Research on World Agricultural Economy

Factors Influencing Farmers’ Willingness to Pay for NPK Fertilizer in Specialty Coffee: Insights from Pagar Alam, Indonesia

Meizar Hanafi

Department of Agricultural Socioeconomics, Faculty of Agriculture, Gadjah Mada University, Yogyakarta, 55281, Indonesia

Irham

Department of Agricultural Socioeconomics, Faculty of Agriculture, Gadjah Mada University, Yogyakarta, 55281, Indonesia

Lestari Rahayu Waluyati

Department of Agricultural Socioeconomics, Faculty of Agriculture, Gadjah Mada University, Yogyakarta, 55281, Indonesia

DOI: https://doi.org/10.36956/rwae.v5i3.1121

Received: 5 June 2024; Received in revised form: 24 July 2024; Accepted: 26 July 2024; Published: 9 September 2024

---

Abstract

Robusta coffee cultivation in Pagar Alam City has not been carried out optimally because most farmers do not practice precision farming patterns in the use of production inputs to increase coffee plant productivity, including the use of unsubsidised coffee-specific fertilisers. In order to be accepted by farmers, fertiliser companies must pay attention to the willingness to pay of farmers for these fertilisers. For this reason, the study aims to: (1) determine farmer perceptions of nutrient content, ease of use and quality of fertiliser, (2) determine the value of farmers’ willingness to pay for unsubsidised NPK fertiliser for coffee in Pagar Alam City, and (3) determine the effect of nutrient content, ease of use and quality of fertiliser and other factors on farmers' WTP in Pagar Alam City. The research location was determined purposively with the consideration that Pagar Alam City is one of the highest coffee producing areas in Indonesia. A total of 100 coffee farmers were used as samples and interviewed using a prepared questionnaire. Data on farmers' willingness to pay was obtained by using the contingent valuation method (CVM). Descriptive analysis was used to determine the level of farmers' perception of nutrient content, ease of use and quality of fertiliser. Multiple linear regression methods was used to analyze the effect of nutrient content, ease of use and fertiliser quality and other factors on farmers' WTP. The results showed that the average value of farmers' WTP for unsubsidised NPK fertiliser for coffee was IDR 11,160 per kg which is lower than the price of unsubsidised NPK fertiliser commonly paid by coffee farmers. The study found that fertiliser quality, ease of fertiliser uses and fertiliser nutrient content, farm income level, land size, age, farming experience, household size and farmer membership status in farmer groups significantly affect the farmers’ WTP.

Keywords: Willingness to Pay; Contingent Valuation Method; Robusta Coffee; NPK Fertilizer; Farming Income

---

References

[1] Ministry of Agriculture, 2022. Coffee Plantation Commodity Outlook. Jakarta: Data Information Center of Agriculture - Secretariat General of Agriculture Ministry of Indonesia.

[2] FAOSTAT (Food & Agriculture Organization) [Internet]. 2024 [cited 2024 May 26];(May). Available from: https://www.fao.org/faostat/en/#data/QI

[3] International Coffe Organization, 2023. “Arabica and Robusta arbitrage remains low as I-CIP volatility remains stable”. September:1–12.

[4] F. & B. Zen, 2018. “Productivity and Technical Efficiency of Coffee Plantation Businesses in South Sumatra & Lampung,” J. Ekon. Dan Pembang. Indones., vol. 18, p. No 3 Special Edition Call for Paper JEPI.

[5] F. & B. Zen, 2018. “Productivity and Technical Efficiency of Coffee Plantation Businesses in South Sumatra & Lampung,” J. Ekon. Dan Pembang. Indones., vol. 18, p. No 3 Special Edition Call for Paper JEPI.

[6] H. Widi, 2023. “Ministry of Agriculture: Subsidised Fertilizer Allocation for 2024 Below Requirements,” 06 Desember 202, Jakarta, 2023. [Online]. Available: https://www.kompas.id/baca/ekonomi/2023/12/06/alokasi-pupuk-bersubsidi-2024-jauh-di-bawah-kebutuhan

[7] T. Gorai, P. K. Yadav, G. L. Choudhary, and A. Kumar, 2021. “Site-specific Crop Nutrient Management for Precision Agriculture – A Review,” vol. 40, no. 10, pp. 37–52, doi: 10.9734/CJAST/2021/v40i1031357.

[8] I. Irmeilyana, 2020. “Profile and Character Description of Coffee Farming Businesses in Pagar Alam Based on Descriptive Statistics and Correlation,” J. Infomedia, vol. 5, no. 1, p. 1, 2020, doi: 10.30811/jim.v5i1.1584.

[9] F. Ashardiono and A. Trihartono, 2024. “Optimizing the potential of Indonesian coffee: a dual market approach,” Cogent Soc. Sci., vol. 10, no. 1, p., 2024, doi: 10.1080/23311886.2024.2340206

[10] K. Yovo, 2016. “Willingness to Pay for Fertilizers at Unsubsidised Price in Togo,” Sch J Econ Bus Manag, vol. 3, no. 10, pp. 565–574, doi: 10.36347/sjebm.2016.v03i10.007.

[11] G. K. Danso, M. Otoo, W. Ekere, S. Ddungu, and G. Madurangi, 2017. “Market feasibility of faecal sludge and municipal solid waste-based compost as measured by farmers’ willingness-to-pay for product attributes: Evidence from Kampala, Uganda,” Resources, vol. 6, no. 3, pp. 1–17, doi: 10.3390/resources6030031.

[12] L. O. Okuma and R. A. Isiorhovoja, 2017. “Farmers’ perception and willingness to pay for organic fertilizer in Delta State, Nigeria,” J. Agric. Food …, vol. 4, no. 1, pp. 9–20, [Online]. Available: https://www.jafedelsu.com/archive/fulltext/new/9_20 Okuma and Isiorhovoja.pdf

[13] Bhekani Sandile Zondo, 2020. “Adoption and Willingness to Pay for Organic fertilizer: A case of Smallholder Potato ( Solanum tuberosum L .) Farmers in KwaZulu-Natal , South Africa,” vol. 122, no. March, pp. 257–268.

[14] B. K. Topuz, 2023. “Members’ willingness to pay for sustainability agricultural organization: A Heckman model approach,” Emirates J. Food Agric., vol. 35, no. 11, pp. 1–9, doi: 10.9755/ejfa.2023.3178.

[15] C. S. Herath and R. Wijekoon, 2022. “Growers’ fertilizer application behavior and their willingness to pay for the fertilizer: a study in coconut triangle of Sri Lanka,” Thai J. Agric. Sci., vol. 54, no. 1.

[16] M. Hanemann, J. Loomis, and B. Kanninen, 1991. “Statistical Efficiency of Double‐Bounded Dichotomous Choice Contingent Valuation,” Am. J. Agric. Econ., vol. 73, no. 4, pp. 1255–1263, doi: 10.2307/1242453.

[17] F. Okim, N. Hanani, and S. Syafrial, 2022. “The Impact of Input and Output Prices on Indonesian Coffee Production and Trade Performance,” Habitat, vol. 33, no. 1, pp. 33–43, doi: 10.21776/ub.habitat.2022.033.1.4.

[18] F. S. Nuvey et al., 2023. “Farmers’ valuation and willingness to pay for vaccines to protect livestock resources against priority infectious diseases in Ghana,” Prev. Vet. Med., vol. 219, no. September, doi: 10.1016/j.prevetmed.2023.106028.

[19] I. Irmeilyana, N. Ngudiantoro, and S. I. Maiyanti, 2022. “Socialization of sustainable Pagar Alam Coffee Farming using herbicide reductors,” Abdimas J. Pengabdi. Masy. Univ. Merdeka Malang, vol. 7, no. 2, pp. 309–318, doi: 10.26905/abdimas.v7i2.6372.

[20] M. Sarwani and S. G. I. Mulyono, Joko, “Global Fertilizer Crysis and the Impact on Indonesia,” J. Anal. Kebijak., vol. 7, no. 1, 2023, [Online]. Available: https://www.researchgate.net/publication/372348714_Global_Fertilizer_Crisis_The_Impact_On_Indonesia.

[21] Mirdah Aprilia Amir, 2022. “Willingness To Pay (Wtp) Dan Willingness To Continue (Wtc) Petani Pada Program Asuransi Usahatani Padi (Autp) Di Kabupaten Wajo,” Gadjah Mada University. [Online]. Available: https://etd.repository.ugm.ac.id/penelitian/detail/209921.

[22] S. W, Tessema. Holden, 2006. “Soil Degradation, Poverty, and Farmers‟ Willingness to Invest in Soil Conservation: A case from a Highland in Southern Ethiopia.,” in Ethiopian Economic Association, Proceedings of the Third International Conference on the Ethiopian Economy, pp. 147–164.

[23] J. K. M. Kuwornu, A. B. Narh Jnr, I. S. Egyir, E. E. Onumah, and S. Gebrezgabher, 2017. “Willingness to pay for excreta pellet fertilizer: Empirical evidence from Ghana,” Acta Agric. Slov., vol. 109, no. 2, pp. 165–173, doi: 10.14720/aas.2017.109.2.14.

[24] Ginting, Thasia, 2014. “Estimation of Processed Sludge Fertilizer Price from Wastewater Treatment Plant Based on Production Costs and Willingness to Pay” Inst. Pertanian Bogor.

[25] E. Oti Agyekum, K. Ohene-Yankyera, B. Keraita, S. Cudjoe Fialor, and R. C. Abaidoo, 2014. “Willingness to Pay for Faecal Compost by Farmers in Southern Ghana,” J. Econ. Sustain. Dev. www.iiste.org ISSN, vol. 5, no. 2, pp. 18–25, [Online]. Available: www.iiste.org

[26] C. R Doss, 2001. “How does gender affect the adoption of agricultural innovations? The case of improved maize technology in Ghana,” AgEcon Search, vol. 25, pp. 27–29.

[27] N. Etim and G. Edet, 2013. “Adoption of inorganic fertilizer by resource poor cassava farmers in Niger Delta region, Nigeria.,” Int. J. Agric. Innov. Res., vol. 2, no. 1, pp. 94–98, [Online]. Available: https://www.semanticscholar.org/paper/6c98dd372fbfa93bac6e9e39f0bdcfbb229dc369.

[28] G. Thapa, Y. K. Gaihre, and D. Choudhary, 2023. “Global fertilizer crisis and willingness to pay for chemical fertilizers: empirical evidence from Nepal,” J. Agribus. Dev. Emerg. Econ., 2024, doi: 10.1108/JADEE-11-2023-0278.

[29] International Coffee Organization, 2024. “Coffee Market Report,” no. January, London, pp. 1–12, January. [Online]. Available: https://www.icocoffee.org/documents/cy2023-24/cmr-0124-e.pdf.

[30] M. Nasrin, S. Bauer, M. Arman, and S. Akhter, 2021. “Farmers as Consumers of Quality Fertilizers: Willingness to Pay and Empirical Evidences from Bangladesh,” South Asian J. Soc. Stud. Econ., vol. 12, no. 1, pp. 15–26, doi: 10.9734/sajsse/2021/v12i130295.

[31] R. Malinda Aptika, Dwidjono Hadi Darwanto, Jangkung Handoyo Mulyo, 2020. “Farmers ’ Willingness To Pay For Bio-Slurry Fertilizer In Central Java,” AGRO Ekon.

[32] S. Tsigkou and S. Klonaris, 2020. “Eliciting Farmers’ Willingness to Pay for Innovative Fertilizer Against Soil Salinity: Comparison of Two Methods in a Field Survey,” Int. J. Agric. Manag., vol. 9, pp. 130–141, doi: 10.5836/ijam/2020-09-130.

[33] A. Shee, C. Azzarri, and B. Haile, 2020. “Farmers’willingness to pay for improved agricultural technologies: Evidence from a field experiment in Tanzania,” Sustain., vol. 12, no. 1, 2020, doi: 10.3390/SU12010216.

[34] P. Ward, S. Gupta, V. Singh, S. Gautam, and D. Guerena, 2019. “What is the true value of fertilizer? An assessment of farmers willingness- to-pay for fertilizers across the hill and Terai regions of Nepal,” Int. Food Policy Res. Inst., vol. 13, no. March, pp. 1–4.

[35] D. Sugiyono, 2013. Quantitative, Qualitative, and Research & Development (R&D) Research Methods. Bandung: ALFABETA. [Online]. Available: www.alfabeta.com ALFABETA, 2013. [Online]. Available: www.alfabeta.com.

[36] C. William Gemmel, 1977. Sampling Techniques, 3rd Editio. New York: John Wiley and Sons, Inc.

[37] Yuliardi. R., 2017. Research Statistics Plus SPSS Tutorial. Yogyakarta: Innosain.

[38] Henley & Spash CL., 1999. Cost-Benefit Analysis and Enviroment. USA: Edward Elgar Publishing Company.

[39] PT Pupuk Indonesia, 2024. “Catalogue of Pupuk Indonesia's Product.” Sahabat Petani PT Pupuk Indonesia.

[40] Asdar and Badrullah, 2016. “Method of Successive Interval in Community Research (Ordinal Transformation Data to Interval Data in Mathematic Education Studies),” Print) Int. J. Soc. Sci. Humanit. Res., vol. 4, no. 2, pp. 356–363, 2016, [Online]. Available: www.researchpublish.com.

[41] Ghozali, Imam, 2016. Multivariate Analysis Application with IBM SPSS Program (7th Edition), Diponegoro University.

[42] Hair, JF, Anderson R.L, Tatham, W.C Black, 1998. Multivariate data analysis, Fifth-Edit. New Jersey, USA: Prentice-Hall.

[43] Y. Zhou, 2018. “Factors Affecting Farmer’s Willingness to Pay for Adopting Vegetable Residue Compost in North China,” vol. 38, no. 6, pp. 401–4011.

[44] P. Mir-Bernal and T. Sádaba, 2022. “the Ultimate Marketing Mix Theory: a Proposal for Marketing and Managers,” Rev. Int. Emprend., vol. 26, no. 4.

[45] Ellicott A, 2016. “Developing awareness of the quality and proper use of fertilizers in Bangladesh", Paris.