The Impact of Production and Price Risks on The Economic Behavior of Coconut Farmers' Households in Seruyan Regency, Central Borneo Province

Rusdi Rusdi,Harianto Harianto,Sri Hartoyo,Tanti Novianti

doi:10.17358/jma.18.3.372

Rusdi Rusdi, Harianto Harianto + Show 2 more

Open Access

https://doi.org/10.17358/jma.18.3.372

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Abstract

Production risk and price risk are problems that are often faced by coconut farmers. This is illustrated by the price and production instability faced by farmers, which will then have an impact on income and decision making in production and work allocation. The purpose of this study was to analyze the effect of changes in the level of production risk and price on the behavior of farmer households in coconut farming production decisions. This research was conducted in Seruyan Regency, Central Kalimantan Province with a total of 200 farmers as respondents. The production function and the risk function were analyzed using the Ordinary Least Square (OLS) method, while the farmer household economic model which was built using the simultaneous equation would be analyzed using the Two Stage Least Squares (2SLS) method. The results of the risk function analysis show that the risk of coconut production is directly proportional to the use of salt and herbicides. Land area, use of salt, herbicides and labor have a significant and positive effect on coconut production. The simulation results show an increased risk of negative impacts on the economy of coconut farmers' households. Keywords: production risk, price risk, household economy, coconut farmers

Highlights

Coconut farmers are often faced with risks, including production risk and price risk
The coconut production received by farmers every year tends to fluctuate, this indicates a risk, both price and production faced by coconut farmers, which will have an impact on decreasing coconut farmer household income so that it affects the economic behavior of farmer households (Figure 1)
The simulation analysis in this study focused on changes in the increase in production risk and coconut price risk

Summary

Introduction

Coconut farmers are often faced with risks, including production risk and price risk. The characteristics of the occurrence of production risk and coconut prices can be seen from the instability of production and prices received by coconut farmers every harvest season. This can be seen in (Figure 1), which shows the rise and fall of coconut production and prices. The risk of product prices can affect the price of products received by farmer households is not stable. The coconut production received by farmers every year tends to fluctuate, this indicates a risk, both price and production faced by coconut farmers, which will have an impact on decreasing coconut farmer household income so that it affects the economic behavior of farmer households (Figure 1)

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