the production of research purposes . The results of this analysis will be the cornerstone of the future and the input to the direction of the National Medium Term Development Plan 2015-2019 . Analysis of the study will be divided into eight books in accordance with the type of staple food categories analyzed . Each book will review matters related to the purpose and benefits of the research . Based on this analysis , is expected to terumus sebuahkerangka development of food security and consumer preferences shift solutions upper middle class households and industry . It may be so that future recommendations as an input to the preparation of the 2015-2019 RPJMN relevant national food security. 1.5.

Systematic Discussion

Systematic discussion is divided as follows: CHAPTER 1. INTRODUCTION This chapter will explain the research background, purpose, benefits, ro scope and systematic discussion of matter in general. CHAPTER 3 . METHODOLOGY This section discusses the general methodology that includes research and types of research approaches , research procedures , population and sample , data collection techniques , data processing and analysis techniques , the operationalization of the concept and research sites . CHAPTER 4 . DEFINITION , CHARACTERISTICS AND FOOD SECURITY GENERAL CONDITIONS Definition , characteristics and general condition of the national food security per category of commodities that are the object of research , namely rice , soy , beef , palm oil , sugar , chili , onion , and corn will be discussed in detail in this section . CHAPTER 5 . RESULTS This section will discuss the analysis report in answering research purposes . Subject strategic production capacity ; national food demand forecast both direct consumption and indirect consumption ; consumer preference towards quality of food , especially for people with middle and upper economic class ; as well as supply chain analysis , supply response , and response production . CHAPTER 6 . CONCLUSIONS AND RECOMMENDATIONS FOR 2015-2019 RPJMN Based on the research formulated a conclusion that led to the recommendation that bridge the supply side and the demand side . The conclusion will be followed by a

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discussion of the development of food security framework in the formulation of policy direction , strategy and focus priorities , targets and indicators in the framework of the preparation of the Medium Term Development Plan (RPJMN ) 2015-2019 related to national food security

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Problem Identification: Problem formulation: the efficiency of commodity supply chain is uncertain?

Formulation of Objectives and Benefits

Collecting Data: STUDY Primary and Secondary

Literature Study CHAPTER 2. FRAMEWORK OF

2.1.

Reference Data:

Alur Kerangka Berfikir Behavior over Time of Historical Data

Make a Mental Model Determinate the variables, formulating a hypothesis using Causal Loop Diagram

Expert Knowledge Elicitation: Depth Interview, Focused Group Discussion (Structural Test) Formulating a Formal Model: Stock and Flow Diagram (Consistency Test)

Simulation: Data (Results) (Extreme Test)

Suitable ? (Behavioral Test)

Policy Development

Figure2.1. Research Flow Chart

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2.1.1. Problems Identification The Development of food and horticultural commodities in Indonesia tend to decrease. The cause of this case is the price factor, which always been a central attention in every discussion and mass media. The price can quickly increase or decrease in a day. This condition can lead to instability in commodity market. The movement of staple food price change in Indonesia (2013) showed in the following figure:

Figure 2.2. The Movement of Staple Commodities Price in Indonesia (2013) Source: Ministry of Trade 2013

Figure 2.2 shows that the whole commodities of staple food displayed a various price change. The highest variation is on red pepper commodity, followed by soybean and beef commodities. From the observation on June to October 2013, both soybean and beef commodities are in an unstable condition. The Government has a major challenge in stabilizing commodity price continuously. This answer of this challenge is a comprehensive understanding from demand and

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supply aspect to overcome the root of the problem so the dynamics of commodity price became stable. 2.2.

Research Hypothesis

Hypothesis developed to form a common structure based on the principle of reciprocal causal relationship. The basic structure formed from the literature review and theory. The structure of the initial model is a reflection of mental models to find the cause of problems of the proposed research.

Iklim Ekstrim+ R2 Impor + + + Sub Sistem Produksi + R3

Ekspektasi Konsumsi +

+ Ratio Produksi dan Konsumsi

B2

GAP Harga B3 + Harga referensi

Konversi Lahan +

Harga Pasar -

R1

GAP Nutrisi (malnutrisi) +

B1

Pendapatan RT

Sub Sistem + Konsumsi Kebutuhan minimum

Figure 2.3. General Hypothesis Model

The mental model shows in figure 2.3 will be developed and improved to become a formal model of the Expert Knowledge Elicitation known as EKE (Ford and Sterman, 1998). Adopting an expert opinion or modeler processed by doing some interview or Focused Group Discussion (FGD). The process can quantify some of the variables that might still qualitative. The improvement of expert opinion of the initial input model is important because the experience of the expert may not caught in the mental model. The next step is stimulation. Stimulation is needed in order to prove the data that have been generated from the simulation did not move according to the theory, logic, or move according to the reference data (real data from the past). The sensitivity analysis of the variables and some policies option or scenario are needed to determine a new

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policy by adding new variables that are exogenous to make the policy design more solid. In general, the model in the figure above has two types of causal loop diagram (closed loop), balancing loop and reinforcing loop. 2.2.1. Balancing Loop General model in figure 2.3 formed initially by examining the commodity market price. The balance between supply and consumption influence the price movement. Greater supply will make the commodity price cheaper and it will not change the commodity consumption. If equilibrium occurred, there will be no change in price. Equilibrium influenced by some variables, such as the condition of sub-system consumption and production. The capability of sub-system to produce commodity production that demanded by costumers, reflected by the high demand of the sub-system consumption. From the consumption aspect, the amount of household income will determine the amount of consumption, assuming the commodities used are normal goods. The higher the household income, the higher number commodities consumed by households. While the up and down movement of market price will determine the amount of real household income. The series of this causal relationship will form a closed loop B1. In other hand, the commodity market price will provide incentive (disincentives) for the producers. If the price market is high, the producer’s incentive will increase and the long-term production will back to the initial equilibrium. The series of this causal relationship will form a closed loop B2. However, if the price is low or decrease the producers will cut the long-term production, and it will lower the ratio of the amount of production and consumption resulting in scarcity of commodities, and increased the price market. Another balancing loop is closed loop B3. In this loop, an increase of market price of the commodity will make a huge gap with the reference price and this condition will pressure the government to do import (export) of commodities. Direct import will accelerate the availability of commodities in the market and it raises make the production and consumption ratio. Just like the previous loop, the increase in this ratio will make the price market decreased. 2.2.2. Reinforcing Loop Beside the equilibrium loop, there is another loop in general model called the reinforcing loop. This loop divided in to closed loop R1, closed loop R2, and closed loop R3. In closed loop R1, an increase in commodity market price will decline the nominal of household income. With the household income declining, an adjustment of consumption amount is required, and it will reduce. Changes in the amount of consumption will make the producers to plan a production in certain commodities to build consumer expectation. If the consumption increases, the 16

consumption expectation for the next period will also increase. However, if the consumption is low or decrease, the consumption expectation will also decrease. A high (low) consumption expectation number will increase (decrease) the production plan. In the production factors, a high (low) production plan will affected a large (small) production realization. The realization of production is limited by the condition of production factors in the company. A high realization of production will rise the production and consumption ratio and it will decrease the commodity market price. In the other closed loop, the rise of commodity market price will provide an incentive to other parties that have no interest to enter the commodity market before. With a certain price level, the conversion of land that once considered not economical will change. The rise of commodity price will lure the landowner to convert their land for agricultural commodities, such as palm oil. Land conversion can occur from non-agricultural land (forest, peat land with their ecosystem and social system) to agricultural land. There is also a conversion from agricultural land to non-agricultural land (housing, factories, and other). In general, land conversion occurs due to economic considerations. In the end, the large land conversion will affect the extreme weather and it is difficult to estimate. A high variability of weather will become an obstacle for commodity producers in the start of production period (planting). It will disrupt the production process, and lowering the harvest number. An extreme weather will also affect the instability of commodity availability (production). This condition interpreted with an uncontrolled commodity and consumption ratio, and it will make the price unstable. The causality in this loop will form a closed loop R2. Closed loop R3, explain the causal relationship of variables related to the nutritional sufficiency of Indonesian people generally. In an extreme case, a reduction in consumption of certain commodities below its required level to the body will lead to malnutrition. If the malnutrition number is high, it will affect the public health and productivity. In this case, the people is one of the main factors of production. If the public productivity decrease, the amount of production of the commodity will decline. This condition make the ratio of production and consumption increase.

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CHAPTER 3. RESEARCH METHODOLOGY

3.1.

Research Type and Approachment

The main approach in this research is the quantitative paradigm or positivistic paradigm (Denzin, 2003). In quantitative approach, researchers conducted a series of studies that originated from a number of theories, which deduced into a hypothesis and assumption of a framework that describe in an analysis model. The analysis model consists of variables that will lead to the implementation of concept (Brannen, 2002). Therefore, reliability or consistency is the key to quantitative research. Quantitative research must also value free or objective and free from situational context (Neuman, 2006). Quantitative approach used in this study is the cross sectional design. Cross sectional design is a design study of a particular sample of data collection that conducted only once is a certain period of time (Malhotra, 2007). The research used in this study categorized as a descriptive research. In principle descriptive research has seven goals : to provide the appropriate profile of a group, describe a process, mechanism and relationship, an overview of verbal and numerical example, the percentage of respondents, find a new information to stimulate new explanations, display the background of an information or events, make a series of categories or types of classification and explain the steps in the research (Neuman, 2006). 3.2.

Research Procedur

Framework or research procedures are very important in the research stage, because it will be the foundation or the blueprint in solving down the problem and provide a solution using an appropriate methodology (Malhotra, 2007). The procedure in this study consists of the following phase: 1) Collect various kind of literatures that will support this research and create a model/framework of the study 2) Create a questionnaire and conduct a pretest instrumentation for 50 (fifty) respondents. Pretest results analyzed using SPSS 17.0. The questionnaire will applied as soon as the results considered eligible to process. 3) Distribute the questionnaire to the selected respondents at 13 study sites. 3.3.

Population and Samples

Target population is a set of data or element of information that need to be analyzed and have its conclusion drawn (Malhotra, 2007). The population also defined as a

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complete or perfect set of all elements or units of observation that possible to use as the study materials. The population of this study is a group or elements that have been included in the marketing chain of staple food research (rice, soybean, beef, palm oil, sugar, chili, onion, and corn in the region that become the focus of study. Time, cost, researcher’s effort and action are limitations that can alter the results of the study and it will lead to a condition where the samples of study need to be drawn. The sample is a part of the whole object or set of studies (population). In this study, the total numbers of samples are 2620 respondents, with the following classifications: Table 3.1. The Respondent of Research Category No.

Commodities

1. 2. 3. 4. 5. 6. 7. 8.

Rice Soybean Sugar CPO (Crude Palm Oil) Chili Onion Corn Beef

1) 2) 3) 4) 5) 6)

Supply Side Respondent Total Farmer/ 7 x 30 (minimum Plantation sample Collector sufficiency for Wholesaler industry, Grocery/Agent Malhotra 2007) x Retailer 6= Distributor 1260 respondents

Demand Side Respondent Total 1) Household 1) 800 2) Industry Household 1) 200 food processing industry

1) Breeders 30 x 6 = 2) Cattle Broker 180 respondent (Belantik) 3) Cattle Wholesaler 4) Feedlot 5) Meat Retailer 6) Distributor Total Respondent 1620* * added 180 respondents to meet the sample respondents from the supply side

1000

Considering the obstacles on the field, the selection of respondents for supply and demand in industry category will use Convenience Sampling Technique (Aaker, 2001). This technique will try to obtain an appropriate sample of population elements. The selection of sample units will left entirely to the researcher. Generally, the respondents will be choose on the spot. The selection of respondent for demand in household category will use the Stratified Sampling Technique with systemic random sampling method based on the proportion of the population that aged between 20-65 years old in each study sites, which refers to the 2010 population census data. The base of Region in Figures (RIF) 2011 and 2012 and selection criteria middle-up class SSE A, B+, and B are AC Nielsen and Milward Brown. 3.4.

Data Collection Techniques

Data collection techniques that used in this study consists of: 1) Survey 19

This study used survey methods research that takes a sample of the population and use questionnaire as the main data collection tool. In general, a unit of analysis in survey research is an individual. This is consistent with the statement that is important for researchers to use methods within method. This method used in one approach, for example, researchers used quantitative survey method and questionnaires in one study and analyze the results with statistical analysis (Neuman, 2006). This study used questionnaire with raw sequence, consisting of closed questions (close0ended question) and open questions (open-ended question). The questions equated for every respondents (Bailey, 1994). 2) Interviews In order to strengthen and confirm the results obtained from the survey and policy analysis, an interview conducted to the stakeholders that have been involved in marketing staple foods, both nationally and in each study sites. An interview for other informants needed if there is a development and need a new field data. The targets of interview are 30 informants who represent various groups. 3.5.

The Techniques of Data Processing and Analysis

The technique that will be used to explain and analyze the data obtained through data collections are: 1) Validity and reliability test at the pre-test questionnaire stage. The analysis of validity and reliability is the precision and accuracy analysis of the indicator. Standard alpha value used in this study was 0,60. The measuring instrument deemed reliable and acceptable if have the same value as the standard alpha value. 2) The analysis of frequency and cross tabulation needed to see the arrangement of data in the table that classified according to a certain categories (Neuman, 2006). This analysis used to conclude information about an indicator by calculating the percentage of raw data or frequency. The measurement of central tendency used in interval and likert scales studies. The measurement of central tendency is the average value (mean) and the mode or recurring value (frequently occurring number) as well as the median or middle value. 3) Analyze the data historical analysis. The analysis needed to find the patterns of contemporary conditions of staple foods consumption and preferences. 4) Mapping and forecasting analysis to map the problems in more detail, and predict the effectiveness of candidate policies. 5) For the interview results, an in-depth analysis of field notes, interview notes or transcripts needed. These data collected as a secondary data to support this study.

20

3.6.

Study Sites

3.6.1. Province Level The survey conducted in several provinces of the largest commodity producers. The details of production of each commodity according to the data from Ministry of Agriculture are as follow: 1) Rice Commodity Table 3.2. National Rice Production

Source: Ministry of Agriculture

Based on the amount of rice production by each province in Indonesia, the five largest rice-producing provinces are West Java, East Java, Central Java, South Sulawesi, and North Sumatra. These five provinces will become the location of survey for rice commodity. 2) Soybean Commodity Table 3.3. National Soybean Production

Source: Ministry of Agriculture

Based on the amount of soybean production in each province in Indonesia, the five largest soybean-producing provinces in Indonesia are East Java, Central Java, West Nusa Tenggara, West Java, and Aceh. These five provinces will become the location of survey for soybean commodity. 3) Corn Commodity Table 3.4. National Corn Production

21

Source: Ministry of Agriculture

Based on the amount of corn production in each province in Indonesia, the five largest corn-producing provinces are East Java, Central Java, Lampung, South Sulawesi, and North Sumatra. These five provinces will become the location of survey for corn commodity. 4) Onion Commodity Table 3.5. National Onion Production

Source: Ministry of Agriculture

Based on the amount of onion production in each province in Indonesia, the five largest onion-producing provinces are Central Java, East Java, West Java, West Nusa Tenggara, and South Sulawesi. These five provinces will become the location of survey for onion commodity. 5) Chili Commodity Table 3.6. National Chili Production

Source: Ministry of Agriculture

Based on the amount of chili production in each province in Indonesia, the five largest chili-producing provinces are West Java, North Sumatra, Central Java, East Java and West Sumatra. These five provinces will become the location of survey for chili commodity. Hot Chili Pepper Commodity Table 3.7. National Hot Chili Pepper Production

22

Source: Ministry of Agriculture

Based on the amount of hot chili pepper production in each province in Indonesia, the five largest hot chili pepper-producing provinces are East Java, West Java, Central Java, North Sumatra and Aceh. These five provinces will become the location of survey for hot chili pepper commodity. 6) Sugar Cane (Sugar) Commodity Table 3.8. National Sugar Cane Production

Source: Ministry of Agriculture

Based on the amount of sugar cane production in each province in Indonesia, the five largest sugar cane-producing provinces are East Java, Lampung, Central Java, West Java and South Sumatra. These five provinces will become the location of survey for sugar cane commodity. 7) Palm Oil Commodity (Crude Palm Oil/CPO) Table 3.9. National Crude Palm Oil (CPO) Production Produksi Kelapa Sawit (Ton)

Propinsi 2010 Nasional Riau Sumatera Utara Sumatera Selatan Kalimantan Tengah Jambi

21.958.120 6.358.703 3.113.006 2.227.963 2.251.077 1.509.560

2011

Rata-rata

23.081.429 5.736.722 4.071.143 2.203.275 2.146.160 1.684.174

% Terhadap Produksi Nasional

22.519.775 6.047.713 3.592.075 2.215.619 2.198.619 1.596.867

100% 27% 16% 10% 10% 7%

Peringkat

1 2 3 4 5

Source: Ministry of Agriculture

Based on the amount of palm oil production in each province in Indonesia, the five largest palm oil-producing provinces are Riau, North Sumatra, South Sumatra, Central Kalimantan and Jambi. These five provinces will become the location of survey for palm oil commodity. 8) Beef Cattle (Beef) Table 3.10. National Beef Production

23

Source: Ministry of Agriculture

Based on the amount of beef production in each province in Indonesia, the largest beefproducing provinces are East Java, West Java, South Sulawesi, West Nusa Tenggara, East Nusa Tenggara, Lampung and Bali. These provinces will become the location of survey for beef commodity. Based on the distribution of agricultural commodity producing regions mentioned above, some provinces that will become the location for survey are: 1. 2. 3. 4. 5. 6.

East Java Central Java West Java West Nusa Tenggara North Sumatera Lampung

7. 8. 9. 10. 11. 12.

South Sulawesi South Sumatera Riau Jambi Bali Central Kalimantan

3.6.2. Regency Level In each province, the survey will focus on city/regency level. The basic determination of the city/regency as a survey location is the city/regency with the most number of commodity productions. 1) Rice Table 3.11. Rice Production in West Java

Source: Ministry of Agriculture

Based on the amount of rice production per regency in West Java, the five largest riceproducing regencies are Indramayu, Karawang, Subang, Garut and Tasikmalaya. These five regencies will become the preferred location of survey for rice production. Table 3.12. Rice Production in East Java

24

Source: Ministry of Agriculture

Based on the amount of rice production per regency in East Java, the five largest riceproducing regencies are Bojonegoro, Jember, Banyuwangi, Lamongan and Ngawi. These five regencies will become the preferred location of survey for rice production. Table 3.13. Rice Production in Central Java

Source: Ministry of Agriculture

Based on the amount of rice production per regency in Central Java, the five largest riceproducing regencies are Cilacap, Grobogan, Demak, Brebes, and Pati. These five regencies will become the preferred location of survey for rice production. Table 3.14. Rice Production in South Sulawesi

Source: Ministry of Agriculture

Based on the amount of rice production per regency in South Sulawesi, the four largest rice-producing regencies are Bone, Wajo, Pinrang, and Gowa. These four regencies will become the preferred location of survey for rice production. Table 3.15. Rice Production in North Sumatra

Source: Ministry of Agriculture

25

Based on the amount of rice production per regency in North Sumatra, the four largest rice-producing regencies are Simalungun, Deli Serdang, Serdang Berdagai, and Langkat. These four regencies will become the preferred location of survey for rice production. 2) Soybean Table 3.16. Soybean Production in East Java

Source: Ministry of Agriculture

Based on the amount of soybean production per regency in East Java, the five largest soybean-producing regencies are Banyuwangi, Lamongan, Sampang, Ponorogo, and Pasuruan. These five regencies will become the preferred location of survey for soybean production. Table 3.17. Soybean Production in Central Java

Source: Ministry of Agriculture

Based on the amount of soybean production per regency in Central Java, the five largest soybean-producing regencies are Grobogan, Wonogiri, Brebes, Blora, and Klaten. These five regencies will become the preferred location of survey for soybean production. Table 3.18. Soybean Production in West Nusa Tenggara

Source: Ministry of Agriculture

Based on the amount of soybean production per regency in West Nusa Tenggara, the four largest soybean-producing regencies are Bima, Lombok Tengah, Dompu, and

26

Sumbawa. These four regencies will become the preferred location of survey for soybean production. Table 3.19. Soybean Production in West Java

Source: Ministry of Agriculture

Based on the amount of soybean production per regency in West Java, the four largest soybean-producing regencies are Garut, Cianjur, Sumedang, and Indramayu. These four regencies will become the preferred location of survey for soybean production. 3) Corn Table 3.20. Corn Production in East Java

Source: Ministry of Agriculture

Based on the amount of corn production per regency in East Java, the five largest cornproducing regencies are Tuban, Sumenep, Jember, Malang, and Probolinggo. These five regencies will become the preferred location of survey for corn production. Table 3.21. Corn Production in Central Java

Source: Ministry of Agriculture

Based on the amount of corn production per regency in Central Java, the five largest corn-producing regencies are Grobogan, Wonogiri, Blora, Kendal, and Boyolali. These five regencies will become the preferred location of survey for corn production. Table 3.22. Corn Production in Lampung

27

Source: Ministry of Agriculture

Based on the amount of corn production per regency in Lampung, the four largest cornproducing regencies are South Lampung, East Lampung, Central Lampung, and North Lampung. These four regencies will become the preferred location of survey for corn production. Table 3.23. Corn Production in South Sulawesi

Source: Ministry of Agriculture

Based on the amount of corn production per regency in South Sulawesi, the four largest corn-producing regencies are Jeneponto, Gowa, Bone, and Bulukumba. These four regencies will become the preferred location of survey for corn production. Table 3.24. Corn Production in North Sumatra

Source: Ministry of Agriculture

Based on the amount of corn production per regency in North Sumatra, the four largest corn-producing regencies are Karo, Simalungun, Dairi, dan Langkat. These four regencies will become the preferred location of survey for corn production. 4) Onion Table 3.25. Onion Production in Central Java

28

Source: Ministry of Agriculture

Based on the amount of onion production per regency in Central Java, the five largest onion-producing regencies are Brebes, Demak, Kendal, Tegal, and Pati. These four regencies will become the preferred location of survey for onion production. Table 3.26. Onion Production in East Java

Source: Ministry of Agriculture

Based on the amount of onion production per regency in East Java, the five largest onion-producing regencies are Probolinggo, Nganjuk, Sampang, Mojokertom and Pamekasan. These four regencies will become the preferred location of survey for onion production. Table 3.27. Onion Production in West Java

Source: Ministry of Agriculture

Based on the amount of onion production per regency in West Java, the five largest onion-producing regencies are Cirebon, Bandung, Majalengka, Garut, and Kuningan. These five regencies will become the preferred location of survey for onion production. Table 3.28. Onion Production in West Nusa Tenggara

29

Source: Ministry of Agriculture

Based on the amount of onion production per regency in west Nusa Tenggara, the three largest onion-producing regencies are Bima, East Lombok, and Sumbawa. These three regencies will become the preferred location of survey for onion production. 5) Chili Table 3.29. Chili Production in West Java

Source: Ministry of Agriculture

Based on the amount of chili production per regency in West Java, the three largest chili-producing regencies are Garut, Cianjur, and Bandung. These three regencies will become the preferred location of survey for chili production. Table 3.30. Chili Production in North Sumatra

Source: Ministry of Agriculture

Based on the amount of chili production per regency in North Sumatra, the three largest chili-producing regencies are Karo, Simalungun, and Deli Serdang. These three regencies will become the preferred location of survey for chili production. Table 3.31. Chili Production in Central Sumatra

30

Source: Ministry of Agriculture

Based on the amount of chili production per regency in Central Java, the three largest chili-producing regencies are Brebes, Magelang, and Boyolali. These three regencies will become the preferred location of survey for chili production. Table 3.32. Chili Production in East Java

Source: Ministry of Agriculture

Based on the amount of chili production per regency in East Java, the five largest chiliproducing regencies are Gresik, Tuban, Banyuwangi, Sampang, dan Malang. These five regencies will become the preferred location of survey for chili production. 6) Sugar Cane (Sugar) Table 3.33. Sugar Cane Production in East Java

Source: Ministry of Agriculture

Based on the amount of sugar cane production per regency in East Java, the five largest sugar cane-producing regencies are Malang, Jombang, Lumajang, Kediri, and Situbondo. These five regencies will become the preferred location of survey for sugar cane production. Table 3.34. Sugar Cane Production in Lampung

31

Source: Ministry of Agriculture

Based on the amount of sugar cane production per regency in East Java, the four largest sugar cane-producing regencies are Way Kanan, Central Lampung, North Lampung, dan Tulang Bawang. These four regencies will become the preferred location of survey for sugar cane production. Table 3.35. Sugar Cane Production in Central Java

Source: Ministry of Agriculture

Based on the amount of sugar cane production per regency in Central Java, the five largest sugar cane-producing regencies are Pati, Sragen, Tegal, Remang, and Pemalang. These four regencies will become the preferred location of survey for sugar cane production. Table 3.36. Sugar Cane Production in West Java

Source: Ministry of Agriculture

Based on the amount of sugar cane production per regency in Central Java, the five largest sugar cane-producing regencies are Cirebon, Majalengka, Kuningan, Garut, and Indramayu. These five regencies will become the preferred location of survey for sugar cane production. 7) Palm Oil (Crude Palm Oil)

32

Table 3.37. Palm Oil Production in Riau Kota/Kabupaten Riau Kab. Kampar Kab. Rokan Hilir Kab. Rokan Hulu Kab. Siak

Produksi Kelapa Sawit (2010,Ton)

% Terhadap Produksi Propinsi

6.358.703 498.849 460.718 441.298 393.287

Peringkat

100% 8% 7% 7% 6%

1 2 3 4

Source: Ministry of Agriculture

Based on the amount of palm oil production per regency in Riau, the four largest palm oil-producing regencies are Kampar, Rokan Hilir, Rokan Hulu, and Siak. These four regencies will become the preferred location of survey for palm oil production. Table 3.38. Palm Oil Production in North Sumatra Kota/Kabupaten Sumatera Utara Kab. Asahan Kab. Labuhan Batu Utara Kab. Langkat Kab. Labuhan Batu Selatan Kab. Simalungun

Produksi Kelapa Sawit (2010,Ton)

% Terhadap Produksi Propinsi

3.113.006 223.102 181.297 125.472 112.027 111.755

Peringkat

100% 7% 6% 4% 4% 4%

1 2 3 4 5

Source: Ministry of Agriculture

Based on the amount of palm oil production per regency in North Sumatra, the five largest palm oil-producing regencies are Asahan, Labuhan Batu Utara, Langkat, Labuhan Batu Selatan, dan Simalungun. These five regencies will become the preferred location of survey for palm oil production. Table 3.39. Palm Oil Production in South Sumatra Kota/Kabupaten Sumatera Selatan Kab. Ogan Komering Ilir Kab. Musi Rawas Kab. Musi Banyu Asin Kab. Muara Enim

Produksi Kelapa Sawit (2010,Ton)

% Terhadap Produksi Propinsi

2.227.963 253.205 186.503 175.403 129.722

Peringkat

100% 11% 8% 8% 6%

1 2 3 4

Source: Ministry of Agriculture

Based on the amount of palm oil production per regency in Riau, the four largest palm oil-producing regencies are Ogan Komering Ilir, Musi Rawas, Musi Banyu Asin, and Muara Enim. These four regencies will become the preferred location of survey for palm oil production. Table 3.40. Palm Oil Production in Central Kalimantan

33

Produksi Kelapa Sawit (2010,Ton)

Kota/Kabupaten Kalimantan Tengah Kab. Lamandau Kab. Kota Waringin Barat Kab. Kota Waringin Timur

% Terhadap Produksi Propinsi

2.251.077 55.062 52.640 37.144

Peringkat

100% 2% 2% 2%

1 2 3

Source: Ministry of Agriculture

Based on the amount of palm oil production per regency in Central Kalimantan, the three largest palm oil-producing regencies are Lamandau, Kota Waringin Barat, dan Kota Waringin Timur. These three regencies will become the preferred location of survey for palm oil production. Table 3.41. Palm Oil Production in Jambi Produksi Kelapa Sawit (2010,Ton)

Kota/Kabupaten Jambi Kab. Muaro Jambi Kab. Tanjung Jabung Barat Kab. Batang Hari Kab. Merangin Kab. Bungo

% Terhadap Produksi Propinsi

1.509.560 300.163 253.258 177.348 157.269 145.288

Peringkat

100% 20% 17% 12% 10% 10%

1 2 3 4 5

Source: Ministry of Agriculture

Based on the amount of palm oil production per regency in Jambi, the five largest palm oil-producing regencies are Muaro Jambi, Tanjung Jabung Barat, Batang Hari, Merangin, and Bungo. These five regencies will become the preferred location of survey for palm oil production. 8) Beef Cattle (Beef) Table 3.42. Beef Cattle Production in Lampung Kabupaten Lampung Tengah Lampung Timur Lampung Selatan Tulang Bawang Barat Way Kanan Total

Lampung Populasi Sapi potong (ekor) 163.019 95.823 50.966 33.048 27.383 496.066

Peringkat 1 2 3 4 5

Source: Region in Figure 2012

Based on the amount of beef cattle population per regency in Jambi, the regencies with large number of beef cattle population are Central Lampung, East Lampung, South 34

Lampung, West Tulang Bawang and Way Kanan. These regencies will become the preferred location of survey for beef cattle population. Table 3.43. Beef Cattle Production in East Java Jawa Timur Kabupaten Kab Sumenep Kab Jember Kab Tuban Kab Kediri Kab Malang Total

Populasi Sapi potong (ekor) 357.038 324.230 312.013 268.139 225.895 4.727.298

Peringkat 1 2 3 4 5

Kabupaten

Sapi Yang dipotong (ekor)

Kab Sidoarjo Kota Surabaya Kota Malang Kab Lumajang Kab Lamongan Total

20.708.898 20.576.337 4.946.239 4.444.501 4.152.773 112.446.815

Peringkat 1 2 3 4 5

Source: Region in Figure 2012

Based on the amount of beef cattle population per regency in East Java, the regencies with large number of beef cattle population are Sumenep, Jember, Tuban, Kediri, Malang, Sidoarjo, Surabaya, Malang (City), Lumajang and Lamongan. These regencies will become the preferred location of survey for beef cattle population. Table 3.44. Beef Cattle Production in Bali Bali Kabupaten Buleleng Karangasem Bangli Tabanan Jembrana Total

Populasi Sapi potong (ekor) 136.191 135.507 94.063 66.812 54.777 637.461

Peringkat 1 2 3 4 5

Kabupaten Denpasar Buleleng Badung Gianyar Karangasem Total

Sapi Yang dipotong (ekor) 13.347 9.951 9.148 4.707 3.193 47.648

Peringkat 1 2 3 4 5

Source: Region in Figure 2012

Based on the amount of beef cattle population per regency in East Bali, the regencies with large number of beef cattle population are Buleleng, Karang Asem, Bangli, Tabanan, Jembrana, Denpasar, Badung and Gianyar. These regencies will become the preferred location of survey for beef cattle population. Table 3.45. Beef Cattle Production in West Nusa Tenggara NTB Kabupaten Sumbawa Lombok Tengah Bima Lombok Timur Dompu Total

Populasi Sapi potong (ekor) 162.924 119.029 117.842 99.092 85.612 784.019

Peringkat 1 2 3 4 5

Kabupaten Kota Mataram Lombok Timur Lombok Barat Lombok Tengah Sumbawa Total

Sapi Yang dipotong (ekor) 12.240 8.394 7.560 5.760 4.320 50.521

Peringkat 1 2 3 4 5

Source: Region in Figure 2012

Based on the amount of beef cattle population per regency in East Bali, the regencies with large number of beef cattle population are Sumbawa, Central Lombok, Bima, East Lombok, Dompu, Mataram (City) dan West Lombok. These regencies will become the preferred location of survey for beef cattle population.

35

From the tables above, we can listed the city/regency that will became an objectives of commodity survey as follow: Table 3.46. Location of Supply Survey According to Its Commodity Category Jawa Timur

Jawa Tengah

Jawa Barat

Padi Kab. Bojonegoro Kab. Jember Kab. Banyuwangi Kab. Lamongan Kab. Ngawi Kab. Cilacap Kab. Grobogan Kab. Demak Kab. Brebes Kab. Pati Kab. Indramayu Kab. Karawang Kab. Subang Kab. Garut Kab. Tasikmalaya

Jagung Kab. Tuban Kab. Sumenep Kab. Jember Kab. Malang Kab. Probolinggo Kab. Grobogan Kab. Wonogiri Kab. Blora Kab. Kendal Kab. Boyolali

Nusa Tenggara Barat

Sumatera Utara

CPO

Sumbawa Lombok Tengah Bima Lombok Timur Dompu Kab. Simalungun Kab. Deli Serdang Kab. Serdang Bedagai Kab. Langkat

Lampung

Sulawesi Selatan

Sapi Kab. Sumenep Kab. Jember Kab. Tuban Kab. Kediri Kab. Malang

Kab. Karo Kab. Simalungun Kab. Dairi Kab. Langkat Kab. Lampung Selatan Kab. Lampung Timur Kab. Lampung Tengah Kab. Lampung Utara

Kab. Bone Kab. Wajo Kab. Pinrang Kab. Gowa

Kab. Asahan Kab. Labuhan Batu Utara Kab. Langkat Kab. Labuhan Batu Selatan Kab. Simalungun Lampung Tengah Lampung timur Lampung Selatan Tulang Bawang barat Way kanan

Kab. Jeneponto Kab. Gowa Kab. Bone Kab. Bulukumba

Sumatera Selatan

Kab. Ogan Komering Ilir Kab. Musi Rawas Kab. Musi Banyu Asin Kab. Muara Enim Kab. Kampar Kab. Rokan Hilir Kab. Rokan Hulu Kab. Siak Kab. Muaro Jambi Kab. Tanjung Jabung Barat Kab. Batang Hari Kab. Merangin Kab. Bungo

Riau

Jambi

Bali

Buleleng Karangasem Bangli Tabanan Jembrana

Kalimantan Tengah

Kab. Lamandau Kab. Kota Waringin Barat Kab. Kota Waringin Timur

36

Jawa Timur

Jawa Tengah

Jawa Barat

Nusa Tenggara Barat

Kedelai Kab. Banyuwangi Kab. Lamongan Kab. Sampang Kab. Ponorogo Kab. Pasuruan Kab. Grobogan Kab. Wonogiri Kab. Brebes Kab. Blora Kab. Klaten Kab. Garut Kab. Cianjur Kab. Sumedang Kab. Indramayu

Bawang Merah Kab. Probolinggo Kab. Nganjuk Kab. Sampang Kab. Mojokerto

Kab. Bima Kab. Lombok Tengah Kab. Dompu Kab. Sumbawa

Kab. Bima Kab. Lombok Timur Kab. Sumbawa

Kab. Brebes Kab. Demak Kab. Kendal Kab. Tegal Kab. Pati Kab. Cirebon Kab. Bandung Kab. Majalengka Kab. Garut

Tebu Kab. Malang Kab. Jombang Kab. Lumajang Kab. Kediri Kab. Situbondo Kab. Pati Kab. Sragen Kab. Tegal Kab. Rembang Kab. Pemalang Kab. Cirebon Kab. Majalengka Kab. Kuningan

Sumatera Utara

Cabe Kab. Gresik Kab. Tuban Kab. Banyuwangi Kab. Sampang Kab. Malang Kab. Brebes Kab. Magelang Kab. Boyolali

Kab. Cianjur Kab. Bandung Kab. Garut

Kab. Karo Kab. Deli Serdang Kab. Simalungun

Lampung

Kab. Way Kanan Kab. Lampung Tengah Kab. Lampung Utara Kab. Tulang Bawang

Sulawesi Selatan

Sumatera Selatan

Riau

Jambi

Bali

Kalimantan Tengah

9) Location of Regional Research for Consumers with Middle and Upper Economic Class (Demand Side)

37

Consumer survey conducted in 27 regencies in Indonesia, assuming that all of these regencies have the most population of middle and upper class people in Indonesia. This population assumed to spread in eight regions in Indonesia, such as Jakarta and the surrounding area, Surabaya and Malang, Bandung and the surrounding area, Yogyakarta, Semarang and the surrounding area, Makasar, Medan, and Denpasar. The composition of the population of the selected regencies and cities are as follow: Table 3.47. Composition of Population in 8 Demand Site Area Location

3.7.

Operationalization of The Concept

3.7.1. Supply Side

38

Table 3.48. Operationalization of Supply Side Concept Variables

Concept Questions

Proportion of Agricultural Land Use

Climate (Climatic Effects To The Planting Pattern)

Productivity

Supply Chain Management

Land Ownership Land Management Status Land Ownership Status Land Use Profile Plan for Land Use Precipitation Profile Temperature Profile Humidity Profile Irrigation System Profile Natural Disaster Profile Pests Profile Disease and Virus Profile Variety of Seeds and Origin of Supply Seed Supply Purchase Profile Variety of Seed Used Profile Fertilizer Type and Origin of Supply Fertilizer Supply Purchase Profile Variety of Fertilizer Used Profile Type of Pesticides and Origin of Supply Pesticide Supply Purchase Profile Variety of Pesticide Used Profile Harvest and Harvest System Profile Agricultural Costs Profile The flow of Supply Trade System per entrepreneur category Commodity price formation profile Commodities sales mode of transportation profile

3.7.2. Demand Side Table 3.49. Operationalization of Demand Side Concept Variables

Concept Questions The profile of commodity products stature

Product Knowledge and Used

The profile of commodity products used Consideration of consumer preferences to the commodity products Patterns of food consumption profile Preferences of substitute food profile

Product Preference

Profile characteristic of the completeness of commodity products quality (local and imported) Products Profile Perception (4P) per commodity category

Stimuli for Consumer Preference

The profile of factors that affect the consumption of commodity products

39

Variables

Concept Questions Profile perception according to its economic factors (increased purchasing power) Profile perception according to its policy factors (commodity import, etc.) Profile perception according to other factors (culture, health, etc.)

40

CHAPTER 4. THE DEFINITION, CHARACTERISTICS, AND GENERAL CONDITIONS OF FOOD SECURITY 4.1.

Food Security Definition

Food security definition and paradigm continue to develop since the Conference of Food and Agriculture in 1943. This conference launched the concept of “secure, adequate, and suitable supply of food for everyone”. There are varieties of food security definition. However, it generally refers to the definition from World Bank (1986) and from Maxwell and Frankenberger (1992), secure access at all times to sufficient food for a healthy life. From a literature study conducted by International Food Policy Research Institute or IFPRI (1999) estimated that there are 200 definitions and 450 indicators of food security (Weingartner, 2000). Below are some definitions of food security that frequently referred: 1) Food Act No. 7, 1996: The fulfillments of household food needs reflected in the availability of enough food, quantity and quality, secure, adequate, and affordable. 2) USAID (1992): the condition when all people at all-time have both physical and economical access to obtain their needs of consumption for a healthy and productive life. 3) FAO (1997) : A situation where all households have both physical and economical access to obtain food for their family, where the households are not at risk to lose both access. 4) FIVIMS (2005): A condition when all people at all times have a physical, social, and economical access to sufficient, secure, and nutritious food to meet their consumption needs and fit with their food preferences for an active and healthy life. 5) Mercy Corps (2007) : A state when all people at all times have an access to physical, social, and economical access to food sufficiency, secure, and nutritious food for their nutritional needs and fit with their food preferences for a productive and healthy life. Based on these definitions, it can be conclude that food security has five elements to fulfill: 1. 2. 3.

Oriented for households and individuals Food availability and accessible at all time Emphasizing to households and individuals food access physically, economically and socially

41

4. 5.

Oriented to fulfill nutritional needs Intended for a healthy and productive life

According to Indonesian Food Act No. 7, 1996, the definition of food security is the fulfillments of household food needs reflected in: (1) the availability of food is sufficient both in quantity and quality, (2) secure, (3) adequate, and (4) affordable. A few definitions need to be understood in order to achieve food security, such as: a.

Fulfill the food supply, this means food availability defined in its broad sense. It include food that come from plants, animals, and fishes to meet the demand for carbohydrates, proteins, fats, vitamins, and minerals that beneficial for human health.

b.

Fulfill the food security condition means it is free from biological, chemical, and other objects that may cause a disturbance, harmful, and danger for human health. It must also conform to religious norms.

c.

Fulfill an adequate food condition means food must be available at all times and evenly distributed throughout the country.

d.

Fulfill an affordable food condition means food must easily obtained by households with an affordable price.

Food security has three main sub systems; there are availability, accessibility, and food utilization, while the nutritional status is an outcome of food security. These three main sub systems must be fulfilled. If one of these sub systems not fulfilled, a country will not have a good food security. Although the food availability at national and regional level is in sufficient level, the access of individuals to meet their food needs is still uneven. Therefore, it is still said that this country have a fragile food security.

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Figure 4.1. Food Security Sub Systems Source: USAID (1999), dan Weingartner (2004)

The sub systems of food availability is the availability of sufficient quantities of nutritional food in a secure number for all people in a country which come from its own production, imports, food reserves, and food aid. The food supply must be able to provide the people which defined as the number of calories needed for an active and healthy life.

Figure 4.2. Food Availability Sub Systems Source: Patrick Webb and Beatrice Rogers (2003)

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Food Access is the households and individuals ability with their resources to obtain sufficient food for their nutritional needs that came from their own food production, or through purchasing food aid. Households and individuals access consists of economical access, physical access, and social access. Economical access depends on the households and individuals income, employment, and prices. Physical access includes the level of households and individuals isolation area (infrastructure distribution), while social access concerns about food preferences.

Figure 4.3. Food Access Sub Systems Source: Patrick Webb and Beatrice Rogers (2003)

Food utilization is the use of food for a healthy life. This includes the needs of the energy and nutrient, water and environmental health. The effectiveness of food utilization depends on the households and individual’s knowledge, sanitation and water supply, health facilities and services, as well as nutritional counseling and how to treat an infant (Riely et.al, 1999). Stability divided into chronic food insecurity and transitory food insecurity. Chronic food insecurity in the inability to obtain food supply at all times, while transitory food insecurity is a temporary condition of food insecurity that occurs because of drought, floods, disasters, and social conflict (Maxwell and Frankenberger, 1992). Nutritional status is and outcome in food security and it is a reflection of an individual’s quality of life. Nutritional status generally measured by life expectancy, infant nutrition level, and infant mortality. Thereby, a comprehensive food security system can summarized into four sub systems, such as: (i) the availability of food in sufficient quantity and type of food for the entire 44

population, (ii) an adequate food distribution, (iii) food consumption that will fulfill an individual adequate nutritional balance, which will affect (iv) nutritional status of the community.

Figure 4.4. Food Utilization Sub Systems Source: Patrick Webb and Beatrice Rogers (2003)

4.2.

The General Condition of Staple Food

Indonesia is a country that rich with natural resources with a very fertile soil. Because of this, Indonesia has an important role as food producers in the world. Indonesia is the world’s third largest rice producer after China and India. Indonesia’s contribution to global rice production reached 8,5% or 51 million tons. China and India as the major rice producers contribute 54%. Vietnam and Thailand both traditionally state exporter of rice contribute 5,4% and 3,9% only. In the context of general agriculture, Indonesia has tremendous potential. Indonesia’s palm oil, rubber, and cocoa production moved to dominate the world market. However, there ia a little problem in the context of food production. Although Indonesia is in the

45

third position as a food-producing country in the world, almost every year Indonesia faced the same problem with food production, especially rice. Indonesian rice production was high, but it cannot meet the population needs. Therefore, Indonesia still has to import rice from food-producing country, such as Thailand. One of the main causes of the problem above is Indonesia’s large number of population. Statistics show that the amount of population is in the range between 230-237 million people. In addition, rice is the major staple food for Indonesian population. Indonesia is the world’s largest rice consumer in the world, reaching 154 kg per person every year. It is much more that rice consumption in China that only reached 90 kg of rice per person every year, India 74 kg of rice per person every year, Thailand 100 kg of rice per person every year, and Philippine 100 kg of rice per person every year. Such condition leads Indonesia to rely their rice production not only from domestic production, but also imported rice from other countries. Besides rice, Indonesia still imports other food commodities such as 45% of domestic soybeans, 50% of salt commodities, and 70% of domestic milk fulfilled through imports. Other factor that causes Indonesia to import food is climate. Nowadays, an unfavorable weather would affect agricultural food sector’s success. The shifting between rainy season and dry season caused numbers of troubles to the farmers, like setting the right time to start planting, determine the use of fertilizers and seeds, and cropping systems that will be used. An uncertainty in planting schedule can lead to an uncertainty in supplying seeds and fertilizers that initially scheduled. Such condition will cause scarcity due to delay in the supply of seeds and fertilizers. The result of this condition is the decrease in food production. An extreme climate anomaly can also lead to a decrease in food production of a certain crops, because the environment condition does not support the plants growth. For example, when the climate anomaly El Nino cause a decrease in sugar cane production the country must import sugar from other countries. Another cause of food import is the size of agricultural land increasingly narrowed. The trend of conversing agricultural land into a non-agricultural land is increasing. From 1981 to 1999, there was a conversion of rice field in Java, reaching 1 million ha in Java and 0.62 million ha outside Java. At the same period there are expansion of rice field area, reaching 0.52 million ha in Java and 2.7 million ha outside Java. However, an uncontrolled expansion of land is unable to lower Indonesia’s dependency towards imported rice. Indonesia’s dependency on imported feedstock is also caused by the cost of transportation in Indonesia, which reached 34 cents ($) per kilometer. Indonesia’s transportation costs is more expensive compared to other countries such as Thailand, China, and Vietnam which only 22 cents ($) per kilometer. As long as the certainty of

46

food supply is not continuous and the transportation costs remain high, the food production industry in Indonesia will depend on imported feedstock. This report will discuss the general conditions of one staple food in Indonesia, which is soybean. The issue of soybean crisis became important because soybean is an essential source of vegetables protein. That is why soybean is one of the main food commodities in Indonesia. Soybean is also the main ingredient for tofu and tempe, which is one of the favored food of Indonesian people. Soybean can also use to make soymilk, juice, and others. 4.2.1. General Condition of Soybean Trade System In the food processing industry in Indonesia, soybeans are widely use as the ingredients for making tofu, tempe, and soy sauce. There are numbers of small scale – medium scale industry in Indonesia. Because of this, the level of soybean consumption reached more than 2.24 to 2.25 million tons per year. According to National Social Survey (NSS) 2011, the consumption of tofu and tempe is only 3,8% of the total household expenditures. However, if it’s combined with soy sauce, oncom, tauco, and soybeans consumption, the percentage is increase to 6,8% of the total household expenditures in Indonesia. Viewed from the national production capacity in 2000, the area of soybean planting covers 967.002 ha, but the farmers can only produce 1.19 million tons of soybeans. Even in 2012, the Statistics Indonesia (SI) said that the national soybean productions have decreased to 843.153 tons. Along with this trend, the harvested area also decreased into 567.624 ha. Such condition resulted to a decreased in productivity rate of nearly 1.5 tons per ha. Table 4.1. Land Area and National Soybean Production Year Harvested Area(Ha) Productivity(Ku/Ha) Production(Ton)

2008 590,956 13.13 775,710

2009 2010 2011 722,791 660,823 622,254 13.48 13.73 13.68 974,512 907,031 851,286 Notes: *) Temporary data Source: SI, 2013

2012 567,624 14.85 843,153

2013* 554,132 14.57 807,568

From the description and table above, each year Indonesia will through deficit condition, and most of the domestic demand will reach more than 65% and it will need imported goods to meet the condition. The surge in import of soybean caused by an increase of consumption for small-scale industry (tofu and tempe), which become a popular food type as a substitute for animal products nowadays. As a country, Indonesia has the obligation to create prosperity for its people. One of the obligations is to fulfill the food supply for the people, and as we know, food is a basic human need. Act no. 7/1996 says that food, as basic human needs whose fulfillment is a fundamental right for every people of Indonesia must always sufficient at all time, secure, food quality, nutritious, and varied at an affordable price. In the context of 47

soybeans, the current implementation of the act done by imports. One result that arises from this condition is an increase in price to the extent that it will not be affordable for the public. Because of the surge in soybean price, soy-based food became rare. This is not the first time Indonesia through a soybean crisis. Earlier in January 2008, February 2011, and July 2012 there was an increase in price due to low supply of soybean. Such condition raises concern to the public, especially for the soybean (tofu and tempe) processors. To overcome this problem, the Government chose to import soybeans because the number of local soybean production is unable to meet the national soybean needs. Unfortunately, a pattern of dependency showed and boosted by internal factors, like the governments habit to fulfill the national soybean needs via imports. The importations of soybeans spend at least US$ 300 million per year. During January – June 2013, Indonesia imports 826.33 thousand tons of soybeans with a value of US$ 509.4 million of the total import, and by the end of the year it will reached 1.1 million tons of soybeans. As an addition to this situation, external factors will emerged from the impact of agricultural liberalization. This means the Government cannot restrict or inhibit food commodities trade. As the result, there will be a strict competition between local soybean and imported soybean. Unfortunately, because of bad management in an effort to increase production and competitiveness of local soybean, the quality and quantity of local soybean do not have the ability to excel this competition. 4.2.2. The General Condition of Business Operator Generally, business operators in soybean trade system classified into; farmers, traders (urban to rural level), middleman traders, cooperatives, Bulog (formerly Dolog), distributors, importers, KOPTI, and retailers. Linkages between business operator described in the following chart (Winarno.et al, 1976):

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Figure 4.5. Business Operator in Soybean Trade System Source: Winarno et al, 1976 dalam CGPRT No 17.

About 65% of the domestic needs mostly filled by imported goods. Such condition make the small-scale business does not have sufficient bargaining power for efficient market in soybean trade system. Moreover, the fulfillment of soybean only can be through by imports. Only 14 importers have the import permits. Related to the ability of domestic soybean production, the government needs to increase the efficiency of local soybean production to meet the public needs and in an attempt to get out of food crisis. To improve soybean production, the business operator (farmers) needs to be motivated. So far, farmers prefer to choose other commodities other than soybean because local soybean competitiveness is low and not have much benefit. The farmers need their morale to be motivated in order to improve their work performance. Indonesian farmers have zero knowledge to enter trade liberalization. Such condition will make fertilizers price to increase and imported food will continue to depress local food price (Deliarnov, 2006). Therefore, government needs to provide an incentive for the farmers so they can continue to produce soybeans. An effort to develop agricultural sector should be useful, profitable, and aligned for farmers. Farmers are rational creatures who could make the best decision from various options. Therefore, farmers have the choice to change their commodities, from soybeans to other profitable crops as a rational choice. Sadly, farmer’s welfare received poor attention from the Government even they are the important factor in order to achieve food security.

49

The Government needs to optimized technology use to increase production. Agricultural technology can change the mode of production and distribution, and find an innovation to find the new way that could be more efficient in producing soybeans (Budhi, 2010). However, there is a risk behind this change because farmers have to change their habits. 4.2.3. The General Condition of Price Formation Soybean price continue to fluctuate with high variation until now. Among other basic commodities, soybean price increase sharply after chili commodities, reacing 12,68% compared to the price in early 2013.

10,600.00 10,400.00 10,200.00 10,000.00 9,800.00 9,600.00 9,400.00 9,200.00 Jan

Feb Mar Apr Mei Jun

Jul

Agu Sep Okt

Figure 4.6. Soybean Price in 2013 Source: Ministry of Trade, 2013

If a farmer enter trade liberalization without any knowledge of it, the fertilizer prices will increase anf imported food will continue to depress local food price (Deliarnov, 2006). Moreover, the distribution of local soybean is still on bad condition and it made local processors have a difficulty in getting local soybean compared to imported soybeans. The longer the soybean distribution process, more expensive the price formed. Due to difficulty in obtaining local soybeans, the price is more expensive than imported soybeans. Soybean processors choose to produce their goods using imported soybeans. As a result, almost 90% of tofu and tempe productions obtained from import (Tempo, 2011). As a result, there is high demand for imported soybeans. This will make the local soybean price decrease sharply so farmers began to switch to plant other crops. Because farmers began to plant other crops beside soybeans, it will indirectly affect the decline in local soybean production. Farmers prefer to plant corn and rice because it considered being more profitable.

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There is another reason farmers choose to leave soybean production. Soybean market tends to form an oligopoly, and it has bad effect on supply and price stability of imported soybeans (Nuryanti, 2007). Oligopoly is markets form in which there are only small number of sellers and usually dominated by a few suppliers only. Because of this, the price set by soybean cartel. Farmers ‘forced’ to sell soybeans at low price because of limited area to sell soybeans. While the industry forced to buy local and imported soybeans with certain price set by the minority business operator. So far, the only things that Government do is price control However, this is only a temporary solution. When the soybean crisis happened, the government lowers the import tariff to 0% in order to make the incoming soybean prices are not too high. However, everytime there is a soybean crisis, soybean and soybean products (tofu and tempe) will remain scarce and the price will increase sharply. 4.2.4. The General Conditions of Food Preference and Consumption Patterns Soybean contributed in providing nutritious food for human, which is why it called Gold from the Soil. Soybean contains a high, well balance, and complete amino acid protein. Every 100 gr of dried soybeans contains 34,90 gr of protein, 331,00 calories, 18.10 gr of fat, and other various vitamins and mineral. Each 1 gr soybeans amino acids contains 340 mg of isoleucine, 480 mg of leucine, 400 mg of lysine, 310 mg phenylalanine, 200 mg of tyrosine, 80 mg of methionine, 110 mg of threonine, 90 mg of tryptophane, and 330 mg of valine. Soybeans consumption in Indonesia will continue to increase every year because of increasing population, increasing income per capita, and public awareness of food nutrition. Compared to animal protein, soybean protein is much cheaper and affordable for most people. Referring to Food Pattern (PPH) in 2000, the public consumption on nuts was raised to 35,88 gr/capita per day. This number is larger compared to the data in 1987, where public nuts consumption only 13,00%. Soybeans are a low-cholesterol source of protein that could be an alternative option to overcome cholesterol problems. Soybeans contain a phenolic compounds and an unsaturated fatty acid that could prevent certain diseases such as coronary heart problem, heart disease, and cancer. Phenolic compounds and unsaturated fatty acid are useful to block nitrosamine compounds, a carcinogenic compound. Soybeans also contain lecithin, a compound that is useful to get rid fat deposit in the body.

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CHAPTER 5. STUDY RESULT

5.1.

Strategic Capability of Soybean Production

5.1.1. Shifting Issues Season and Rainfall Fluctuations of the Strategic Capability of Soybean Production According to McSweeney (2010) in the UNDP report CountryProfile, climate change, in general, the climate in Indonesia can be categorized in the equatorial climate is hot and humid throughout the year. Changing seasons affected by the Inter-Tropical Convergence Zone (ITCZ). Normally, the rainy season begins November to March has its peak during January and February. The rainfall in low-lying areas on average 1,800 to 3,200 mm per year, this figure will rise to mountainous areas up to an average of 6000 mm. Average humidity in Indonesia is between 70 to 90 percent. Indonesia is also affected by climate change from year-ketahuun associated with both El Nino Sothern Oscillation (ENSO) or the Indian Ocean Dipole (IOD). Enino will make a warmer climate conditions and dry, while the La Nina will bring climatic conditions became wetter and humid so that rainfall will be higher and the average of the extreme and cause flooding.

Figure 5.1.a. Three Regions Climate Indonesia, Area A (thick curve) - Monsoon Region, Region B (dashed curve) - Semi-Monsoon Region and Area C (dashed curve separated) - Regional Antimonsun Source: Aldrian, 2003

According to the division made by the climate area Aldrian and Susanto (2003), Indonesia can be divided into three climatic regions (Figure 5.1.a). The area is also known as a monsoon region, the area we know as the B semi-monsoon and area C is an anti monsoon region. Similar characteristics of the three regions is found by Wyrtki

52

(1956) and Hamada et al. (2002), although they did not describe clearly their area. Area A as shown in Figure 5.1.b is a region with a maximum rainfall in December / January / February (DJF) and minimum in July / August / September (JAS). This illustrates the two monsoon regimes: wet northeast monsoon from November to March (NDJFM) and dry southeast monsoon from May to September (MJJAS). With a strong monsoonal cycle and its location in the south, then this deerah we might call a monsoon area towards the south (southern monsoon region).

Figure 5.1.b. Annual Rainfall Cycle of Each Region Source: Aldrian, 2003

The annual cycle of area B has two peaks in October / November / December (OND) and also in March / April / May (MAM). The peaks in the OND and MAM, respectively representing the movement in the direction of the north and south of the ITCZ. This area then we might call a semi monsoon region (northwest semi-monsoonal). From Figure 5.1.b Aldrian also explains the differences are quite striking area C where the region has a peak in May / June / July and Aldrian declare this area as an area antimonsun Maluku (Molucca anti-monsoonal region). Yet according to the World Bank, average average rainfall and temperature in Indonesia secaa successively lower in May to October and June to September for the average air temperature. This is shown in Figure 5.1.c.

Figure 5.1.c. Average Temperature (° C) and Rainfall (mm / month) in Indonesia 1901-2009 53

Source: World Bank, 2013

In general, the effects of climate change can be seen from the plants subjected to pressure / stress . Because climate change is more susceptible to pest attack . Other impacts of insect pests and microbes are better off with the more thermophilic length summer / drought and rising temperatures . On the other hand , when the organism is not a pest , a pest that moment may be able to expand into other regions . Climate change also disrupts the balance between the populations of insect pests , natural enemies and host plant . " The most important impact of climate change on insect pest populations is a disturbance of the synchronization between the host plant and the development of insect pests , especially in the rainy season / cold . An increase in temperature will also be supporting the development of insect pests and pest live insects in the winter / rainy . While increased temperatures can lead to insect pests that originally lived in the southern hemisphere to the invasion of the northern hemisphere . Increased levels of CO2 in the air can cause degradation of plant-eating insects feed , as a result of increased levels of nitrogen in the leaves . While the summer / dry hotter ( temperature rise ) will benefit thermophilic pathogens . In soybean plants , these plants are very sensitive to changes in day length as including short- day plant . That is , do not soybean plants will flower when the day length exceeds a critical limit , ie 15 hours per day . Therefore , if the high-yielding varieties of subtropical areas with panjanghari 14-16 hours planted in tropical regions with an average length of 12 -hour days so varieties will decrease production because its key short term , ie from age 50 -60 days be 35-40 days after planting . Effect of temperature on soybean plants affect the plant in flowering and pod formation . The optimum temperature for soybeans is 20 ° C - 30 ° C , when the phase of flowering is 24 ° C - 25 ° C. Soybean pods are formed optimally at a temperature of 26.6 ° C - 32 ° C , at high temperatures can disrupt soil moisture and evapotranspiration due to increased rate of metabolic processes that occur will be higher ( Lamina 1989 ) . Air humidity is optimal for the growth of soybean plants ranged from 75 % - 90 % ( Adisarwanto 2008) . Soybean plants are actually quite tolerant to drought stress because it can survive and produce when drought conditions a maximum of 50 % of field capacity or soil conditions are optimal ( Adisarwanto 2005) . Optimal temperature on germination phase is 30 ° C so it can germinate within 4 days after planting (DAP ) . If the soil temperature is low ( less than 15 ° C ), the emergence of the sprouts will Setar 2 weeks old . If the high soil temperature is above 30 ° C so many seeds that die because of high respiration in seeds . Optimum soil temperature for germination of soybean crop is 30 ° C. Water demand for soybean crop also affect the growth and development of plants in order to grow optimally. Soybean crop water needs during the growth period of soybean is 350-450 mm . The need for radiation higher than the soybean crop needs as radiation for rice and cassava . Minimum intensity of solar radiation on soybean plants is 216 to 576 cal . ( Kassam 1978 , Sakamoto and Shaw , 1967, Rose 1969) .

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Climatic conditions in a region influenced the development of eggs , larvae , and imago armyworm . The dry season is the season where armyworms can progress rapidly than in the rainy season . This is due to the rainy season , armyworm eggs will carry the rain water will decay and so it can not hatch . While in the dry season , the temperature enough support for the development of eggs into larvae and humidity is generally lower in the winter , the dry . If the temperature and humidity do not support , then the larvae will not develop . Climatic conditions for the growth of the soybean crop is quite high at 75 % -90 % , but this plant is able to survive until the humidity reaches 38 % - 45 % . When plants can still survive in low humidity ( dry season ) , then began to attack the armyworm . This is because the very good armyworm pests thrive when dry moisture conditions . Armyworm pest attack by damaging the leaves that interfere with the process of photosynthesis to pod formation . Soybean pod filling requires great energy . To obtain a large radiation , planting should be done in the dry season or drought order needs can be fulfilled radiation ( radiation required to soybean plants are 576 cal 216 ) . Radiation in the dry season ranges at 325-454 cal . . If the soybean crop is grown in the dry season is likely to be infested large armyworm compared to planting in the rainy season , due to armyworm pests can thrive in drought conditions . However , if the soybean crop is grown during the rainy season , the need for radiation for photosynthesis would not be enough for the charging pod but armyworms will carry rainwater . One of the cases against the armyworm pest of soybean crops is occurring in Gresik , East Java, in August of 2010 ( Reuters August 30, 2010 ) . The pest attacks occur in the dry season when rainfall for the month was 12.6 mm ( MoF 2002 ) . The pest causes the yellowish color on the leaves of soybean plants . Armyworm pest control can be divided into four kinds , namely , technical culture , physical and mechanical , biological , and chemical . Culture is technically done with crop rotation with non-host plant species which , planting the seeds of plants that are tolerant or resistant to attack armyworms , and simultaneously planting area in units / centers . While mechanically , caterpillars spread can be prevented with sanitation / hygiene litter and weeds from the garden , especially around the plant and collect groups armyworm eggs and onions since the early attack rate / light by inserting a plastic bag to be destroyed . Biologically , usually utilizing the parasitoid natural enemies , such as Pollites sp . , Tritaxys braueri flies , and spiders Telenomus miscellany Cuposera sp , predators such as dragonflies , and utilizing a selective biopesticide plants . If other means of controlling the population tidakdapat pressing worm attack , if the population group of eggs ( dry season ) has reached 1 kelompok/10 clumps or 5 percent of infected leaves / clump or ( rainy season ) has reached 3 kelompok/10 clumps or 10 percent of infected leaf / clumps selective and effective insecticide application as prescribed / recommended concentration . Provision of insecticide on soybean plants must be given before memasiki caterpillar instars 4 and 5 because if it is then entered instar armyworm pest would be quite 55

difficult to eradicate with insecticide ( Arifin 1986) . So , armyworm pest control must be fast , ie the one to the third instar because the instar , pest armyworms are still susceptible to insecticides ( Earnings and Soekarna 1986 ) . Armyworm pest is one of the pests of soybean . Armyworm pests thrive in the moisture dry , while the soybean crop can be grown at high humidity but still can survive on moisture redah . Optimum temperature for germination of soybean is high at 30 ° C and in the formation of pods required temperature of 26.6 ° C to 32 ° C , the temperature of the pests began to develop (low humidity ) . If planting is done during the rainy season , water needs are met , pest armyworms can be leached or washed . But during the rainy season , the plant does not need radiation to be fulfilled . If planted in the dry season , pests will thrive despite radiation plant needs are met , but the need for water plants are not fulfilled. 5.1.2. Soybean Crop Productivity

Millions

Nationally, according to the latest data from the Central Bureau of Statistics, the national soybean productivity from 1993 have continued to rise by an average of 1.17% per year to reach. It was shown in Figure 5.2.a. the following: 2

16.00

2

15.00

1

14.00

1

13.00

1

12.00

1

11.00

0

10.00 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

1

Luas Panen(Ha)

Produksi(Ton)

Produktivitas(Ku/Ha)-Sumbu Kanan

Figure 5.2.a. National Soybean Productivity Description *: is a temporary data Source: BPS (Accessed December 31, 2013)

Productivity in the picture above is calculated from the comparison between Production and Harvested Area. It also seems that the harvested area and national soybean production year after year continues to decline each decreased by an average of 2.68% per annum and 3.8% per year. This reflects the increase in productivity is mainly due to a decrease in harvested area larger than the production. Where a decline in harvested area this could be due to the reluctance of farmers to use the land for soybean planted as intercrops. While the level of smaller angles, from the side of the farmers, the soybean productivity

56

will depend on the process of beginning to the end of the cultivation of soy itself. The process generally tergampar in Figure 5.2.b. the following:

Konversi Lahan

Keuntungan

Biaya

Bibit



Pendapatan

Biaya Tetap

Perubahan Ekspektasi Awal Panen Harga KB Ekspektasoi Panen Awal

Musim Tanam Masa Panen

Harga BK

Curah Hujan

Potensi Panen Perubahan Ekspektasi Akhir Panen Rarta-rata panen

Harga KK

Kedela Bertangkai Penjualan Penuaian Kualitas Bibit Pengeringan % Penyusutan Pengulitan Biji Kedelai

Penanggulangan Hama dan Gulma

Pemupukan

Penjualan BK

Panen Gap

Kulit Kedelai

Penjualan KK

Figure 5.2.b. National Soybean Productivity Sources: Primary and Secondary Data Processed

Production systems over the harvest starts from the formation of expectations by farmers who have the intention of planting soybeans as a crop on an area between one hectare ( 1 ha ) . The expectation is based on the use of seed examples Gepak Yellow , which weighs about 8.25 grains per 100 grams . 1 If the seedlings were planted at a spacing of 25 x 25 cm, then there are 160,000 per hectare planting hole . 2 When the hole is filled 2 1 grain , it takes 320,000 soybean grain So ( 8.25 g / 100 grain ) x 320,000 points = 26,400 grams = 26.4 kg . But , if one hole included 3 seed grain is needed as much as 8.25 grams / 100 grain x 480,000 points = 39,600 grams = 39.6 kg . 3 While the price of seeds is Rp 35,000 / kg. By using sebanya 39.6 Kg of seeds that have petatni expectations will get a harvest with weights between 2.22 tons to 2.86 tons per hectare during the growing season 73 days . Then after planting and planting preparation process is complete , farmers will undertake maintenance including watering and controlling weeds and soybean crops against pests . There will also be fertilizing nutrients to ensure adequate so dibutukan by tanamnan pod formation process goes well . Dalah certain conditions during the cultivation process prior to harvest things can happen that are not desirable as natural

57

disasters , changes in rainfall or pests that damage crops . Those things are all in the end will make the expectations of the crop farmers will change until harvest time were really arrive so they can know their crops . Harvest period for soybeans is 75 to 90 days . Once the farmer has several options to make the sale in the form of soy that stemmed ( with a water content of 17% ) or soya beans ( with a water content of ( 14 % ) . Soybean To obtain the ore has to go through the drying process so that the weight of soybeans will experience shrinkage of + 20 % . Besides extracting ore soybeans , farmers will also get skin soybean pods that have economic value as well , so that could add to the income of farmers . dAPT used soy skin becoming good fodder . Normally , farmers will benefit from farming activity by subtracting the income that he obtained at a cost she paid . This advantage will then be compared with what the opportunity cost if he invest to invest in other investment instruments such as deposits , which currently has interest per year + 7 % . From the calculation of this ratio would feel more farmers farming profit and loss , when the comparison is greater then the farmers will continue to plant soybeans , while if smaller would make farmers think again for planting soybeans or the worst is to sell his farm . Pertnian massive conversion of land into non-agricultural land is very detrimental to the prospects of national food security . And in terms of the environment , if it tarjadi conversion to non- agricultural industrial land will certainly have an impact on climate change and in the end will make the weather and rainfall becomes more unpredictable . Productivity is supported by the use of soybean planting seed varieties , fertilizers , and process control hamanya . seen from virietas types of seeds planted by soybean farmers , where seed is obtained the majority of seed stores , during the 2012-2013 growing season as shown in the following table: Table 5.1.a. Soybean Seed varieties are planted in the growing season 2012-2013

No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Types of Seed Anjasmoro Klokos Grobogan D pros Wilis Galunggung Bromo Burangrang Sariayu Surya Malabar Raja basa Cemara Salktama Gepak kuning

Percentage 13.44% 12.25% 7.71% 7.31% 7.31% 4.55% 4.15% 2.57% 2.57% 1.78% 1.58% 0.99% 0.99% 0.79% 0.59%

Source: Processed Primary Data

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It appears from the above table, most farmers use seed varieties Anjasmoro that as many as 13.44% and followed by as much as 12.25% Klokos. There also appears to Gepak Yellow varieties that have fast growing carp Yanga with high productivity is not an option most farmers who were respondents in this study. Farmers seem unwilling to take a risk by planting new varieties of seed varieties although it has many advantages. Most farmers claimed to have used seed that had been planted him for over 3 years by nearly 81%. On average, respondents who answered the farmer, managing soybean fields each growing season of 4,420.95 m2 or 0.44 acres (1 m2 = 0.0001 ha), use of fertilizer types as follows: Table 5.1.b. Type Fertilizer Used

No 1 2 3 4 5 6 7 8 9 10 11

Types of Fertilixer Weight Organic Fertilizer 639.8958 Urea 224.5429 ZA 120.2143 TSP 94.49809 KCl 54.91667 Fertilizer Phosphate and Potassium Content of Leaves 52.5 NPK 36.95122 Other Fertilizers 32.75 Liquid Organic Fertilizer 5.438462 Leaf Fertilizer with Nitrogen 4.08 PPC/ZPT 2

Unit Kg Kg Kg Kg Kg Kg Kg Kg Lt Kg Kg

Sources: Primary Data Processed

Shown in the table above, many farmers use organic fertilizers by 6.4 quintals (Kw). After the organic fertilizers, farmers choose menggunakanpupuk Urea, ZA, TSP, and KCL each sequentially is as much as 2.2 KW, 1.2 KW, 0.9 KW, and 0.54 Kw. Apparently, many soybean farmers who rely on inorganic fertilizers in maintaining soil fertility to menungkatkan soybean harvest. In addition, farmers also use a wide variety of chemicals in protecting soybean plants from pests and other pests. Several types of chemicals used soybean farmers, among others, appear in the following table: Table 5.1.c. Use of Chemicals

No

Type

Granular Insecticide 1 Furadan 3G 2 Dharmafur 3G 3 Curater 3G 4 Applaud 10 WP

Total users (respondents who answered) of the 201 respondents

Mean (kg)

45 5 5 1

6.4 17.6 86.2 1 59

5 MIPCIN 50 WP 6 Others Rodenticides 7 Racumin 8 Phyton RMB 9 Ratgone 10 Tiran Herbicides 11 Round Up 75 WSG 12 Gramaxone S Fungicides 13 Antracol 70 WP 14 Benlate 15 Others

20 1

1.875 1

5 4 4 1

6 2 2.5 4

27 5

5.44 6.6

20 1 2

31.4 30 1.4

Note: some respondents use quart size (lt) and kilograms (kg) in answering the questionnaire. Since 1 liter = 0.96 kg, then just as easily to the Kg and Lt are not converted in this table. Sources: Primary Data Processed

Shown in the table above, many farmers using Furadan 3G and MIPCIN 50 WP insecticide to deal with attacks. More precisely both the insecticides used to control green leafhoppers, armyworms, leaf roller caterpillars. As for fungicides, farmers are using Antracol 70WP to control the growth of fungi that can protect soybean leaves and stems. In more detail the following can be seen in Table 5.1.d pests often faced by soybean farmers.

Table 5.1.d. Pests are often attacked, according to survey respondents

No 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Type of Pests Ulat Grayak Ulat penggulung daun Hama dan OPT Lainnya Ulat Jengkal Lalat pucuk Kumbang kedelai Lalat batang Kepik Hijau Penggerek Polong Lalat bibit kacang Aphis Kepik Polong Tungau merah Kutu bemisia

60

Percentage 37.31% 23.38% 15.42% 13.43% 9.45% 8.46% 7.96% 4.98% 4.48% 2.49% 2.49% 2.49% 1.99% 1.49%

15 16

Ulat helicoverpa Kepik Piezodorus

1.49% 0.50%

Sources: Primary Data Processed

It appears in the table above, Armyworm is a pest that is often faced by soybean farmers. Sebanya nearly 40% of the 201 respondents experienced these pests. While the latter is often disturbing pest of soybean leaf roller caterpillar which is by 23, 38% had experienced farmers revealing these pests. 5.1.3. Basic foundation Soybean Production Systems Almost similar to the system of rice production and other agricultural commodities, the basic foundation of the soybean production system also has some very important variables in determining whether the system is able to work and produce the desired output. These variables can be generally classified as a controlled variable becoming associated with the timing of planting, selection of quality seeds, fertilizer, maintenance and control of pests and weeds. While the second variable is uncontrollable as the weather and the issues related to climate or rainfall and other natural factors. However, there are some things that are often forgotten about how the system actually reversed the basic foundation building block for the production-production system is

61

viewed from the side of the farmers themselves, as shown in Figure 5.2.a. the following: Perbandingan Investasi

Konversi Lahan

Rasio Keuntungan Opportunity

Setoran Pokok

0.76

Bunga

Deviasi W aktu Mengkoreksi Ekspektasi

Rata-rata BC Ratio

R p456,271 pe r ha

Modal Akhir Pertambahan Modal

Biaya PHG

Normal Distribution

Harga Bibit

Rata-rata Keuntungan Periode Pencatatan Bunga

Perubahan EPA Biaya

Pendapatan

Bibit

Curah Hujan RataRata

Penanggulangan Hama dan Gulma

Ekspektasi Panen Aw al

Biaya Pemupukan

Harga KB Pemupukan

Proporsi Curah Hujan Aktual Curah Hujan Kedelai

Harga Kulit Ari Kedelai

Harga BK

Usia Panen

W aktu Ekspektasi Berubah Ekspektasi Potensi Panen

Panen Ideal

Kedelai Bertangkai

Penuaian

Perubahan Potensi Panen

Pengeringan

Kualitas Bibit

Musim Tanam 1

Penjualan Kedelai Bertangkai

% PKB

Penyusutan Kering

Pengulitan Pemupukan Biji Kedelai

Panen Gap

Penjualan Biji Kedelai

Penanggulangan Hama dan Gulma

% PBK

Jeda W aktu Musim tanam Kulit Kedelai Penjualan Kulit Kedelai

% PKK Luas Panen Nasional per Tanam Rate_1

Rata-rata perubahan luas tanam

Produksi Kedelai Panen Nasional

Konsumsi perkpita

Rata2Perubahan konsumsi perkapita

Pertumbuhan per tahun

Normal Dist Perubahan LT Deviasi

Kebutuhan Kedelai dan Turunan

Proyeksi Penduduk Pertambahan bersih penduduk

Figure 5.3.a. Basic System Basic Foundations Soybean Production Sources: Primary and Secondary Data Processed

Blok-blok tersebut dapat diutarakan sebagai berikut: 1

Expectations Harvest and Crop Yields [blue block on the basis of the production of soy) Total tonnage harvest to be gained by farmers to grow rice was originally based on seed quality and quantity conditions lahaan owned by farmers. For example, if farmers use seed with specification capable of producing 72 kg of soybean seeds 1 kg of weight for one hectare of rice field, in accordance with the product specifications seeds, then if no barriers mean maximum harvest conditions will be achieved as much as + / - 3 tons of soybeans However, observations of the condition of paddy by farmers related to the changes that occur in weather conditions, wind, rainfall, and the development of pest or weed pest of rice, will make the rice harvest expectations are always changing from

62

time

to

time,

such

as

the

shown

in

Figure

5.2.b.

below

Ekspektasi Potensi Panen

ton/ha 6 5 4 3 2 1 0

0

20

40

60

Non-commercial use only!

Figure 5.3.b. Potential Yields per hectare expectations by Farmers Sources: Primary Data Processed

Shown in the picture above that the expected harvest for each growing season varies from farmers adapted to observations of anything that might affect their crops. At the beginning of the period it appears that the expectations of the farmers harvest more observation will fluctuate because there is less rainfall in the early period of soybean planting in May or June due to weather anomalies which makes conditions more extreme rainfall that farmers have the possibility of planting or harvest failure due to floods and other disasters. While simulation yields obtained by the farmers of each growing season is shown in Figure below; to n/ha

1.5

1.0

0.5

0.0 0

20

40

60

Bulan Ke de la i Be rta ngk a i

Biji Ke de la i

Kulit Ke de la i

Non-com m ercial us e only!

Figure 5.3.c. Yields per hectare Simulation Results Sources: Primary Data Processed

Then , yields collected at each harvest period ie + / - 2.5 to 3 months early look has always exceeded expectations in accordance with the specifications of seeds and the amount of land that is 3 tons . This phenomenon occurs because depending on

63

the factors and the maintenance of a good rice crop management and natural factors which rainfall is much more in the rainy season and lower during the dry season . While the picture was also seen shrinking weight yield of soybeans into soybean seeds which stemmed reduced 20 % by weight. While soybeans are also leather memeiliki economic value is assumed to have a weight of 15-20 % . 2 Rainfall and Climate Change [ red block on the basis of the production of soy ) Simulated rainfall in rice production system is assumed to be influenced by the conversion of agricultural land into non-agricultural land as occurs in rice production centers in Java or can also mean farmers choose between other crops such as maize . While the land conversion decision itself is affected by the economic motivation of the owner of the land . For example , voters always compare the value of land capital returns that he put in for soy cultivation is seen from the Benefit Cost Ratio and the opportunity that he could get if the capital invested in other investment instruments , such as deposits with an interest rate of 7% per year . Comparison of the two ratios is shown in Figure 5.3.d below: 1.0

0.5

0.0

-0.5

-1.0 0

20

40

R asio Ke untungan O pportunity

60 R ata-rata BC R atio

Non-commercial use only!

Figure 5.3.d. Farmers Gain Ratio Sources: Primary Data Processed

The smaller the ratio of BC Ratio and the greater the opportunity cost of the intentions of farmers and landowners to convert land into non-agricultural land to sell at parties bargained . Shown in the picture above that farmers benefit ratio is only good at the beginning of the planting of the first period alone , setalahnya continue to experience fluctuations and stabilize at levels less than 1 ( one ) . This means the benefit you'll get by farmers only slightly different from the fee she paid . Meanwhile, when compared with its opportunity cost , which appeared around the figure 0.5 , this means that the capital cost farmers to grow rice more profitable when invested in other investment instruments such as deposits . Visible from both these ratios prospects for rice farming less and less promising . With konsisi like 64

that , it needs to be taken strategic steps that continue to support agricultural activities especially rice to keep it interesting , so it does not interfere ketabilan especially rice supplies and food in general . The influence of El Nino and La Nina is also emphasized in the simulation of precipitation in the model system of rice production . Rainfall simulation results shown in Figure 5.3.e below: m m /Bulan 500

400

300

200

100 Januari

Mare t

Me i

Juli

Se pte m be r Nope m be r

Bulan C urah Hujan R ata-R ata

C urah Hujan Sim ulasi

Figure 5.3.e. Rainfall levels Sources: Primary Data Processed

Non-commercial use only!

Shown in the picture above there is a situation of extreme rainfall resulting from the simulation. Where, during the rainy season rainfall is higher than the average, while in the dry season rainfall is becoming lower. This is said to be extreme, so the chances of occurrence of floods that destroy rice crops and drought disasters that make the rice into puso increasing. Variability like this that will eventually make it difficult for farmers in the cultivation of rice and other commodities. 2

Early Season Planting [yellow block on the basis of the production of soy)

Another important point that is relevant in determining the success of rice cultivation are the timing of planting. The timing of planting will depend largely on the observations of farmers at the turn of each season. This observation will become more difficult when the higher rainfall variability. Rice production simulation system model uses the assumption that the time from planting soybeans in a span of smulasi was in June of each year, as shown in Figure 5.3.f. the following :

65

Musim Tanam Kedelai

1.0

0.8

0.6

0.4

0.2

0.0 0

20

40

60

Non-commercial use only!

Figure 5.3.f. Early Season Planting Period Sources: Primary Data Processed

The selection is based on the observation month average rainfall at the end of the first growing season in around May / June rainfall is ideal for planting soybeans ie 200 mm / month. 5.2.

National Soybean Demand Estimates Household and Consumption Preferences on the Quality of Food Soybeans

This study held in order to estimate the national demand of soybean for direct consumption (household) and indirect consumption. To determine the average of domestic soybean demand, a survey conducted on 80 households spread across 27 major cities in 13 provinces. For industry demand, there are 37 respondents spread across industries in 27 major cities in 13 provinces.

5.2.1. The Estimated Demand of Household Soybean Consumption According to the last NSS data in 2007-2013, the consumption of soybeans and soybean products such as tofu and tempe in Indonesia shown in the following table: Table 5.2. Soybeans and Soybean Products Consumption per capita (kg/year) – NSS 2013 Soybean Tofu Tempe (Fermented soybean cake) The total consumption of soybeans and its product

2009 0.052 7.039 7.039

2010 0.052 6.987 6.935

2011 0.052 7.404 7.300

2012 0.052 6.987 7.091

2013 0.052 7.039 7.091

14.13

13.974

14.756

14.13

14.182

Source: NSS 2007-2013

66

This survey choose a category of household correspondent using stratified random sampling technique based on the criteria of household with an appropriate house conditions, have a decent sanitary facilities, an electricity lit with a minimum resources of 900 watts, not in a category of lower economic class , and have an average gross expenses at least IDR 2,000,000,-. In other words, the correspondents are households from middle-upper economic class. According to the survey, the consumptions of soybeans and soybean products for middle-upper economic class household can be seen in the following table: Table 5.3. Soybeans and Soybean Products Consumption per Capita (Kg/Tahun) for MiddleUpper Economic Class Category Average Consumption Average Consumption per The Average Consumption of Soybeans and Its per Month (Kg) Year (Kg) products (Tofu and Tempe) in the MiddleHouseh Upper Economic Class *per capita Husehold *Per capita olds Soybean* 0.02 0.00 0.05 0.24 Tofu** 0.42 0.08 1.01 5.04 Tempe (Fermented soybean cake)*** 0.20 0.04 0.47 2.35 The total consumption of soybeans and 0.64 0.13 1.53 7.63 its product Source: Primary data Notes: * Data from NSS 2013 ** Average household consumes 5.3 Pax of tofu per month. I Pax tofu = 0.08 kg soybeans (Source; Interview with Entepreneur in Lamongan) Therefore tofu consumption for the middle-upper class household in a month = 0.08Kg * 5.3 = 0.42 Kg *** Average household consume 4.9 boards of tempe per month 1 boards of tempe =0.04 kg soybean (Source; www.tempo.co) Therefore tofu consumption for the middle-upper class household in a month = 0.04Kg * 4.9 = 0.196 Kg

Table 5.2 shows that the average total consumption of soybeans and soybean products are stable, with a small average increase of 0,154%. It is also shown that during the total five years, the average consumption per Capita is 14,24 kg/year. Table 5.3 shows the average total household consumption is quiet high, its about 1,53 kg. This indicates the level of consumption is relatively small, only 11% of the national consumption level. So, if a proportion performed then the consumption of soybean for lower-middle consumers are 12,62 kg per capita per year. The population growth in Indonesia was increasing 1,23% from 2006 to 2013. In 2014, the total population will reach 241 million people, and in 2020 it was projected it will reach more than 261 million people. Based on data from NSS survey on March 2013, the percentage of the population according to their expenses per capita per month is: Table 5.4. The Percentage of Population According to Their Expenses per Capita

67

Source: NSS, March 2013.

To make a projection of national beef demand for the category of middle-upper economic class, a group of residents with an expense per capita of IDR 750.000,- to IDR 1.500.000,- was taken as correspondents. The average growth rate of soybean consumption is 0,154% and the population growth rate is 1,23%, we can see the results of soybeans demand projection in table 5.5.a and 5.5.b. The total demand for soybeans and soybean products reached +2,658,019.25 tons. Furthermore, the projected demand for soybeans was compared to the farmer’s productivity. With the same assumption used to project demand and productivity, the total pattern of consumption and production of soybeans in Indonesia from 2014 to 2019 can be seen in Figure 5.4.

68

Table 5.5.a. Projected Consumption of Soybean Based on The Household Needs in Upper Economic Class Projected Consumption of Soybeans and Soybean Products Based on The Category of Upper Ecnomic Class Household

Year Soybean Consumption per Capita (kg/th)

National Population Projections (1,23% growth)

750.000 - 999.999 Projected Population

1.000.000 - 1.499.999

Projected Demand

Projected Population

> 1.499.000

Projected Demand

Projected Population

Total

Projected Demand

*2013

1.53

241,985,142

19,697,591

30,137,314

11,445,897

17,512,222

4,549,321

6,960,461

54,609,998

2014

1.53

244,975,316

19,940,991

30,556,701

11,587,332

17,755,920

4,605,536

7,057,322

55,369,943

2015

1.53

248,002,439

20,187,399

30,981,925

11,730,515

18,003,009

4,662,446

7,155,531

56,140,465

2016

1.54

251,066,968

20,436,851

31,413,065

11,875,468

18,253,538

4,720,059

7,255,106

56,921,709

2017

1.54

254,169,365

20,689,386

31,850,205

12,022,211

18,507,552

4,778,384

7,356,067

57,713,824

2018

1.54

257,310,098

20,945,042

32,293,429

12,170,768

18,765,101

4,837,430

7,458,433

58,516,964

2019

1.54

260,489,640

21,203,857

32,742,821

12,321,160

19,026,234

4,897,205

7,562,224

59,331,278

2020

1.55

263,708,472

21,465,870

33,198,466

12,473,411

19,291,001

4,957,719

7,667,458

60,156,925

Table 5.5.b. Projected Consumption of Soybean Based on The Household Needs in Lower-MiddleEconomic Class Year

Soybean Consumptio n per Capita (kg/th)

National Population Projections (1,23% growth)

Projected Consumption of Soybeans and Soybean Products Based on The Category of Lower-Middle Ecnomic Class Household

< 150.000 Projected Population

150.000 - 199.999

200.000 - 499.999

Projected Demand

Projected Population

Projected Demand

Projected Population

Projected Demand

500.000 - 749.999 Projected Population

Projected Demand

Total

*2013

12.62

241,985,142

1,960,080

24,736,210

10,139,177

127,956,414

144,077,954

1,818,263,779

50,115,123

632,452,852

2,603,409,255

2014

12.64

244,975,316

1,984,300

25,080,430

10,264,466

129,737,049

145,858,303

1,843,566,511

50,734,388

641,253,989

2,639,637,979

2015

12.66

248,002,439

2,008,820

25,429,451

10,391,302

131,542,448

147,660,652

1,869,221,358

51,361,305

650,177,600

2,676,370,856

2016

12.68

251,066,968

2,033,642

25,783,315

10,519,706

133,372,980

149,485,273

1,895,233,223

51,995,969

659,225,394

2,713,614,912

2017

12.70

254,169,365

2,058,772

26,142,120

10,649,696

135,228,977

151,332,440

1,921,607,059

52,638,476

668,399,103

2,751,377,259

2018

12.72

257,310,098

2,084,212

26,505,911

10,781,293

137,110,811

153,202,432

1,948,347,908

53,288,921

677,700,454

2,789,665,085

69

2019

12.74

260,489,640

2,109,966

26,874,761

10,914,516

139,018,831

155,095,532

1,975,460,890

53,947,404

687,131,250

2,828,485,731

2020

12.76

263,708,472

2,136,039

27,248,753

11,049,385

140,953,399

157,012,024

2,002,951,163

54,614,024

696,693,286

2,867,846,601

* The Survey was conducted at the end of 2013 Source: Processed Primary Data

70

Figure 5.4. Consumption Trends and National Soybeans Production (million tons) Source: Processed Primary data

As shown in Figure above the projected production fluctuates with trends, it gradually rise to consumption projections from 2014 to 2019. However, this process will decrease after 2019 and it will make big deficit. This phenomenon has an impact on the increase of soybean prices and the increase of national dependency on imported soybeans. Generally, the simulation results based on a declining trend of the national soybean production that happened because of climate change and a decrease of harvested area. The decrease of harvested area happened due to land conversion and decreasing number of farmers. This also caused by a change in planting pattern or the selection of interlocutory plants. All of these things are rationals when farmers do an opportunity comparison of what he got from the investment to other instruments. This will increase the perception of soybean farming is no longer profitable. 5.2.2. Consumption Preferences on Soybean Food Products Quality and The Prediction of Food Quality Needed in Middle-Upper Economic Class Household in The Next Five Years This section will analyze the survey result on consumer preferences for quality and affordability of soybeans. The survey conducted because consumers will consume more processed soy products such as tofu and tempe, that is why the data presented refers to consumer’s perception of the two products as a proxy soybeans. Figure5.5.a shows that the majority of consumers from all class categories considers that the quality of imported soybeans is high. About 50% of the respondents who had incomes above IDR 8,000,000,- , have a perception that imported soybeans was more qualified than local soybeans.

71

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Rp. 2.000.001 – Rp. 3.000.000

Rp. 3.000.001 – Rp. 4.000.000

Rp. 4.000.001 – Rp. 5.000.000

Rp. 5.000.001 – Rp. 7.000.000

Rp. 7.000.001 – Rp. 8.000.000

diatas Rp. 8.000.000

Sangat Berkualitas

19.15%

15.02%

18.89%

21.43%

0.00%

8.33%

Berkualitas

57.02%

59.15%

52.22%

35.71%

60.00%

66.67%

Agak Berkualitas

20.94%

18.78%

26.67%

35.71%

40.00%

16.67%

Kurang Berkualitas

2.67%

6.57%

2.22%

7.14%

0.00%

8.33%

Tidak Berkualitas

0.22%

0.47%

0.00%

0.00%

0.00%

0.00%

Figure 5.5.a.Household Consumer Perception (Based on Monthly Income) to The Quality of Local Soybeans Source: Processed Primary Data

Figure 5.5.b shows that household consumers have a beter perception of the quality of local soybeans. There are 66,7% of the consumers who have an income more than IDR 8,000,000, considers local soybeans good quality. Only 25% consumers think differently. However, it is generally ithe perception of the consumers from the lower income category have a high quality perception. Figure 5.5.c shows about the affordability of soybeans, both local and import. It is shown that both soybeans are quiet affordable. All of the income categories have the same perception about this price affordability. The highest consumers are the one who had an income more than IDR 8,000,000,- (66,67%).

72

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Rp. Rp. Rp. Rp. Rp. 2.000.001 3.000.001 4.000.001 5.000.001 7.000.001 diatas Rp. 8.000.000 – Rp. – Rp. – Rp. – Rp. – Rp. 3.000.000 4.000.000 5.000.000 7.000.000 8.000.000

Sangat Berkualitas

10.18%

6.22%

18.18%

7.41%

20.00%

8.33%

Berkualitas

43.89%

45.93%

38.64%

33.33%

20.00%

25.00%

Agak Berkualitas

34.62%

38.28%

32.95%

44.44%

60.00%

50.00%

Kurang Berkualitas

8.82%

7.18%

9.09%

14.81%

0.00%

8.33%

Tidak Berkualitas

2.26%

1.91%

1.14%

0.00%

0.00%

8.33%

Sangat Tidak Berkualitas

0.23%

0.48%

0.00%

0.00%

0.00%

0.00%

Figure 5.5.b. Household Consumer Perception (Based on Monthly Income) to The Quality of Imported Soybeans Source: Processed Primary Data 100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

Rp. 2.000.001 – Rp. 3.000.000

Rp. 3.000.001 – Rp. 4.000.000

Rp. 4.000.001 – Rp. 5.000.000

Rp. 5.000.001 – Rp. 7.000.000

Rp. 7.000.001 – Rp. 8.000.000

diatas Rp. 8.000.000

Sangat Terjangkau

11.14%

9.39%

14.44%

17.86%

20.00%

8.33%

Terjangkau

47.66%

53.05%

47.78%

53.57%

40.00%

66.67%

Agak Terjangkau

20.71%

22.07%

21.11%

25.00%

20.00%

25.00%

Kurang Terjangkau

18.04%

15.02%

15.56%

3.57%

20.00%

0.00%

Tidak Terjangkau

2.45%

0.47%

1.11%

0.00%

0.00%

0.00%

Figure 5.5.c. Household Consumer Perception (Based on Monthly Income) to The Affordability of Local Soybeans Source: Processed Primary Data

Based on the results above, it can be concluded that for household consumers with middle and higher income, the issue of quality and price, especially for processed soybean products, do not affect their preferences. Both households still think that

73

neither local soybeans and imported soybeans have good quality and have an affordable price. To complement the findings about the pattern of national soybean consumption at household consumer level it is important to consider a few things, such as: First, the proportion in consumer’s “plate” (nutrition composition). Currently, soybeans have a significant contribution in Indonesian dishes. Processed soybean products like tofu, tempe, tauco, soy sauce, food faloring, etc, become one of the main option as rice side dishes. There are popular idioms such as “Tempe Nation” that show how important soybeans are in the structure of Indonesian food community. With a high dependency toward imports, the proportion will gradually reduce and there will be abundant food supply in local area. This condition can only mapped accurately if we know the preferences of household consumers about soybeans substitute. To figure out the soybean substitution preferences map in household consumer’s level, respondents were asked to rank the commodities that they are using as a substitute for soybeans in three market conditions. The first condition is the current normal market situation, i.e there are no shortages or price fluctuations. The second condition occurs when the prices rise, and the third condition is whne there is a shortage of supply (for example : due to war). Figure 5.6.a shows that there are substitution preferences by consumers when the price of soybenas is in normal condition (no drastic increase and decrease). The figures showed us the most desirable commodities as soybeans substitute are corn (31,14%), green beans (28,55%), and red beans (13,57%). It is true that a substitute cannot accurately replace soybeans as the most popular feedstock for some products (tofu and tempe). However, these commodities can change the deficit of vegetables protein that has been contributed by soy. Meanwhile, in Table 5.6.a we can see the consumers substitution preferences of soybeans based on the amount of household consumers income. Consumers who have an income less than IDR 5,000,000,- per month tend to have a varied selection of substitution. While consumers who have an income more than IDR 8,000,000,- or more shows more homogeneous choices, such as corn and red beans.

74

Soybeans Corn 31,14%

Green Beans 28,55%

Red Beans 13,57%

Wheat 12,79%

Peanuts 9,56%

Peas 2,33%

Jack Beans 1,55%

Snap Peas 0,26%

Gnetum Gnemon 0,26% Figure 5.6.a. Consumer Preferences on Soybean Substitutes (on normal price) Source: Processed Primary Data

Table 5.6.a Consumers Preferences Table to Soybean Substitute (at normal price) According to Their Total Income Percentage of Respondents Choosing Soybeans Substitute Substitution (According to Consumer Income per month) Preferences of Soybeans Rp3.000.00 Rp5.000.00 Rp7.000.00 at Normal Rp2.000.001 Rp4.000.001 diatas 1 – 1– 1– Price –3.000.000 – 5.000.000 Rp8.000.000 4.000.000 7.000.000 8.000.000

Total

Red Beans

14,52%

8,57%

13,95%

21,43%

40,00%

36,36%

13,57%

Wheat

13,82%

14,29%

8,14%

7,14%

0,00%

0,00%

12,79%

Peanuts

11,75%

5,71%

10,47%

7,14%

0,00%

0,00%

9,56%

Green Beans

27,42%

26,67%

37,21%

42,86%

20,00%

9,09%

28,55%

Corn

28,34%

39,05%

25,58%

21,43%

40,00%

54,55%

31,14%

Peas

1,38%

4,76%

2,33%

0,00%

0,00%

0,00%

2,33%

Snap Peas

0,23%

0,00%

1,16%

0,00%

0,00%

0,00%

0,26%

Gnetum gnemon

0,46%

0,00%

0,00%

0,00%

0,00%

0,00%

0,26%

Jack Beans

2,07%

0,95%

1,16%

0,00%

0,00%

0,00%

1,55%

100,00%

100,00%

100,00%

100,00%

100,00%

100,00%

100,00%

Total

75

Source: Processed Primary Data

These conditions represent the assumption that taste andconsumer consumption behavior of household that have income more that IDR 8,000,000,- tend to be different from consumers with lower incomes. Consumers with higher income use corn and red beans on their diet to substitute soybeans, eventhough corn and red beans is more expensive. Consumers with a lower income choose more varied substitute depending on their diet. Both conditions are the results of survey when the market condition is normal, both in terms of price and supple stability. When market condition change, especially when price is increasing, consumer behavior will change slightly. Figure 5.6.b showed a preferences substitution by consumers when soybeans price is increasing. The figures showed us the most desirable commodities as soybeans substitute are green beans (29,73%), corn (29,48%), and red beans (15,23%). Compared to normal conditions, a preference for corn is decreasing while the green beans increased. There are numbers of myth found on the interview results about green beans commodity. Many respondents compare soybeans and green beans because they are ignorance about the soybeans form. This also happens because domestic consumers are more often buy processed soybeans products, not soybean.

Soybeans Corn 29,48%

Green Beans 29,73%

Red Beans 15,23%

Wheat 12,29%

Peanuts 10,32%

Jack Beans 1,23%

Peas 0,98%

Snap Peas 0,49% Gnetum gnemon 0,25%

Figure 5.6.b. Consumer Preferences on Soybean Substitutes (at high price) Source: Processed Primary Data

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Table 5.6.b shows the consumers preferences on soybeans substitute based on the amount of household income. Consumers with an income less than IDR 7,000,000,- per month tend to have varied selection of substitution. Consumers with higher income (IDR 8,000,000,- or more) also showed more varied selection, although the majority still choose corn. These condition represent the assumption that increasing price make domestic consumers from higher income began to see cheaper substitute as an alternatives. Table 5.6.b Consumers Preferences Table to Soybean Substitute (at high price) According to Their Total Income Percentage of Respondents Choosing Soybeans Substitute Substitution (According to Consumer Income per month) Preferences of Soybeans diatas at High Price Rp2.000.001 Rp3.000.001 Rp4.000.001 Rp5.000.001 Rp7.000.001 –3.000.000 –4.000.000 – 5.000.000 – 7.000.000 – 8.000.000 Rp8.000.000

Total

Red Beans

15,94%

10,78%

18,75%

21,43%

50,00%

16,67%

15,23%

Wheat

11,95%

15,69%

9,38%

7,14%

0,00%

0,00%

12,29%

Peanuts

13,15%

2,94%

12,50%

7,14%

0,00%

16,67%

10,32%

Green Beans

29,88%

27,45%

31,25%

42,86%

0,00%

16,67%

29,48%

Corn

25,90%

41,18%

21,88%

21,43%

50,00%

50,00%

29,73%

Peas

0,40%

1,96%

3,13%

0,00%

0,00%

0,00%

0,98%

Snap Peas

0,40%

0,00%

3,13%

0,00%

0,00%

0,00%

0,49%

Gnetum gnemon

0,40%

0,00%

0,00%

0,00%

0,00%

0,00%

0,25%

Jack Beans

1,99%

0,00%

0,00%

0,00%

0,00%

0,00%

1,23%

100,00%

100,00 %

Total

100,00%

100,00%

100,00%

100,00%

100,00%

Source: Processed Primary Data

The analysis continued to see what would happen when there is a shortage of soybeans supply, for example when there is a natural substitute disaster or war. Figure 5.6.c showed approximately the same results with the normal condition. The most favorite substitute for soybeans in this situation is corn (32,60%), green beans (29,50%) and red beans (12,94%). There are an interesting fact in table 5.6.c from consumers with an income higher than IDR 8,00,000,-. These consumers choose wheat as one of the substitute for soybeans.

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Soybeans and wheat have different function, where grain (wheat) is a contributor of carbohydrate and soybean is a contributor of protein. These conditions indicate a state of urgency, consumers with higher income did not thouroughly think about nutritional division. They will choose food security supply than the balance of the amount of nutrient contained.

Soybeans Corn 32,60%

Green Beans 29,50%

Red Beans 12,94%

Wheat 12,29%

Peanuts 9,06%

Peas 1,81%

Jack Beans 0,91%

Gnetum Gnemon 0,52% Snap Peas 0,39%

Figure 5.6.c. Consumer Preferences on Soybean Substitutes (at crisis) Source: Processed Primary Data

Table 5.6.c. Consumers Preferences Table to Soybean Substitute (at crisis) According to Their Total Income Percentage of Respondents Choosing Soybeans Substitute Substitution Preferences of Soybeans at Crisis

(According to Consumer Income per month) Rp3.000.00 1– 4.000.000

Rp4.000.00 1– 5.000.000

Rp5.000.001 – 7.000.000

Red Beans

13,47%

9,57%

16,67%

19,23%

40,00%

0,00%

12,94%

Wheat

11,87%

13,88%

14,29%

0,00%

0,00%

18,18%

12,29%

Peanuts

12,10%

5,26%

5,95%

3,85%

0,00%

0,00%

9,06%

Green Beans

27,85%

27,75%

38,10%

50,00%

20,00%

18,18%

29,50%

Corn

31,96%

37,32%

21,43%

26,92%

40,00%

63,64%

32,60%

78

Rp7.000.001 – 8.000.000

diatas Rp8.000.00 0

Total

Rp2.000.00 1– 3.000.000

Peas

0,46%

4,78%

2,38%

0,00%

0,00%

0,00%

1,81%

Snap Peas

0,23%

0,48%

1,19%

0,00%

0,00%

0,00%

0,39%

Gnetum gnemon

0,91%

0,00%

0,00%

0,00%

0,00%

0,00%

0,52%

Jack Beans

1,14%

0,96%

0,00%

0,00%

0,00%

0,00%

0,91%

100,00%

100,00 %

Total

100,00%

100,00%

100,00%

100,00%

100,00%

Source: Processed Primary Data

Based on the results of the three settings, Government needs to securecommodity supplies that most selected soybeans substitute by household consumers. Figure 5.7 shows there are three commodities that need extra attention, such as corn, green beans, and red beans. These commodities face the same challenge, that is small domestic production. Prioritas Substitusi Daging Sapi Konsumen Rumah Tangga

Kondisi Normal

Prioritas 1: Jagung (31,14%)

Prioritas 2: Kacang Ijo (28,55%)

Prioritas 3: Kacang Merah (13,57%)

Harga Mahal

Prioritas 1: Kacang Ijo (29,73%)

Prioritas 2: Jagung (29,48%)

Prioritas 3: Kacang Merah (15,23%)

Pasokan Langka

Prioritas 1: Jagung (32,60%)

Prioritas 2: Kacang Ijo (29,50%)

Prioritas 3: Kacang Merah (12,94%)

Tantangan Jagung: Belum swasembada

Tantangan kacang ijo: Produksi kecil, luas lahan kecil

Tantangan Kacang Merah: Produksi kecil, luas lahan kecil

Figure 5.7. Household Consumers Priority on Soybean Substitutes

5.3.

The Estimated Demand for Soybeans in Industry

There are 11 types of industrial products that are relevant to soybeans suh as tofu, tempe, soy sauce, oncom, tauco, soybeans, soymilk, soy flour, various of seasonings, and other sobeans processed products. Based on the survey results in Table 5.7.a, the most selected products are tofu, tempe, soy sauce, various of seasonings, and oncom. The

79

results is relatively distributed on every consumers income categories, there are no different patterns for one consumers group identified from the survey. Table 5.7.b shows types of soybeans that have most demand by the industry is soybeans with Meratus type, followed by Muria and Rajabasa. Imported soybeans have lower demand due to high price eventhough the production quality is much better. Table 5.7.a. The Composition of Houshold Demand to Soybean Based Products Soybeans Income

Total

Rp2.000.001 – 3.000.000

Rp3.000.001 – 4.000.000

Rp4.000.001 – 5.000.000

Rp5.000.001 – 7.000.000

Rp7.000.001 – 8.000.000

Tofu

20,63%

18,87%

18,78%

16,88%

17,24%

18,46%

19,72%

Tempe

20,58%

18,87%

19,21%

18,18%

17,24%

18,46%

19,79%

Soy Sauce

18,19%

18,34%

18,34%

18,18%

17,24%

18,46%

18,25%

Oncom

11,33%

10,67%

10,92%

10,39%

6,90%

9,23%

10,99%

Tauco

6,03%

8,02%

8,73%

10,39%

6,90%

6,15%

7,08%

7,09%

9,17%

8,08%

6,49%

6,90%

9,23%

7,80%

Soymilk

1,06%

0,88%

1,09%

3,90%

6,90%

6,15%

1,25%

Soy flour

0,32%

0,35%

0,66%

0,65%

3,45%

3,08%

0,45%

14,73%

14,73%

13,76%

13,64%

17,24%

10,77%

14,53%

0,05%

0,09%

0,44%

1,30%

0,00%

0,00%

0,15%

100,00%

100,00%

100,00%

100,00%

Seasonings Processed products Total

100,00% 100,00% 100,00%

Source: Processed Primary Data

Table 5.7.b. Industrial Consumer Demand Type of Soybeans Percentagae Meratus 36,95% Muria 27,23% Rajabasa 21,88% Impor 10,05% Malabar 3,89% Source: Processed Primary Data (n=37).

Table 5.7.c. Summary of Industrial Consumer Demand Feedstock Requirement Typeof Soybeans (Ton/Month) Meratus 9,50 Muria 7,00 Rajabasa 5,63

80

diatas Rp. 8.000.000

Typeof Soybeans Impor Malabar

Feedstock Requirement (Ton/Month) 2,58 1,00

Source: Processed Primary Data (n=37)

This preference also reflected in the number of actual needs based on the type of soybeans. Table 5.7.c shows that the demand for Meratus soybeans is the highest among other types. On the other hand, imported soybeans due to the decline of local soybeans production currently dominate the market. The data obtained from this survey shows that industrial consumers actually has a higher preferences on local soybeans. 5.4.

Supply Chain as an Inventory Response and Production Response Flow

Up until now, the main priority of food security policy in Indonesia focused on rice. In the last four decades, this policy is still relevant to the pattern of consumer demand, which is shown in the proportion of calories from rice wich contribute 50% of the total calories consumed by Indonesian people along with an increase of per capita income. However, soybeans are one commodity that is interesting to study in its relation to the impact of climate change and national food security strategies. As one of commodity that mainly acquired through imports, soybeans need special treatment and attention given the vulnerabilities that could cause by the dependence on imports. Until the middle of 2013, Governments issued a Letter of Approval Inmport (LAI) for 14 companies. According to the data from the Ministry of Commerce, these 14 companies receives import quota to meet the shortage of supply of soybeans ranged between 1,75 million – 2,1 million tons per year. National soybeans demand in 2012 reached 2,5 million tons, while domestic production only reached 850 thousand tons. National soybeans demand continues to increase from year to year. The shortages of supplies are frequent in the recent years, where the dominance of a few importers considered as the source of the problem. Trade system applied has many loopholes resulting in market inefficiency; this is why the Government plans to improve soybeans marketing by giving LAI to those who able to do import. Price control is very important for commodity prices, because price need to accommodate two interests; farmer’s interest and consumer’s interest. This means, the soybean price should be affordable by all segments of society, but at the same time also able to provide incentives to farmers so they can have an enthusiasm in growing them.

Place

Table 5.8. The Percentage of Household Consumers Buying Soybeans and Soybean Based Products Income

81

Total

Rp2.000.00 1– 3.000.000

Rp3.000.001 – 4.000.000

Rp4.000.00 1– 5.000.000

Rp5.000.00 1– 7.000.000

Rp7.000.00 1– 8.000.000

diatas Rp. 8.000.00 0

Mobile Vegetables Seller

52,57%

57,82%

40,79%

47,75%

12,20%

37,26%

51,98%

Traditional Market

36,78%

23,94%

37,01%

34,46%

14,63%

23,08%

32,58%

Retailer / Grocery Store

8,79%

16,05%

18,60%

11,24%

42,68%

8,41%

12,18%

Minimarket

1,66%

2,08%

2,40%

0,94%

0,00%

3,61%

1,86%

Supermarket/Hypermarket

0,21%

0,10%

1,20%

5,62%

30,49%

27,64%

1,40%

100,00%

100,00%

100,00%

100,00%

100,00%

100,00%

100%

Total

Source: Processed Primary Data

Overall, the most frequently visited place to buy soybean products are in the mobile vegetables seller, followed by traditional markets and grocery store. Based on the results, it can be concluded that the mobile vegetables seller have a strategic role in the chain of distribution of soybean products. Primarily because of the nature of soybean products, especially tofu and tempe, which requires separate storage. The sellers also have a close network with tofu and tempe maker. In the survey conducted, we have mapped the soybean supply chain in the areas that became the focus of research. In general, the illustration of the supply chain can be seen in Figure 5.8.

82

Negara pengekspor kedelai

Bungkil Kedelai

Petani Kedelai

KUD atau kelompok tani

A

Peternak

Pengumpul/ Pedagang kecil

B

Importir Kedelai

BULOG

Pedagang Besar

D

C KOPTI, Perajin Tempe dan Tahu

Industri Pengolahan

Hotel, Restoran, Katering

Ritel Tradisional

Ritel Modern

Pasar

KONSUMEN Titik Kritis

Figure 5.8. Soybeans Supply Chain (existing) Source: Processed Primary data

The critical point of national soybean supplies based on the survey results at point A (importer), B (Bulog), C (Tofu and Tempe Maker), and D (Manufacturing Industry). Each point have significant influence in the scheme of national soybean supply resilliance. Point A is the 14 importers that have a permission from Government to import soybeans in order to overcome shortage. The importers have a great control in price and supply timing. Point B is Bulog, which only control 5% of the national soybean supplies, but have a potential to balance in the market. Unfortunately, this potential is not fully utilized. Point C is the tofu and tempe maker, they are one of the largest consumer group for this commodity. The makers are very sensitive to price and supply volatility. Beside the makers, the manufacturing industry also one of the largest soybeans consumers that make a critical point in the supply chain of national soybean supplies (Point D). Unlike ofu and tempe maker, the manufacturing industry have an access and a better ability to minimize the impact of soybeans price and supply volatility. 5.4.1. The Mechanism of Soybean Price Formation 83

To view the supply chain’s ability to respond the fluctuation, supply, price fluctuation, and changes in consumer demand; it is necessary to review the mechanism of price formation that occurs in business operator. Based on the research results and verification at the time of interview, the flow of price formation process that occurs in soybean trade system is: Table 5.9. The Sale Price of Stemmed Soybeans and Soybeans Stemmed Soybeans Soybeans (Rp/kg)

(Rp/kg)

Beli

Jual

Beli

Jual

1. Farmers

-

7,315

-

7,345

2. Cooperative

-

-

8,000

8,700

6,900

7,156

6,979

7,800

4. BULOG

-

-

7,500

7,700

5. Wholesalers/Agents/Wholesale

-

8,300

8,200

9,250

6. Manufacturing Industry

-

-

8,407

-

7. Retail merchants/Retail Store

-

-

8,083

8,255

3. Collector (Small Trader)

Source: Processed Primary Data

Based on the purchasing price and the average selling price of the operator in the supply chain, there are some interesting fact that need to be highlighted. There are thee business operator who get a purchase price of stemmed soybeans below the average selling price from farmers, such as collector, manufacturing industry, and retailers. This condition happens because of some possibilities: first because of the system used in the purchase is the bonded labor system (before harvest), or second because the buyer’s bargaining position against the farmer is larger (due to asymmetric information). Farmers sell stemmed soybeans for IDR 7,315/kg and soybeans for IDR 7,345/kg. Collector bought stemmed soybeans for IDR 6,900/kg and soybeans for IDR 6,979/kg. Collectors obtain bigger margin when selling stemmed soybeans than selling soybeans. There are significance differences between stemmed soybeans price with soybeans price. BULOG get purchase price for stemmed soybean is IDR 7,500/kg and the selling price is IDR 7,700/kg. Bulog only took about 3% margin for this commodity. For comparison, wholesalers took about 10% margin and cooperative 8% margin. From the survey we can conclude that the biggest margin in the national soybean supply chain are for wholesalers and cooperatives.

84

Negara pengekspor kedelai

Bungkil Kedelai

Petani Kedelai

Kedelai Bertangkai Biji Kedelai

Peternak

: Rp.7.315 : Rp.7.345

KUD atau kelompok tani

Pengumpul/ Pedagang kecil

Biji Kedelai : Rp..8.700

A

B

Importir Kedelai

Biji Kedelai

BULOG

: Rp.7.700 – Rp.7.800

Pedagang Besar

D

Biji Kedelai

C Industri Pengolahan

Biji Kedelai Hotel, Restoran, Katering

: Rp.8.407 – Rp.9.250

KOPTI, Perajin Tempe dan Tahu

: Rp.8.255 – Rp.9.250

Ritel Modern

Ritel Tradisional

Pasar

KONSUMEN Titik Kritis

Figure 5.9. The Price Formation of Stemmed Soybeans and Soybeans Description: Imported soybeans are not included in the survey area of commodity price Source: Processed Primary Data

Based on the price formation mechanism, stemmed soybeans and soybeans price then mapped according to the survey results. Each figure shows the formation flow of stemmed soybeans and soybeans (Figure 5.9). Figure 5.9 also shows that the characteristics of soybean demand as the raw materials for other products. There are only a few direct purchases by household consumers on soybeans. Domestic consumers consume processed soybean products such as tempe, tofu, soy sauce, tauco, soymilk, cereals, etc. Tempe and tofu havethe largest proportion of the food products that used soybeans as raw material, it reached 80% of national soybean demand in 2012. The remaining 20% are used by manufacturing industry. Because of these characteristics, the pattern of purchasing behavior of tofu and tempe makers and manufacturing industry became the major central in soybeans chain supply. Price and supply volatility will first perceived by the industrial consumers, not the 85

household consumers as the end-user. One unique aspect of national soybeans supply chain is industrial consumers can put pressure and lobby their association when there is a problem in soybean supplies. Koperasi Pengrajin Tempe Tahu Indonesia (KOPTI) is one association that actively lobbying for its member benefit. As an impact, Government needs to continue renew soybeans marketing from time to time, to accommodate the pressures from the industry association. Regarding this matters, BULOG role in the supply chain should be prioritized in order to maintain the stability of soybean prices and supplies. BULOG needs to have larger share of imports and planned number of national stockpiles to intervene the volatility in third market. Based on the projections made by BULOG, the national soybeans reserve stock should be strived at 10% level of the total consumption every year, or about 250 thousand tons per year. Currently, we cannot detect the national soybeans reserve stock because it is kept on the importer. As a business entity that seeks profit, the importer sold soybean reserves in the most favorable situation. Besides the issue of the stock amount, there is also the problem about the location of the deployment of soybean stocks. The deployment should be well planned because of the growing demand for soybean products (such as tofu and tempe) outside Java. Reserve stocksof soybean supplies outside Java is still taken from the reserve stock in Java, where most of the local soybean production and warehouse premises of the soybeans importers. 5.4.2. The Perception of Independence and Stability of Soybean Supply In ths research, we also identify the challenges faced by soybean supply chain (existing) as a proxy of food security to climate change (Figure 5.10). There are few aspects between the relationship of climate change and food security: a.

Climate change is likely to cause crop failure and pests attack on soybean plants. This will threaten food security, not only in terms of productivity and supply, but also in terms of price volatility.

b.

Climate change will increase the scarcity of natural resources, especially water and biodiversity (natural enemies of crop pests). This will cause an increase of expense by soybean farmers.

c.

Climate change also give pressure to the Government to improve infrastructure and technology, as a part of the strategic system in national food security, sepecially for soybeans commodity.

86

Pembibitan

Sumberdaya: Air, tanah, pupuk, energi, Tantangan: Perubahan cuaca, hama, bencana alam

Penanaman

Sumberdaya: Air, tanah, pupuk, energi, Tantangan: Perubahan cuaca, hama, bencana alam

Petani Sumberdaya: Air, tanah, energi Tantangan: Perubahan cuaca, hama, bencana alam

Pemanenan dan pelepasan biji Petani

Petani, pemroses biji kedelai

Distribusi kedelai

Pedagang, BULOG, Koperasi Pengusaha Tempe Tahu

Sumberdaya: Energi, infrastruktur Tantangan: Cuaca ekstrem, infrastruktur, bencana alam

Pemrosesan

Konsumsi

Industri pengolahan, Pengrajin Tempe Tahu Rumah tangga, hotel, restoran, UKM, dan lain-lain

Figure 5.10. Soybean Supply Chain Challenges Source: Primary Processed Data

We also explored the perception of the stakeholders involved in the soybean supply chain (including employers and consumers) against the resistance of soybean commodity supplies nationwide. There are four dimensions used (Figure 5.11), such as: (1) self-sufficiency, (2) supply stability, (3) affordability, and (4) quality). The perception measured using scale 1 to 5, higher number indicat better rate.

Supply Stability

Self-Sufficiency

Are the reserve stock of soybean supplies stable and sufficient?

Is the soybean production able to meet the domestic needs?

Food Security: Soybean Commodity Quality

Affordability Are soybean prices affordable and not fluctuate?

Are the flavours, nutrients, and calories contained meet the expected quality?

Figure 5.11.The Dimentions of Soybean Food Security Source: Processed Primary Data

87

Figure 5.12.a shows that consumers pereption to the independence of soybean commodity supplies are negative? As for the stability of supply, household consumer’s perception tends to be neutral. An entrepreneur who used soybeans as the main ingredients of their products also has similar perceptions (Figure 5.12.b). 5 Palm Oil 4

Rice

Self-Sufficiency

3 2

Cows

1

Soybeans

0 0

1

2

3

4

5

Stability of Supply Figure 5.12.a.Food Security Perceptual Map according to The Consumers Source: Processed Primary Data 5 Palm Oil 4

Rice

Self-Sufficiency

3 2 Cows 1 Soybeans 0 0

1

2

3

4

5

Stability of Supply Figure 5.12.b.Food Security Perceptual Map According to The Business Operator Source: Processed Primary Data

Soybeans position in both perceptual map (Figure 5.12.a and 5.12.b) reflects the inability of the national soybean production to meet the consumers and industrial needs. Actual data in 2013 showed that approximately 70% of the source of soybean supplies are imported. Import policy will renew the perception of supply stability, though soybeans scarcity still happened often. This happened because the Government still not optimized BULOG function to establish a national reserve stock of soybeans that could maintain the price

88

and supply stability, especially when the imported supply is volatile. Figure 5.11.a and 5.11.b indicates that consumers have the perception that the durability and food security for soybean commodity is low. 5 Rice

4 3

Palm Oil

Affordability

2

Soybeans

1

Cows

0 0

1

2

3

4

Quality

5

Figure 5.12.c. Food Security Perceptual Map According to The Consumers Source: Processed Primary Data

The size of food security perception also needs to consider the commodity affordability and quality. Figure 5.12.c shows household consumers perceived that soybean commodity expensive. 5 Rice

4

Palm Oil

Affordability

3 2

Soybeans

1

Cows

0 0

1

2

3

4

Quality

5

Figure 5.12.d.Food Security Perceptual Map According to The Business Operator Source: Processed Primary data

Meanwhile, household consumer’s perception about the soybeans quality that they consumed is good. Household consumer’s perception reflected in Figure 5.12.c are thought to be the perception about soybean products (tofu and tempe). Figure 5.12.d indicates that industrial consumer’s perceptions about the affordability of soybeans are not too good. This condition happens because the frequency of soybean supplies shortage is high, which resulted in an increase of soybean price. However, the perception about soybeans quality tends to be good. This means, the quality of soybeans reach the standard quality of manufacturing industry. 89

Sawit 0

100

Kedelai

70

30 Impor

Sapi Padi

15

85

5 0%

Domestik

95 20%

40%

60%

80%

100%

Figure 5.13. The Main Source of Food Supply in Indonesia (2010) Source: Processed Primary Data

5.4.3. The Fact About Normative Supply Chain Management Application of Staple Food There are three main issues on the applied supply chain and trade system of soybean commodity: a.

Farmer’s weak position in the supply chain Most of the farmers do not have the ability to distribute and market their own soybean products. When harvesting, they only rely on the merchant to buy their crops. This situation makes farmer’s bargaining position weak, so the pricing is not favorable to them.

b.

Too many intermediaries so the margin became large In an areas that have a shortage on soybeans (eg Jabodetabek), intermediaries involved in the supply chain to the last consumers. Moreover, the commodities number became larger than the area that surplus on soybeans (eg East Java). Longer supply chain means there will be an increase of soybean prices, and the intermediaries will have larger margin.

c.

Inneficient distribution due to lack of infrastructure Another challenge faced by farmers is the lack of infrastructure, both in quantiry and quality. Some critical infrastructures in the distribution of soybeans are roads, ports, and railway crossings. The poor infrastructure will affect the time travel and the amount of fuel needed. As the result, distribution costs are more expensive than the price of soybean commodity. For each commodity delivery conducted, the largest cost components are for vehicle rental (transportation). This was followed by the cost of local transport, including transport workers (porters, motorcycle taxi/rickshaw. Other components that have significance effects are the costs of retribution and extortion. 90

Table 5.10.a and 5.10.b shows the amount of soybean shipping and distribution costs. The data based on the survey results on the business operator in soybean supply chain, for every shipping they do. The type of products transported divided into two kinds: stemmed soybeans and soybeans. The distance of delivery also divided into two: local delivery within a regencies or city and intercity delivery, both in one province or inter-provincial. Table 5.10.a. Shipping Cost and Local Distribution (per-one-time-delivery) Cost Components Driver’s cost (local) Porter’s cost (local) Vehicle rental (local) Fuel (local) Toll Fee (local) Parking (local) Extortion (local)) Retribution (local) Other Costs (local) Total costs (local)

Stemmed Soybeans (IDR) 123.333 69.167 235.000 48.125 -5.000 2.000 -36.667 185.000

Soybeans (IDR) 103.222 100.563 240.985 50.069 130.000 3.750 17.000 5.000 40.000 222.537

Source: Processed primary data

The first component of shipping cost is vehicle rental. It is the biggest cost component for each business operator. Another large component costs are for drivers, porters, and fuel. Other components that add the transportation costs are retribution and extortion. Overall, local transportation costs are for stemmed soybeans. Meanwhile, the cost for intercity transportation is relatively large; it reached IDR 689,547 per one shipping. This happens due to to the frequency of soybeans intercity shipping need to be processed further. Manufacturing industriesprefer to buy soybeans which are cheaper. Table 5.10.b. Shipping Cost and Intercity Distribution (per-one-time-delivery) Cost Components Driver’s cost (intercity) Porter’s cost (intercity) Vehicle rental (intercity) Fuel (intercity) Toll fee (intercity) Parking (intercity) Extortion (intercity) Retribution (intercity) Total costs (intercity)

Soybeans (IDR) 100.625 77.000 2.400.000 125.556 20.400 7.429 24.000 2.000 689.547

Source: Processed Primary Data

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These two strategies can be the answer for the issues above: 1

Optimalization of local foods This strategy relies on the optimalization of many commodities produced in the local area as the main food. This will reduce the dependency on the supply commodities from other areas. The uniformity of plant food became the major contributor of protein (soybeans) in the past has been eliminate the self-sufficiency of food in local communities. Local knowledge need to be returned through social intervention by the Government, such as through promotion of local foods using local ingredients. This could be an excellent strategy to improve national food security. Moreover, it will increase the efficiency of the supply chain for staple commodities, because the distribution channel becomes shorter. The lesser intermediaries, with lower time and distance of shipping.

2

Farmer’s distribution and marketing capabilities empowerment (direct-toconsumer marketing): The second strategy is to improve the ability of farmers to distribute and market their own crops. If farmers can directly related to the final consumers, the margins obtained will be higher than they sell it to traders. To increase their distribution capabilities, Government needs to provide access to transportation and transport equipment that can be used by farmers in their area of distribution. This can be realized in the form of developing “Public Logistic Network”, where the Government developed a logistics network that provide shipping with a special subsidized cost to communities (including farmers). To improve the marketing capabilities of farmers, the Government needs to provide Internet access and communication platform that could help farmers to relate with prospective buyers. The negotiations and transactions are via online. Marketing aspects such as packaging and branding needed to attract more buyers.

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CHAPTER 6. CONCLUSIONS AND RECOMENDATIONS

6.1.

Conclusion

1. Analyze the strategic capability of production to develop policy recommendations in order to improve the capacity of national food production.. a) Shifting Season and Rainfall Fluctuations In general, season and climate variability can disrupt the planning and expectations of the crop farmers. While this season is actually very variability associated with the conversion of land that happens where will result in extreme and unpredictable weather. Climate in Indonesia can be categorized in the equatorial climate, which is hot and humid throughout the year. Normally, the rainy season begins November to March has its peak during January and February. The rainfall in lowland areas on average 1,800 to 3,200 mm per year, this figure will rise to mountainous areas up to an average of 6000 mm. Average humidity in Indonesia is between 70 to 90 percent. Climate change can cause pressure / stress on the plant. As climate change causes the plant more susceptible to pest attack. Climate change also disrupts the balance between the population of insect pests, natural enemies and host plant. The most important impact of climate change on insect pest populations is a disturbance of the synchronization between the host plant and the development of insect pests, especially in the rainy season / cold. An increase in temperature will also more supporting the development of insect pests, as well as live insects pests in winter / rainy. The increase in temperature during maturity can also lead to a decrease in seed quality mainly caused by the inhibition of the accumulation of food reserves in seeds (Zakaria, 2005) Soybean plants are very sensitive to changes in day length as it includes short-day plant. Soybean plants will not bloom when day length exceeds a critical limit, ie 15 hours per day. Therefore, if the high-yielding varieties of subtropical regions with the length of 14-16 hours planted in tropical regions with an average length of 12-hour days so varieties will decrease production because its key short term, ie from age 50 -60 days to 35-40 days after planting. 93

b) Soybean Productivity Nationally, according to the latest data from the Central Bureau of Statistics, the national soybean productivity from 1993 have continued to rise by an average of 1.17% per year . Despite this broad national soybean harvest and production year after year continues to decline each decreased by an average of 2.68% per annum and 3.8% per year. This reflects the increase in productivity is mainly due to a decrease in harvested area larger than the production. Where a decline in harvested area this could be due to the reluctance of farmers to use the land for soybean planted as intercrops. While the level of smaller angles, ie from the side of the farmers, the soybean productivity will depend on the process of beginning to the end of the cultivation of soy itself. Normally, farmers will benefit from the activity of planted by reducing the income he earned a fee that he remove. Then the profit will be compared with the cost of such opportunity when he put capital to investments in other investment instruments such as deposits, which currently has an interest rate per year + 7%. From this comparison the calculations more farmers will feel the profit and loss of farming, when comparatively bigger then farmers continued to plant soybeans, while if smaller would make farmers think again to cultivate soybean plant or the worst is selling agricultural land. c) Basic Foundations of Soybean Production Systems Almost similar to the system of rice production and other agricultural commodities, the basic foundation of the soybean production system also has some very important variables in determining whether the system is able to work and produce the desired output. These variables can be generally classified as a controlled variable becoming associated with the timing of planting, selection of quality seeds, fertilizer, maintenance and control of pests and weeds. While the second variable is uncontrollable as the weather and the issues related to climate or rainfall and other natural factors. However, there are some things that are often forgotten about how the system actually reversed the basic foundation building block for the production-production system is viewed from the side of the farmers themselves, ie; (1) expectations of and harvest crops; (2) rainfall and climate change; and (3) the beginning of the growing season.

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Description and estimate the demand of national food either by individual households (direct consumption) or by the food processing industry (indirect consumption). Average total consumption of soy and its derivatives can be said to be stable from year to year until 2013, with an average increase of 0.154% is very small and the total average per capita consumption is equal to 14.24 kg / year. The survey showed that the average total number of household consumption over the medium to soybeans and derived products per capita per year is 1:53 kg. This indicates the level of consumption is very small, at only 11% of the national consumption level. So if carried proportion, then the consumption of soy to lower middle class consumers are 12.62Kg per capita per year. In terms of population, Indonesia's population growth from 2006 to 2013 was 1.23%. So that in 2014 Indonesia's population will reach about 241 million people and by 2020 Indonesia's population is projected to more than 261 million people. With a growth rate of soy consumption on average 0.154%. and a population growth rate of 1.23%, the projected demand for soybeans and derived products (tofu and tempeh) for Indonesian households could reach +2,658,019.25 tons. Analysis of consumer preference towards quality of food, especially for people with middle and upper economic class that can be used to predict the quality of food that is required in the next 5 years. a. Soy Consumption Preferences Secondary Public Economy Class Processed soy products such as tofu, tempeh, tauco, soy sauce, flavorings, and so on, became one of the main options to accompany rice. Popular idioms, such as "Tempe Nation" shows how important the position of soybeans in the food structure of Indonesian society. Given the high dependence on imports, the proportion ideally should gradually be reduced, replaced with foods abundant in the local area. But it can only be mapped accurately if we know the preferences of domestic consumers to substitute soy. Under normal conditions, the commodity most in demand as a substitute for soybean row is corn (31.14%), green beans (28.55%), and red beans (13.57%). Indeed, substitution of soy alternative options can not be accurately replace the role of soy as a feedstock popular products, such as tofu and tempeh. However, these commodities can change the perceived deficit of vegetable protein that has been contributed by soy.

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When market conditions change, especially when prices rise significantly, the commodity most in demand as a substitution of soybean row is green beans (29.73%), corn (29.48%), and red beans (15.23%). When compared to normal conditions, a preference for corn has decreased, while the green beans increased. Analysis continued to see what will happen when there is a shortage of supply of soybeans, for example due to war or natural disasters. The most desirable commodities as soybeans successive substitution is corn (32.60%), green beans (29.50%), and red beans (12.94%). Thus it becomes an important input, namely that any market situation happens, the majority of consumers are replacing soy with all three of these commodities. b. Soy Consumption Preferences Industry. There are 11 types of products that are relevant to the soybean industry is, know, tempeh, soy sauce, oncom, fermented soybean paste, soybean, soybean extract, soybean flour, spices, and other soy formula. To meet consumption needs, the type most favored soybean industry is soybean Meratus, followed by soybean and Rajabasa Muria. While soybean import own less too interested. Considering the price is high enough, even though the quality of imported soybean productivity better. This preference is also reflected in the number of actual needs based on the type of soybean. Demand for soy soy Meratus highest among other types. On the other hand, the market is currently dominated by soybean imports due to a continued decline in local soybean production. The data obtained from this survey show that consumers-even industry actually has a higher preference than the local soybean soybean imports. Analyzing the supply chain, supply response, and the response of production to develop recommendations to bridge the supply side and the demand side. Based on an analysis of the supply chain and trade system, which has been applicable to commodity soybeans, has identified three (3) major problems faced by soybean supply chain (existing) including; 1) weak position of farmers in the supply chain; 2) intermediate that is too much to be a large margin; 3) the distribution is not efficient due to poor infrastructure. These challenges can be answered with a three-tiered strategy through local grocery optimization policies. This strategy relies on the optimization of many commodities produced in the local area as a main meal. Local knowledge is to be returned through social intervention by the government. Among them is by promoting local food using local ingredients.

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The next strategy is the empowerment of farmers marketing and distribution capabilities. The second strategy is to improve the ability of farmers to distribute and market their own crops. If farmers can be directly related to the final consumer, the margins obtained will be higher than if they sell to traders. To enhance their distribution capabilities, then the government needs to provide access to the means of transport and transport equipment that can be shared by farmers in the area to distribute their crops. This can be realized in the form of development 'Public Logistics Network', which the government develop a logistics network that provides shippers with a special subsidized cost to communities in need, including farmers 6.2.

Recommendation for RPJMN 2015 – 2019

6.2.1. Policy Direction Associated with the ability of domestic soybean production, which needs to be done by the government is to increase the efficiency of local soybean production to meet the selfsufficiency and food needs. To increase the local production of soybeans, the main actors are the farmers need to be motivated. So far, farmers prefer other than commodity soybeans because soybean competitiveness of local low and do not provide much benefit Specific constraints faced is the reduction of soybean harvested area because farmers prefer to plant rice or corn that are more interesting. Accordingly, the government should seek to provide incentives for farmers to be interested in re-planting soybeans. Because, farmers preferred to leave the switch to soybeans and other food crops is a form of rational choice. The imbalance between supply and demand does cause soybean imports. This condition can not be avoided, at least until the current regime, so it must be done with care and caution. Conversely, if handled in a way bussiness as usual, it will not give any benefit, but only to the rent seekers. 6.2.2. Strategy and Priority Focus There should be a driving force that can motivate morale in improving the quality of one's performance. In fact farmers in Indonesia tend to lead to impoverishment. Unpreparedness farmers to enter the trade liberalization makes the burden borne by the farmers become much larger, such as the high price of fertilizer and the dominance of imported food which further depress local food prices. Therefore, by providing incentives to farmers, so the farmers have a reason to continue to produce soybeans. If the government is serious to increase production, the use of technology becomes important. Agricultural technology means change the mode of production and distribution, and innovation over new ways for efficiency in producing soybeans.

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Behind both of them there is a risk that must be taken because the farmers change their habits. On the other hand, soybean procurement through imports need careful handling and prudent. In the spirit of protecting local farmers, import policy must be in harmony with the spirit. Import permit must be given to the party that can be optimally controlled by the government, for example in terms of time. Simply put, if the import is not carried over supply which will cause losses to farmers, also avoid over demand is pushing up prices to the detriment of consumers. 6.2.3. Target and Indicator Nationally, according to the latest data from the Central Bureau of Statistics, the national soybean productivity from 1993 have continued to rise by an average of 1.17% per year to reach. Productivity is calculated from a comparison between Production and Harvested Area. This reflects the increase in productivity is mainly due to a decrease in harvested area larger than the production. Where a decline in harvested area this could be due to the reluctance of farmers to use the land for soybean planted as intercrops. In this regard, one important indicator is a measure of the increase in productivity is agricultural expansion. This factor will reflect the seriousness of the government in order to achieve food security soybean. Unpreparedness farmers to enter the trade liberalization makes the burden borne by the farmers become much larger, such as the high price of fertilizer and the dominance of imported food which further depress local food prices. In addition, the distribution of local soybean is still considered bad that the soybean processing more difficult to get local soybean compared with soybean imports. The longer the process of distribution of soybean, the more expensive the price is formed due to the transfer to go through a lot of hands that take advantage. To address this challenge, the seriousness of soybean production development program will look through budget development and provision of incentives allocated to encourage increased production and farmers' income. Government intervention is needed, among others, in the form of preferred expand access to capital sources and their formal support scheme offered, complemented by extending the scope of each of the aid scheme.

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