Marketing and Economic Empowerment of Rubber Farmers in

Gunung Toar Sub-District of Kuatan Singingi Regency:

Comparative Study of Auction and Conventional Marketing Systems

Rosnita

, Eri Sayamar

, Roza Yulida

, Deby Kurnia

, Yulia Andriani

, Aung Ezra Alfatah

Staff of Agribusiness,Faculty of Agriculture, University of Riau

Alumni of Agribusiness Department,Faculty of Agriculture, University of Riau

Bina Widya Campus Km 12.5 Simpang Baru, Tampan Pekanbaru, 28293, Indonesia

Keywords: Marketing, Rubber, Auction, Conventional.

Abstract: This research aims at comparing the rubber marketing of auction and conventional systems:1) Analyze the

profile of rubber farmers 2) analyze cost, margin, efficiency, and proft in both systems, 3) analyze the

rubber farmers' empowerment. The research used Survey method to 89 rubber farmers as samples using

Slovin formula. The sample consisted of 39 rubber farmers with marketing of auction system and 50 rubber

farmers with conventional system. The research was conducted in Gunung Toar Sub-district of Kuantan

Singingi Regency from September 2016 until September 2017.The Data analysis used descriptive analysis

of respondent profile and marketing system, different test analysis was conducted on margin, efficiency, and

profit in both marketing system by rubber farmer in Gunung Toar Sub-district. The results of this study

illustrate that the profile of farmers of the auction system comes from male and female but to conventional

farmers are all male and both are in productive age. Education in auction farmers is dominated by high

school and elementary school in conventional level. Land ownership area > 2 Hectares with status as owner

of auction farmers and < 2 Hectares on conventional farmers with status of farm workers and tenants. There

are differences in cost, margin, efficiency and profit between the auction system and the conventional

system.

1 INTRODUCTION

Kuantan Singingi Regency is one of the regencies in

Riau Province which has potential in rubber

plantation. Rubber farming system conducted by

rubber farmers has not been profitable for rubber

farmers. It can be seen from the long distribution

channels, the farmers are not getting information and

transparency in the price, and have limitations in the

fund / capital (Department of Industry and Trade,

2005).

The Rubber plantations in Riau Province are

dominated by smallholder plantations cultivated

independently on a small scale and management

systems are still traditional. Kuantan Singingi

Regency has the largest land in Riau Province

compared to other districts which in 2016 reached

144,314.70 hectares with 62.770 rubber farmers and

88,487.73 tons / year. A total of 6,236 families from

62,770 families in Kuantan Singingi Regency are

located in Gunung Toar Subdistrict (Department of

Plantation of Kuantan Singingi Regency, 2017).

At first Farmers market their rubber traditionally

/ conventionally to their tauke (boss) who came to

the farmers in the farm place done. The marketing

system is done every day that the price trend is set

by the tauke. Farmers assume the tauke is their

savior in helping to overcome the economic

problems. The farmer feels that the tauke is the

foster father of the farmer (patron-client) even

though the farmer realizes that the price received is

very low and the farmer resignedly accepted it. The

patron-client relationship is a special relationship

between two parties, where the party with a higher

economic status uses its influence to protect and

profit the party whose economic status is lower. The

reward will be given by the client in the form of

assistance, or support including service to the patron.

In 2014 under guidance and assistance by

extension worker then formed a rubber marketing

auction system in Gunung Toar sub-district.

Rosnita, ., Sayamar, E., Yulida, R., Kurnia, D., Andriani, Y. and Ezra Alfatah, A.

Marketing and Economic Empowerment of Rubber Farmers in Gunung Toar Sub-district of Kuatan Singingi Regency: Comparative Study of Auction and Conventional Marketing Systems.

DOI: 10.5220/0009904300002480

In Proceedings of the International Conference on Natural Resources and Sustainable Development (ICNRSD 2018), pages 439-445

ISBN: 978-989-758-543-2

439

Through these two marketing system approaches the

farmers are given the freedom to choose the existing

marketing system. Marketing with auction system

invites farmers to join in Farmer Groups and

Combined Farmer Groups. Through this marketing

system farmers have a better bargaining position

than the previous marketing system (conventional)

with better quality / level of rubber marketed.

Although auction system marketing system is more

promising in terms of price for farmers, the apparent

problem is that not all farmers are interested in

participating in the marketing of the auction system.

It is alleged that farmers do not have a favorable

picture for farmers in the marketing of auction

systems yet. This makes farmers still think that

conventional marketing is still able to help farmers

overcome the problems they face, so that there are

farmers who have followed the marketing of the

auction system back to become farmers who market

conventionally. This is what makes the author

interested to review the marketing through the

approach of both systems by doing comparison

(comparison) on both systems.

2 RESEARCH METHODS

The research used survey method in two villages

(Gunung Village and Lubuk Terentang Village)

Gunung Toar Sub-district of Kuantan Singigi

Regency with research time from September 2016

until September 2017. Sampling is done by cluster

sampling with Slovin formula approach and

proportionally to farmers who market by auction

system and conventional systems. The research

sample consisted of 89 people consisting of 39

rubber farmers with auction system marketing and

50 conventional farmers.

The analysis is done by using several analytical

approaches:

a. Descriptive Analysis. Descriptive analysis is

used in analyzing the profile of rubber farmers.

b. Marketing analysis is done on margin, efficiency

and profit.

Marketing margins is analyzed using the formula

(Hanifah et al, 1986) which is:

M = Hk–Hp ( 1 )

Which:

M = Marketing margins ( Rp/Kg)

Hk = Prices paid by the final consumer ( Rp/Kg).

Hp = Prices received by producer farmers ( Rp/Kg).

Marketing efficiency is calculated using the

formula (Soekartawi, 2002):

EP=

( 2 )

Which:

EP = Marketing Efficiency (%)

TB = Total Cost (Rp/Kg)

TNP = Total Product Value (Rp/Kg)

The lower or a smaller percentage of marketing

efficiency the more efficient the marketing.

Conveserly, the higher or greater the percentage of

marketing efficiency the more inefficient marketing.

The marketing profit uses Soekartawi's formula

in Iskandar (2008),

π = M – B ( 3 )

Which:

π = Marketing profit (Rp/kg)

M = Marketing Margin (Rp/kg)

B = Marketing Cost (Rp/kg)

c. The difference in marketing of auction system

with the conventional in terms of margin,

efficiency and profit using different test formula

(Sugiyono, 2010).

Which :

d. The empowerment of rubber farmers using

Likert Scale analysis. Likert scale is used to

measure attitudes, opinions and perceptions of a

person or group of social events or symptoms

(Sugiyono, 2010). Table 2 illustrates the

empowerment of rubber farmers through the

marketing system used.

Table 1: Likert Scale Value, score and category of rubber

farmers empowerment in Gunung Toar Sub-District 2016.

= Average gain of auction trader

= Standard deviation of auction

= Number of auction samples

= Average gain of conventional trader

= Standard deviation conventional

= Number of conventional samples

ICNRSD 2018 - International Conference on Natural Resources and Sustainable Development

440

Number

Category

Economic

Empowermen

Scale Score

Very

Powerful

2,32 –

2,97

2. Powerful 2

1,66 –

2,31

3. Powerless 1

1,00 –

1,65

3 RESULT AND DISSCUSSION

3.1 Profile of Rubber Farmers

Profile of rubber farmers is a general description of

farmers who can show farmers from all sides and

can give an overview of farmers' social and

economic conditions. The social and economic

conditions of this farmer will give description of

ability and farmer in doing their farming activity.

The profile of rubber farmers in the auction and

conventional systems is presented in Table 2.

Table 2 shows that the profile of rubber farmers

in the auction system is better than the rubber

farmers in the conventional system, both from the

level of education, the area and the land ownership

status, as well as the experience in rubber farming.

The lower the ability level of rubber farmers then the

tendency to do marketing with conventional system.

It shows that dependence on tauke is bigger if the

economic ability and human resource of farmer is

still low. Looking at the conditions that exist farmers

need to be guided and nurtured so that farmers

become more empowered and can choose marketing

channels with a better system and have the ability to

determine the price (price maker).

3.2 Rubber Marketing System in

Gunung Toar Sub-district

Gunung Toar Sub-district is one of the districts in

Kuantan Singingi Regency that conducts

conventional marketing and also with auction

system conducted by the community since 2014.

Through the auction system the price received by

farmers is better than the price on conventional

marketing system because rubber farmers are

fostered and accompanied by extension workers in

Table 2: Profile of rubber farmers in the auction and conventional system in Gunung Toar Sub-district 2016

Number Description

Auction s

stem Convensional S

ste

Total % Total %

1 Male

ende

30 76,90 50 100,00

2 Productive a

e (15-54

ears old) 28 71,70 28 56,00

3 Education:

a. Elementary School

. Senior Hi

h School/equal

51,20

54,00

4 Family dependents:

a. 0 - 3 persons

. 4 - 6 persons

89,70

40,00

5 Land ownership area

a. < 2 Hectares

. >2 Hectares

56,40

62,00

6 Ownership status :

a. Owner

. Worker / tenan

100,00

62,00

7 Experience in rubber farming

a. 11-15 years

. 16-20

ears

53,80

40,00

The Auction system marketing mechanism in

Gunung Toar Sub-district is done through closed

auction system and managed by auction market

organizers formed from Combined Farmer Groups

(CFG). The organizer of the auction market consists

of Chairman, Secretary and Treasurer. The

Chairman's job is to carry out and oversee the

implementation of the auction market, the Secretary

notes all things related to the auction market activity,

and the Treasurer in charge of finance in the auction

market.

Marketing and Economic Empowerment of Rubber Farmers in Gunung Toar Sub-district of Kuatan Singingi Regency: Comparative Study

of Auction and Conventional Marketing Systems

441

The Combined Farmer Groups fostered and

accompanied by the organizer, especially in

maintaining the quality or level of Marketed Rubber

materials. Extension workers in guiding farmers to

maintain the quality of the rubber materials always

refers to the Regulation of the Minister of

Agriculture No. 38/Permentan/OT.1401/8/2008. The

regulation of the minister of agriculture policy is to

oblige farmers in rubber tapping with the correct

technique, skilled manpower, and good equipment.

Rubber materials produced quality by giving

freedom to farmers to determine the type of rubber

materials produced according to market demand

(garden latex, wind sit, slab, or lump). The auction

market is conducted once a week at a mutually

agreed place.

The Farmers who do not join the market auction

market, market their rubber to tauke conventionally.

Conventional marketing can be done every day.

Farmers who market their rubber to conventional

markets are generally farm workers and tenant

farmers where landowners already have patron-

client bonds with traders in the conventional market.

Dependence on tauke ultimately makes it difficult

for farmers to market their production through an

auction system. The production and price in a single

marketing on auction and conventional systems are

on average presented in Table 3.

Table 3: The production and price on auction and

conventional system.

Description

Auction

Market

Conventional

Market

A Production

marketed (kg)

a. Highest

b. Average

c. Lowest

1.239,75

684,07

194,25

250,00

106,52

60,00

B Price of Auction

Market ( Rp)

a. Highest

b. Average

c. Lowest

10.100,00

8.824,54

8.025,00

6.615,00

7.600,00

6.050,00

Table 3 illustrates that the average production and

prices contained in the auction system are higher

than conventional systems. The amount of average

production marketed due to market day only occurs

once a week and the high price in the auction market

due to farmers already incorporated in the farmer

group and Combined Farmer Groups so have a

better bargaining position. The marketing

mechanism of rubber through two systems namely

the Auction and Conventional systems have

differences both from the characteristics of farmers

and prices received, as well as market days. The

marketing mechanism is presented in figure 1.

3.3 Rubber Marketing System in

Gunung Toar Sub-district

In the marketing system of agricultural products, the

marketing agencies involved vary greatly depending

on the type of commodity being marketed. They

may consist of: middlemen, (directly related to

farmers), collecting traders (who buy agricultural

products from middlemen), wholesalers (who collect

the proceeds from collecting merchants), agents

(who buy from wholesalers) in large quantities , and

retailers (who are dealing directly) with consumers.

A marketing approach with auction system is a

very appropriate tool in empowering farmers,

because both farmers and traders are brought

together in a place and transparency exists in many

ways for both parties. The role of middlemen who

harm farmers can be trimmed (Bappebti, 2005). The

profit of an auction market for farmers can provide

price assurance, reduce costs, improve efficiency

and provide better returns for farmers. Costs,

margins, efficiency, and profit of farmers in both

marketing systems are presented in Table 4.

Table 4 illustrates that the marketing of rubber

with auction system further strengthens the

bargaining position and provides better prices for

farmers, where the price received by farmers in the

auction system is higher at Rp 7,240.65 (78.70

percent) than the price received by conventional

farmers Rp 6,293.41 (68.40 percent) of the price

paid by the final consumer (Factory). The auction

system is more profitable for tauke with the

comparison of tauke profit in the auction system is

only 4.35 percent compared to conventional systems

that give a profit of 6.52 percent for tauke. The

efficiency of auction system marketing is more

efficient with 0.08 percent greater than conventional

marketing system with 0.14 percent efficiency. This

means that auction system marketing can increase

the selling price and reduce marketing costs for

rubber farmers.

ICNRSD 2018 - International Conference on Natural Resources and Sustainable Development

442

Table 4. Cost, Margin, Profit and Marketing Efficiency on Auction and Conventional System in Gunung Toar Sub-district

2016

No Description

Auction Market Conventional Marke

Rp/Kg/wee

%Rp/Kg/wee

1. FARMER

Price Received by Farme

7.240,65 78,70 6.293,41 68,40

Total Cos

759,35 8,25 1.306,59 14,20

Cos

1. Group cuts 3% 240,00 2,61 500,00 5,43

2. Transportation 86,02 2,20 197,59 2,15

3. Wages Transpor

433,33 4,71 609,00 6,62

2 TAUKE (BOSS)

Price Paid

y Tauke 8.000,00 86,96 7.600 83,61

Total Cos

800,00 8,69 1.000,00 10,87

Cos

1. Unloading 400,00 4,35 400,00 4,35

2. Weighing 200,00 2,17 200,00 2,17

3. Ca

200,00 2,17 400,00 4,35

Tauke’s profit 400,00 4,35 600,00 6,52

3 FACTORY

Price in Factory 9.200,00 100,00 9.200 100,00

Margin 1.200,00 13,04 1.600,00 17,39

Efficiency 0,08 0,14

Figure 1: Rubber marketing system in Gunung Toar Sub-district

Seeing the difference is statistically significant

different statistically between the two marketing

systems viewed from cost, margin, efficiency, and

profit. Using the proposed hypothesis and the

analysis used (Test Z and Test t), the proposed

hypothesis is as follows:

= There is no difference in cost, margin,

efficiency and profit between marketing with

auction system and conventional systems.

Ha = There is difference in cost, margin, efficiency

and profit between marketing with auction

system and conventional systems.

The consideration in decision making in this

research is:

= Accepted, if the significance value or sig.(2-

tailed) < 0,05

Farmer

CFG

Auction

Wei

hin

Price Maker

Auction

Tauke

()

Small Trader

Factor

Auction S

stem

Conventional

System

Wholesalers

Marketing and Economic Empowerment of Rubber Farmers in Gunung Toar Sub-district of Kuatan Singingi Regency: Comparative Study

of Auction and Conventional Marketing Systems

443

Ha = Accepted, if the significance value or sig (2-

tailed) > 0,05

Based on the proposed hypothesis and the

analysis conducted then obtained the results of the

analysis presented in Table 5.

Table 5: Different test of marketing of auction and

conventional system seen from margin cost, efficiency and

profit in Gunung Toar Sub-district 2016

No Description Significance Decision

1 Cost paid by Tauke 0,00** Ha Accepted

2 Marketing margins 0,00** Ha Accepted

3 Marketing

efficiency

0,00** Ha Accepted

4 Profit receiver by

Tauke

0,42 Ho Accepted

Table 5 reveals that there is a very significant

difference in both marketing systems (auction and

conventional systems) in terms of cost, margin,

efficiency on the basis of the marketing system, but

the profitability of traders in both marketing systems

is statistically no different.

3.4 The Empowerment of Farmers

Empowerment is an effort to provide opportunity,

strength or power so that farmers are able to identify

and analyze their own needs and able to solve

problems themselves by optimizing the resources

and potentials (Soetomo, 2012).

The empowerment of rubber farmers is

illustrated by the amount of capital owned, the use

of technology, worker, and marketing. In the auction

system, farmers' capital in the auction system ranges

from Rp 1,000,000.00 to Rp 68,000,000.00. The use

of technology can be seen from the information

technology in doing marketing, and the average

worker usage of 2 people, with marketing auction

farmers can save Rp 150.000,00 to Rp 250.000,00.

Farmers with large conventional marketing system

of farmer's capital ranged from Rp 900,000.00 to Rp

13,962,600.00.Farmers do not use information

technology in the price where direct marketing

between farmers and tauke without using Mobile

phone as teir aid. Farmers have not been able to use

the workforce outside the family. Farmers have not

been able to save from marketing done because

farmers are always bound by debt with tauke but

farmers can repay the debt that has been done to

tauke. Farmers' empowerment between the auction

and conventional systems is presented in Table 6.

Table 6. The empowerment of rubber farmers in the

marketing of the auction and conventional system in

Gunung Toar Sub-District in 2016

Indicator

Marketing

Auction System

Conventional

System

Score