Optimal allocation of resources in the coastal wetlands of Sumatra and case studies to tests the results

Abstract

There are three major groups of people that live in Muara Telang study area, these are local residents, Buginese, and transmigrants. They grow rice, coconuts, bananas and other crops. Coconuts and bananas are the cash crops of the area. The objective of this study is to determine the economic efficiency of the cropping system as it was applied by each of those three major groups of people in Muara Telang. Also it compares the costs, yields, labor use, net returns over time for the cropping systems applied by each. This study has also examined the nonformal institution of the Buginese farmers and the methods of clearing coastal wetlands by the three groups of people in Muara Tcl . The data collection was carried out by interviewing the farmers in their houses. Analysis of the data was done by using a linear programming model, which was developed for each of the three major groups of farmers in Muara Telang. The result shows that the farmers in Muara Telang have not yet allocated their existing scarce resources to alternative activities efficiently, and there is something to be gained from reallocation of these resources. The important limiting factors of production are planting, weeding and harvesting labor for large sized farms (local resident farms), harvesting labor for middle sized farms (Buginese farms), and weeding labor for smaller farms (transmigrant farms). Using hired or exchange labor is one way for solving these limiting factors which if applied, could lead to an increase of more than 40 percent in the farmers' income. Price policy was found not to be a practical policy instrument in changing the product mix or increasing the farmers' income. This is shown by the fact that product prices would have to change very drastically if any significant changes in production patterns are expected. Moreover, the distributional effect of increasing prices would only benefit the larger farmers, who already have higher incomes.