Analysis of Factors Affecting Local Revenues with Integration System

of Oil Palm - Cattle

T. M. Nur

, Halus Satriawan

and Chairul Fadli

Agribusiness Department, University of Almuslim, Bireuen, Indonesia

Agrotechnology Department, University of Almuslim, Bireuen, Indonesia

Animal Husbandry Department, University of Almuslim, Bireuen, Indonesia

Keywords: Livestock income, influencing factors, integration of oil palm-cattle livestock.

Abstract: The goals of oil palm-cattle livestock integration system are 1) improving the optimization of oil palm

plantation management, 2) enhancing the acceleration of population increase and livestock production; 3)

increasing the income of oil palm farmers and cattle farmers. The purpose of this study was to analyse

factors that affect the income of livestock oil palm - cattle integration system. This research is a quantitative

research using field observation method applying questionnaire instrument and structured interview to 40

farmers who apply integration system. The analysis is multiple linear regression analysis to identify the

factors that influence farmers’ income. The results showed that: 1) Simultaneously, all independent

variables (Calf Cost, Feed, Cattle Breeding Scale, Farmers’ Age, Farmers’ Education, and Breeding

Experience influenced the variable with the income of 64.9%; 2) Partially, the free variable Calves Cost,

Feed, Cattle Maintenance Scale, Farmers’ Age, and Livestock Experience did not provide a tangible return

to farmers' income with integrated systems. Only variables of farmers’ education had a significant value

,smaller than α (0.05), meaning that education variables could affect the farmers' income through livestock

by the use of innovation or new technology.

1 INTRODUCTION

Beef is a priority commodity of food sovereignty in

addition to rice, corn, soybeans, sugar, and fish.

Based on the details of Nine Government Priority

Agenda (Nawacita), the priority agenda in

agriculture consists of two things, namely the

increase of agroindustry and the improvement of

food sovereignty. Agricultural development in the

next five years is based on the third Medium Term

National Development Plan (RPJMN) (2015-2019)

(Kementerian Pertanian, 2015). The vision to be

achieved in the Strategic Plan in the body of General

Directorate of Animal Husbandry and Health (Ditjen

PKH) 2015-2019 is the realization of sovereignty

and food safety of livestock origin with the aim of,

among others, developing integrated livestock

business and increasing the income and welfare of

farmers (Ditjen PKH, 2017).

Since the revitalization of agriculture and

forestry (RPPK) launched by the government in

2005, the concept of integration of cattle-palm began

to be adopted and in 2007, some local governments

make it a flagship program (Edwina & Maharani.

2014). Local governments that have adopted this

concept include: West Kalimantan (Ibrahim and

Gufroni, 2008), Riau (Sisriyenni and Sutopo, 2008).

In addition to local governments, plantation

companies engaged in oil palm cultivation have also

implemented this system, such as PTPN III North

Sumatra (Agro et al. 2014). Implementation of

integrated systems can directly overcome the

problem of limited resources of conventional feed

using agricultural based-feed materials and

agricultural industry by developing integrated crop

farming system. The problem is the integration of

livestock is still limited to the small scale done by

smallholder farms. Integration of plantation and

cattle are still limited.

The cattle-oil palm integration program in

Bireuen District is a government commitment with a

mandate of national medium-term development plan

(RPJMN) and Strategic Plan of 2015-2019 through

the Directorate General of Animal Husbandry and

Animal Health with the Livestock Area

Development program 2014, where Bireuen District

236

Nur, T., Satriawan, H. and Fadli, C.

Analysis of Factors Affecting Local Revenues with Integration System of Oil Palm - Cattle.

DOI: 10.5220/0008888002360241

In Proceedings of the 7th International Conference on Multidisciplinary Research (ICMR 2018) - , pages 236-241

ISBN: 978-989-758-437-4

is directed as a commodity development area cattle

with a system of integration of oil palm.

Bireuen Regency is one of the districts in Aceh

with high contribution of the agricultural sector to

the Gross Domestic Product. According to Bireuen

BPS data (2016) the contribution of the agricultural

sector to the total GRDP is 33.98%, meaning that the

agricultural sector is a very influential sector in the

economy of Bireuen Regency. Plantation and

livestock sub-sectors are the second largest sub-

sector in GDP formation in the agricultural sector.

Bireuen District is also a center of livestock,

especially cattle. The number of cattle population in

Bireuen Regency in 2014 was 56,422 heads (BPS of

Bireuen. 2016), then increased to 62,291 in 2016

(Bireun Regency 2017) while the livestock

population in Aceh Province in 2016 was 600,759

heads (DG PK 201/20). Bireuen Regency

contributes 10.36% to the provincial livestock

population. Potential oil palm plantations and the

distribution of cattle population is an opportunity to

implement the integration of cattle-palm in Bireuen

Regency.

Implementation of oil palm-cattle integration

system can increase the optimization of oil palm

plantation management, while also accelerating the

increase of population and livestock production. One

example of land optimization is the fulfillment of

animal feed needs by utilizing vegetation and

byproducts of oil palm plantation industry (Wijono

et al. 2015), while livestock can contribute to the

provision of organic fertilizer and weed control.

From an economic perspective, the application of

the concept of integration can help increasing the

income of both oil palm farmers and cattle farmers.

Increased breeder income is mainly influenced by

the feed cost savings of 20-40% to produce 1 kg

weight gain (Batubara, 2003). In addition, the

welfare of farmers with the pattern of integration of

oil palm - cattle is potentially increasing with the

increasing farmers’ income (Gabdo and Ismail,

2013). Research conducted in Bengkulu Province

shows that there is an increase of 1.81 times income

compared to the pattern of oil palm plantations only

with the assumption that each family owns 3

hectares of land with cattle of at least 3 heads

(Gunawan et al. 2004). In general, the advantages of

cattle-plant integration systems are: 1)

diversification of resource use, 2) reducing business

hazard, 3efficiency of labor uses, 4) efficiency of

inputs, 5) reducing chemical energy dependence, 6)

environmentally friendly, 7) increasing the

production, and 8) sustainable farm household

income (Handaka et al. 2009).

Based on this background, this study aims to

analyze several factors that affect the income of

livestock enterprises in the system of integration of

oil palm and cattle.

2 MATERIALS AND METHODS

This research is a quantitative descriptive research

using field observation method applying

questionnaire research instrument and structured

interview to 40 farmers who apply the system

integration. Determination of farmers as a sample of

the population is done with the selected sample

system, purposive sampling. The sampling criteria

were farmers in Juli Sub-district, Peusangan Selatan

Sub-district, Peusangan Sub-district Siblah Krueng,

and Makmur Sub-district, Bireuen District, Aceh

Province, which implemented the integration system

of oil palm with cattle, either using the loose system

as well as the cow population and the largest oil

palm plantation area. Secondary data was obtained

from several institutions, namely BPS-Statistics of

Bireuen Regency.

2.1 Data Analysis

To answer the purpose of the study, the analysis is a

multiple linear regression analysis to identify factors

affecting the farmers’ income, formulated as

follows:

 a  bx1  bx2  bx3  bx4  bx5

bx6μ

(1)

With:

y = Cattle Farmers’ Revenue (Rp / year)

x1 = Calf Cost (Rupiah / year)

x2 = Feed Cost (Rupiah / year)

x3 = Cattle Maintenance Scale (ST / year)

X4 = Farmers’ Age (year)

X5 = Farmers’ Education (year)

X6 = Breeding Experience (year)

a = Constants

b = Variable Coefficient

μ = Error

3 RESULT AND DISCUSSION

Regression analysis of factors affecting farmers’

income in Bireuen District is shown in Table 1. The

value of R

in Table 1 is 0.649 and the value of

Analysis of Factors Affecting Local Revenues with Integration System of Oil Palm - Cattle

237

Adjusted R

is 0.586, meaning all of independent

variables affected the dependent variable which is

the income of 64.9% and the rest 35.1% is

influenced by other variable (μ) which is not

examined in this study. To see whether there is the

influence of the independent variable on the

dependent variable can be seen from the value of

significance. The smaller significance value than α

(0.05) is the variable X5 (educational variable).

While other variables, the resulting significance

value is greater than α (0.05). These results may

explain that simultaneously the factors of calves

cost, feed cost, maintenance scale, age, farming

experience do not affect the income of beef cattle

farmers. The smaller (<0.05) significance value is or

the greater t table value is compared to the value of t

arithmetic shows the independent variables are

increasingly influential on the dependent variable.

Table 1: Statistical Analysis into Factors Affecting Farmers’ Income.

Model R R Square

Adjusted R

Square

Std. Error of

the Estimate

Change Statistics

R Square

Change

F Change df1

1 0.806

0.649 0.585 0.272 0.649 10.176 6

a. Predictors: (Constant), Experience, Calf, Maintenance, Feed, Farmers’ Age, Education

b. Dependent Variable: Y

ANOVA

Model Sum of Squares df Mean Square F Sig.

Regression 4.528 6 0.755 10.176 0.000

Residual 2.447 33 0.074

Total 6.975 39

a. Dependent Variable: Y

b. Predictors: (Constant), Experience, Calf, Maintenance, Feed, Farmers’ Age, Education

Model

Unstandardized Coefficients

Standardized

Coefficients

T Sig.

B Std. Error Beta

(Constant) -0.267 0.755 -.354 0.725

Calf 0.106 0.097 0.124 1.088 0.284

Feed 0.214 0.108 0.229 1.985 0.056

Maintenance 0.043 0.106 0.048 0.405 0.688

Farmers’ Age 0.161 0.105 0.192 1.527 0.136

Education 0.343 0.123 0.385 2.786 0.009

Experience 0.218 0.125 0.245 1.750 0.089

The regression model of multiple linear

regression analysis is Y = -0.267 + 0.106X

0.214X

- 0.043X

+ 0.161X

+ 0.343X

+ 0.218X

The variable cost of calfstatistically has a

regression coefficient of 0.106 indicating a positive

value which means if the value of the regression

coefficient of other variables is considered fixed

(unchanged) then each additional cost of

calves/livestock of Rp 1,- will increase revenue by

Rp 0.106, but this increase does not effect on income

too much. Based on the significance value, calf cost

has a value of 0.282 > α (0.05) which means that the

cost of calf has no big effect on the income earned.

This can be caused by the raise of not the samecalf,

most farmersraise local calf of Aceh, Bali Calf and

there are some farmers who raise Simental calves.

The calf cost is related to the quality of the beef

cattle, the higher the price of calf the better the

quality will be, the quality will be determined by

outside appearance such as milk breeding, body

shape and livestock cleanliness. The better the

quality will affect the calf born. Saleh et al states

that the calf is one of the factors that determine the

success of farm production (Saleh et al. 2006). The

calf cost issued will certainly affect the value of beef

cattle at the end of the year, if the beef cattle is not

sold then the added value of the livestock will be

counted as revenue for the breeder.

ICMR 2018 - International Conference on Multidisciplinary Research

238

Partially the cost of feed does not give a big

effect on farmers’ income. The result of regression

of significant value is 0.056 bigger than α (0.05),

meaning that feed cost has no big significanceon

farmers’ income. The value of regression coefficient

for feed cost is positive equal to (0.214).With this

positive relationship,it means every increase of feed

cost as much as Rp 1 will increase income equal to

Rp 0.214. The contribution of feed costs to income

can affect profits or losses. Regression results

indicate that increased feed costs will increase the

income.

Livestock can be intensively maintained with

cheaper feeding costs sourced from oil palm

plantations than livestock using conventional

concentrates. If both livestock conditions (using

conventional concentrate feed and silage) are

maintained intensively then the cost of feed sourced

from oil palm plantations still has a smaller

economic value compared to the conventional

concentrate.

The comparison of these two types of feed

indicates that silage feeds that use natural resources

from oil palm plantations have better economic

value to increase farmers' income. According to

Gunawan et al, cheap feed using local resources is

one of the alternative solutions to reduce production

costs (Gunawan et al. 2003). Preparation strategy is

done by selecting the feed ingredients based on the

materials availability, nutritional content and price.

The role of oil palm plantations as one of the

forage sources that can be used as livestock

development is very supportive, supported by the

role of land vegetation as land cover and crop

residues as animal feed. However, forage processing

is required in order to maximize the nutrient content

and benefits of plantation waste as a substitute feed

during the dry season. The pattern of integration

with cattle is expected to be an integral part of the

oil palm plantation business, which ultimately can

have a huge impact on increasing farmers' income.

Significant value on the maintenance scale also

shows a less effect (0.688) on income. The result of

regression coefficient from maintenance scale shows

positive value of 0,043.With this positive relation, it

means every increase of maintenance scale as much

as 1 ST will increase farmers’ income equal to 4%

per cattle so that more number of livestock raised

hence the cattle farmer will obtain bigger income.

According to Soekartawi, the income of cattle

business is strongly influenced by the number of

livestock sold by farmers (Soekartawi, 2003). Krisna

and Mansur states that the higher the scale of the

business run and owned, the greater revenue will be

accepted because it can reduce production costs

(Krisna and Mansur, 2006). The study results show

that farmers have average 8.8 cows (8 ST mature

cattle), meaning that this maintenance includes

household scale, with the addition of the number of

cows raised, and it will increase the family income.

Saleh et al states that in the business of beef cattle

farming, every addition of 1 ST of cattle can

increase farmers’ income (Saleh et al. 2006). Krisna

and Manshur add that the high income earned by

farmer in running their livestock business is

influenced by the number of livestock raised (Krisna

and Manshur, 2006). The more cattle are raised, the

more profit the farmers will obtain.

Farmers’ age based on the regression result

shows a positive relationship (0.161) which means

that every 1 year in farmers’ age the farmers' income

will also increase by 16.1%. But this increase has no

big effect on income based on significant value. In

this case, the age effect of the breeder is relatively

uniform in the productive age criteria (22-55 years).

Based on the data obtained, 92% of respondents are

25-55 years old, with details of 25-35 years (20%),

36-45 years (40%), and 46-55 years (32%). Age

level in beef cattle business is one of the aspects that

affect the performance of business activities

undertaken.Work productivity will increase if the

farmers are still in a productive age and will

decrease the ability of work along with the increase

of the age. In addition, according to Maharani, by

the age, farmers tend to receive new innovations

faster and various information related to the

development of farming information technology and

information related to price and marketing

(Maharani, 2001).

The regression coefficient of education shows a

positive value (0.343). If the value of regression

coefficient of other variables remain (unchanged)

then any increase in education level will affect

farmers' income. The value of education significance

is 0.009 < α (0.05) which means it has big effect on

the income earned. This may be due to higher

educated farmers, or having a non-formal education

related to good livestock business. They are

generally more actively exploiting innovation or

new technology and although still using traditional

breeding systems.

The intensive integration of cattle-palm requires

feeding aids, farmers with better education will be

more receptive to receiving technology, so we

expect educated farmers can be pioneers to begin

paying attention to potential replacement feeds for

existing beef cattle in their respective areas. The

younger age of educated farmers according to

Analysis of Factors Affecting Local Revenues with Integration System of Oil Palm - Cattle

239

Edwina & Maharani are generally more curious and

interested in adopting higher technology. Education

can be obtained through formal and non-formal

education (Edwina and Maharani, 2014).

If the regression coefficients of other variables

are fixed then each addition of one year of breeding

experience will lead to an increase in income of

21.8%. Significant value of breeding experience is

0.089 > α (0.05) which means that the livestock

experience has no big effect on income. According

to Saleh et al in terms of livestock raising

management, farmers with more livestock farming

experience should master good farming practices

such as feeding, cage and livestock hygiene care,

health care and disease management. Breeding

experience in raising cows is a very valuable capital

to develop the business (Saleh et al. 2006). The

respondents experience of cattle raising shows the

experience of raising beef cattle between 2 to 40

years. The results of questionnaires and interviews

show that as much as 80% of the respondents have

experience breeding between 10-30 years, even 5%

of respondents have experience rearing for 31-40

years.

Age and experience in managing livestock will

affect the farmers’ ability running their business.

The farmers should increasingly know how to

develop their business in order to succeed and be

able to capture opportunities in the busines. But in

the field there is no effect as expected. This can be

caused by the fact that the farmers do not make

positive changes in the income-generating effort, for

example the farmers raise the feed for his beef cattle

and tend to let the animals feed themselves. This

condition will cause the livestock not to get a good

weight, so this kind of thing is a habit (social

culture) for the general farmers.

4 CONCLUSIONS

Based on the result of data, analysis and discussion,

it can be concluded that:

1. Simultaneously, all independent variables (Calf

Cost, Feed, Cattle Maintenance Scale, Farmer's

Age, farmer's education, and Breeding

Experience influence dependent variable which

is income of 64.9% and the other 35.1% is

influenced by other variables (μ).

2. Partially, the calf cost, feed, cattle maintenance

scale, farmers’ age, and breeding experience

variables do not provide a big escort to farmers'

income with integrated systems. Only variables

of farmers’ education have a significance value

smaller than α (0.05), meaning that education

variable can affect livestock farmers' income

through the use of innovation or new

technology.

ACKNOWLEDGEMENTS

The authors express the appreciation and gratitude to

the Directorate of Research and Community Service

(DRPM) of the Ministry of Research, Technology

and Higher Education Number: DIPA-

042.06.1.401516/2017 under Contract Number:

376.a/Umuslim/KP.2018 for funding on the Grant

Research of Institution Strategic Scheme.

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