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Go Back       Himalayan Journal of Agriculture | Volume :3 Issue:4 | Aug. 10, 2022
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DOI : 10.47310/Hja.2022.v03i04.007       Download PDF       HTML       XML

Risk Management Analysis of Rice Business in Bohar Village, Taman District, Sidoarjo Regency Analysis Of Rice Farming Risk Management In Bohar Village, Taman District, Sidoarjo Regency


Navy Dilidharmayanti, Teguh Soedarto and Indra Tjahaja Amir


Master of Agribusiness Study Program, Faculty of Agriculture, UPN Veterans East Java, Jl. Rungkut Madya No. 1 Mountain Anyar, Gunung Anyar District, Surabaya East Java City, Indonesia 60294


*Corresponding Author

Navy Dilidharmayanti


Article History

Received: 20.07.2022

Accepted: 30.07.2022

Published: 10.08.2022


Abstract: Risk management is a tool that can assist farmers in making decisions in dealing with risks. So that research on risk analysis is important to be carried out in order to determine appropriate farming risk management actions for farmers. This study aims to analyze the kinds of risks faced, analyze the level of risk, risk management strategies for rice farming in Bohar Village, Taman District, Sidoarjo Regency. The research location was chosen purposively in the village of Bohar, Taman District, Sidoarjo Regency, which has a high risk potential and is one of the areas that has a fairly low production in Sidoarjo Regency. The data is divided into primary data and secondary data, primary data obtained from interviews with a total sample of 36 people. The analysis in this study uses descriptive analysis and the level of risk. The results of the research that the risk management carried out by rice farmers in Bohar Village, Taman District, Sidoarjo Regency, namely starting from farmers identifying damage or problems that occur in rice farming. Farmers also take several ways to reduce the risks that occur in their farming. There are three strategies carried out by farmers, namely ex-ante strategies (before the risk occurs) such as rice - rice - rice cropping patterns, conventional planting systems and the use of superior varieties, and seed treatment. Interactive strategies (when there is a risk) such as doing embroidery, spacing tightly or jajar legowo, using fertilizer types and volumes according to needs, looking for workers from outside the village and borrowing credit from informal sources. Ex-post strategies (after a risk occurs) such as completely relying on rice farming, taking from savings and finding solutions to existing failures.


Keywords: Risk Management, Risk Level, Farming, Rice.


INTRODUCTION

Paddy is plant lots of food produced by people in Indonesia, because is wrong one food tree for society. Beside _ Thing that, commodity main plant food in Thing this rice (rice) is a ingredient eat main Indonesian society which reaches 255.46 million people with rate growth by 1.31% and level consumption rice reached 124.89 kg/ capita / year, so that with existence increase population every year, then occur enhancement production rice every year where Thing this Becomes priority for resolve deficiency supply rice (Baeha, D. G. 2019).


Rice production is converted into rice for the population's food consumption, rice production in East Java Province in 2021 is estimated to be equivalent to 5.69 million tons of rice, or a decrease of 20.45 thousand tons (0.36 percent) compared to rice production in 2020. According to the Central Statistics Agency, rice production in 2019 and 2020 is estimated at 5.50 million tons and 5.71 million tons, respectively. In line with rice production, the largest rice production in 2021 will occur in March with an estimated production of around 1.26 million tons of rice. Rice production in East Java from 2018 to 2020 tends to fluctuate for production and productivity tends to decline. Rice production centers in East Java in the last three years were spread out in 2018 with a productivity of 58.26, the remaining 56.28 - 56.88% in 2019 - 2020. This is due to several factors that generally occur in the province of Java. East, such as the presence of pests that quite affect the productivity of rice plants in January - April and May - August such as rats, stem borers, and others.


According to (Fahmi, I. 2016) risk is a form of uncertainty about a situation that will occur later (future) with decisions taken based on various considerations. Risk management is an attempt to identify, analyze, and control risks in every company activity with the aim of obtaining higher effectiveness and efficiency. The risk management function is better explained and understood through the steps in the decision-making process. The process begins by recognizing the various risks that are being faced. Then the risk must be measured, analyzed, and evaluated in terms of frequency, severity, and variability. Furthermore, decisions must be made such as selecting and using methods to deal with each of the identified risks (Herman, D. 2016).


Risk is the probability of an event resulting in a loss when the event occurs during a certain period (Badariah, N. et al., 2012). The presence of risk in agriculture has a significant influence on farmers' production and investment decisions, so a good risk management concept is needed. Risk can be said as a result (or deviation from the realization of a disaster) that may occur unexpectedly. Even though an activity has been planned as well as possible, it still contains uncertainty that later it will not go completely according to the plan. In other words, risk must be managed as well as possible so that the company's effectiveness is not compromised. The fact that farmers live in different climatic and institutional conditions implies different perceptions of risk. This situation is caused by: 1) different probabilities of certain risk factors 2) different mentality and awareness of farmers and or 3) a mixture of both (Borges, J. A. R., & Machado, J. A. D. 2012). Understanding the right risk perception can be seen as a prerequisite for choosing an efficient risk management strategy, because farmers who are not aware of the risks they face will not be able to manage them effectively (Sulewski, P., & Kłoczko-Gajewska, A. 2014).


The production process is the main source of income for agricultural producers, so it is important for farmers to recognize and manage production risks (Ullah, R. et al., 2015). The risks faced by rice farmers can be in the form of production risk, production selling price risk and income risk. Production risk is caused by, among others, pest and disease attacks, weather or natural conditions, problematic water supply, and variations in inputs used. Natural conditions greatly affect the variation in yield, for example with very large or very small rainfall conditions, which can cause crop failure. Unpredictable weather conditions are often the cause of the decline in rice production and productivity produced by farmers.


Farmers are also faced with the risk of market price uncertainty which affects farmers' income. In certain areas, this uncertainty has forced farmers to switch to other commodities with higher economic value and less risk of crop damage. If this is allowed to continue, it is feared that it will have an impact on the stability of national food security, especially the production and availability of the staple food of rice (Soeparno, H. et al., 2013). The importance of risk management is to implement good business governance, to face the rapidly changing business environment, to measure business risk, to manage risk systematically and to maximize profit. Risk management concepts that are important for assessing a risk include the maximum level of damage that will be experienced by the company in the event of an event that poses a risk. With risk management, the possibility of the risks faced will be smaller and can provide income in accordance with the expectations of farmers. Risk management is a tool that can assist farmers in making decisions in dealing with risks. So that research on risk analysis is important to be carried out in order to determine appropriate farming risk management actions for farmers. This study aims to analyze the kinds of risks faced, analyze the level of risk, risk management strategies for rice farming in Bohar Village, Taman District, Sidoarjo Regency.


RESEARCH METHODS:

Location study chosen purposively done _ with method take sample based on criteria certain , i.e., with consideration the area inside many there is farmer which rice is wrong one area in the village Bohar District Park District Sidoarjo have potency risk tall and is wrong one area that has production enough low in district Sidoarjo . The total population according to agricultural extension workers in Bohar village is 190 farmers. The method of determining the number of samples used is the Slovin method, with the formula. Based on the results above, the number of samples is 36 people.



Where:

N = population

N = sample

e = error


The kinds of risks of rice farming in Bohar village were analyzed using descriptive analysis. This analysis describes the kinds of risks faced by farmers. Elton and Gruber in (Situmeang, H. 2011) explain that the quantitative analysis used to measure risk is by using the coefficient of variation with the following formula:



Information:

KV = coefficient of variation

_t = standard deviation

Xr = average value

To find out the farmers' perceptions of the risks of rice farming, the researchers gave questions to be answered by the respondents and the scores given were different for each available answer which was analyzed descriptively quantitatively. In measuring farmers' perceptions of farming risk, farmers were given questions through a questionnaire, namely a total of 20 questions with a total of 36 respondents. Each answer is associated with a form of statement or attitude support expressed in words. By calculating the score as follows:


Total Score of Each Criterion : Score Achievement (3,2,1) x Number of Respondents........(2)

Total Score : Total Score of Each Criteria.................................(3)

Average Total Score : Total Score / Number of Respondents...........................(4)


Determination of the level of perception is grouped by quantitative descriptive analysis into five categories, namely very bad, bad, not good, good and very good, and categorized based on intervals. According to (Soegyarto, M. 1997) the interval value can be obtained from the following formula:


Highest score – Lowest score

𝐼𝑛𝑡𝑒𝑟𝑣𝑎𝑙 (𝑖) =

𝛴category (c)


After the interval (i) and category boundary (c) are known, the next step is to create classes to classify the level of farmers' perceptions of the risks of rice farming in Bohar village, Taman sub-district. Risk management in dealing with rice farming risks is known by using descriptive analysis. This analysis describes the ways in which rice farmers face the risks of their farming. Respondents describe strategies that can be done to address existing risks efficiently and effectively.


RESULTS AND DISCUSSION:

  • Types of Risks Facing Rice Farmers in Bohar Village:

Source risk could originated from production, price or market, institution, people or farmer, dan finance. Farmer could choose more from one desired answer _ for every type risks faced. _ all kinds _ most disturbing risk farmer on farming rice in the village Bohar could seen in Table 1.



Table 1: Types of Risks Faced by Rice Farmers in Bohar Village

No

Information

Answer

1

Risks originating from production

  1. Disturbance of plant-disturbing organisms (pests, diseases, and weeds)

  2. Uncertain weather or climate

  3. Natural disasters

Reason:

Because if rice plants are attacked by pests, it can cause production failure,

Uncertain weather/climate can disrupt/slow down the production process.


36

36

2

Market-sourced risk

  1. The price of rice received by farmers is lower than that of traders

  2. The price of rice is not calculated the lowest price

  3. Substandard rice sales



Reason:

Because the price of rice is still dependent on several middlemen or rice traders so that farmers cannot determine the price of rice themselves, the absence of an institution that protects the price of rice in farmers causes prices to be unstable.


36

30

3

Risk comes from humans

  1. Farmers' health is disrupted

  2. Reduced workforce in rice farming production activities

  3. Different abilities of outside workers

Reason:

Because human resources are starting to reduce the interest of farmers and the behavior of farmers who are less than optimal also affects rice farming.


36

4

Risk comes from finance

  1. Lack of capital for farming

  2. Expenditure to meet the needs of farmer households is high

  3. There are no financial institutions to borrow capital

Reason:

Because if the capital owned is little, it can cause the production process to be not optimal, farmers do not dare to go into debt because the results are uncertain, spending for household needs is more, it can reduce capital for farming.


30

21

Source: Primary Data Analysis, 2021



Production risk can be caused by uncontrolled events usually caused by extreme natural conditions such as rainfall, climate, weather, and attacks by pests and diseases. It is known that as many as 100% of the respondents or 36 respondents experienced pest, weed and disease attacks. Rice fields are part of the ecosystem and food chain, so pest disturbance is natural and unavoidable. However, excessive and uncontrolled pest disturbance can have a negative impact on rice production. The pests that most often attack rice plants in this village are stem borers and rats. The disease that most often attacks rice plants in Bohar Village is crackle disease, this disease is caused by the bacterium Xanthomonas oryzae, which is a Gram negative bacterium that causes bacterial leaf blight (HDB) in rice. As many as 100% of the respondents or 36 respondents experienced erratic weather/climate, such as the rainy season or a long dry season which can also hamper the production process. For example, during the rainy season, the planting process is delayed due to rain, making it impossible to carry out activities outside the home. The long dry season also causes farmers to have to look for water sources first to irrigate their fields, so the production process will take longer.



Market or price risk relates to fluctuations in the price of a commodity or input price in farming activities. This situation causes fluctuations in farm income. As many as 100% of the respondents or 36 respondents experienced that the price of rice received by farmers was lower than that of traders so that the income was uncertain. Farmers are still involved in this sector but with a relatively weak role compared to other actors, such as rice mills or wholesalers. The bargaining position of farmers in front of rice mills or traders is very weak. As many as 83.3% of respondents or 30 respondents experienced the lowest price of unprotected rice. The price of grain in the last season was in the range of Rp. 3,700/kg. Meanwhile, the price of grain is usually in the range of Rp. 4,200/kg to Rp. 4,600/kg. Such a market structure allows farmers and consumers to be in a weak position and millers and rice traders in a dominant position.



Risk from humans or farmers is the risk posed by human behavior or farmers in rice farming activities so that it affects rice production. The results of the research on human resource risks faced by rice farmers in Bohar Village, Taman Subdistrict, are reduced labor in rice farming production activities. As many as 100% of the respondents or 36 respondents experienced a reduction in labor in rice farming production activities. Fewer workers can prolong farming activities. Starting from the laziness of farmers, the behavior of farmers who cultivate rice is less than optimal, and the ability of different workers can also affect rice farming in Bohar village, Taman sub-district.



Financial risk is the risk that is the impact for a farmer as a result of the way the farmer manages his finances. that as many as 83.3% of the respondents or 30 respondents experienced a lack of capital to cultivate rice. Rice farming requires a large amount of capital (depending on the scale). Most farmers have small-scale farming, so the opportunity to obtain sufficient capital for the next growing season is hindered by limited income from the previous planting season. As many as 58.3% of the respondents or 21 respondents experienced high expenditures to meet the needs of farmers' households. All respondents feel that daily expenditure is very high, household expenditure is of course a top priority in farm household finances. This makes the capital for farming less and less.



  • Rice Farming Risk Level in Bohar Village:

Risk analysis is to separate small acceptable risks from major risks, and prepare data to aid in risk prioritization and treatment. Risk analysis includes determining the source of risk, the likelihood and impact of the risk that will occur. Calculations regarding the magnitude of production risk, cost risk and income risk of rice farming in Bohar village are shown in Table 2.


Table 2: Amount of Production Risk, Cost and Income in Rice Farming in Bohar Village

No

Risk

KV . value

Category

Per Farmer

Per Hectare

1

Production

0.58

0.23

Low

2

Cost

0.65

0.19

Low

3

Income

0.68

0.49

Low

Source: Primary Data Analysis, 2021


Production risk KV value from production risk per farmer shows that each unit of rice production (kg) faces a risk of 0.58. The KV value of production risk per hectare shows that each unit of rice productivity (kg/ha) faces a risk of 0.23. The coefficient of variation (KV) values of 0.58 and 0.23 indicate that the production risk per farmer and per hectare of rice in Bohar Village, Taman District, Sidoarjo Regency is low because the value is smaller than 1. the production of each farmer does not have a high variation even though he manages a different area of land. Based on these results, the hypothesis which states that the level of risk of rice production in Bohar Village, Taman District, Sidoarjo Regency is high, is not accepted or rejected.


Cost risk The KV value of cost risk per farmer shows that each unit cost of lowland rice production (Rp) faces a risk of 0.65. The KV value of production risk per hectare shows that each unit of rice productivity (Rp/ha) faces a risk of 0.19. The coefficient of variation (KV) values of 0.65 and 0.19 indicate that the risk of production costs per farmer and per hectare of rice in Bohar Village, Taman District, Sidoarjo Regency is low because the value is smaller than 1. the distribution of production costs for each farmer does not have a high variation even though they manage different land areas. Based on these results, the hypothesis which states that the level of risk of rice production costs in Bohar Village, Taman District, Sidoarjo Regency is high, is not accepted or rejected.



Income risk KV value from income risk per farmer shows that each unit of rice income (Rp) faces a risk of 0.67. The KV value of income risk per hectare shows that each unit of rice productivity (Rp/ha) faces a risk of 0.48. The coefficient of variation (KV) values of 0.67 and 0.48 indicate that the risk of farm income per farmer and per hectare of rice in Bohar Village, Taman District, Sidoarjo Regency is low because the value is smaller than 1. the income distribution of each farmer does not have a high variation even though they manage different land areas . Based on these results, the hypothesis which states that the level of risk of rice farming income in Bohar Village, Taman District, Sidoarjo Regency is high, is not accepted or rejected.



  • Rice Farming Risk Management in Bohar Village:

Risk management in rice farming is a way that must be done by farmers in carrying out their farming activities to minimize the risks that will be accepted. Various risks that exist in rice farming will threaten the income obtained by farmers, so that agricultural risk management needs to be carried out. The ex-ante strategy is a strategy carried out by farmers before a risk occurs, this effort is designed to prepare the farm so that it is not in a position that is too vulnerable when a shock occurs. Efforts taken by farmers are farmers doing a rice-paddy-paddy cropping pattern. All respondents as many as 36 farmers chose to do a rice-paddy-rice cropping pattern because the irrigation was smooth so that the production process ran smoothly, to meet their daily needs and to supply stock in the warehouse. Using the rice - paddy - rice cropping pattern is a strategy to deal with: (1) production risk, decreased production or crop failure due to pests and diseases or flooding (2) market risk, namely increased demand resulting in stock availability.



An interactive strategy is a strategy that is carried out by farmers when a shock occurs, which involves relocating resources so that the risk impact on production can be minimized. Actions taken when experiencing labor shortages (TK) are to maximize the use of labor in the family, farmers choose to utilize and maximize labor in the family. Farmers also look for workers from outside the region if the labor in the family is not sufficient, especially during the harvest season. These workers from outside the area were chosen by farmers on the grounds that alternate labor could not be sufficient because other farmers were busy with their respective farms.



The ex-post strategy is a strategy carried out by farmers after a shock occurs, which is directed at relocating resources so that the risk impact on subsequent production can be minimized. If the rice farming suffers losses, the source of capital chosen by the farmers for the next farming is by borrowing from relatives or taking savings and some farmers choose to reduce the area of land to be planted with rice according to the existing capital. Farmers will find solutions to the causes of losses experienced in their farming. The solution is carried out according to the risks faced.



CONCLUSION:

all kinds _ most risk faced farmer rice in the village Bohar District Park District Sidoarjo is disturbance organism bully plants (OPT) and disease crops, unfavorable weather / climate _ fixed, price received rice _ farmer low price _ rice no protected, reduced power work so that behavior less farmers _ maximum in farming rice, small farming capital, and expenditure for sufficient needs house ladder farmer high. Risk level production, rate risk cost, and level risk income faced _ by farmer paddy ricefield belong to low.



The risk management carried out by rice farmers in Bohar Village, Taman District, Sidoarjo Regency, is starting from farmers identifying damage or problems that occur in rice farming, then looking for the cause of the damage. Farmers also take several ways to reduce the risks that occur in their farming. There are three strategies carried out by farmers, namely the ex-ante strategy (before the risk occurs) such as the rice - rice - rice cropping pattern, conventional planting systems and the use of superior varieties, and seed treatment. Interactive strategies (when there is a risk) such as doing embroidery, spacing tightly or jajar legowo, using fertilizer types and volumes according to needs, looking for workers from outside the village and borrowing credit from informal sources. Ex-post strategies (after a risk occurs) such as completely relying on rice farming, taking from savings and finding solutions to existing failures.


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