Financial analysis of rubber plantation conversion into oil palm plantation and its impact on income distribution in Muaro Jambi Regency.

Abstract

Rubber and oil palm plantations give bigger contribution to region economics development in Jambi Province. These commodities export rank first in that of farm estate commodity. Land conversion activities happened from rubber plantation into oil palm plantation because of many reasons. The objectives of this research are to estimate profit of rubber and oil palm farming, to identify influencing factors of land conversion and to know its impact on income distribution. Methods to determine the structure of income and production cost are performed by farming analysis and feasibility of rubber and oil farming for 25 years are used by financial analysis. Factors influencing of farmer decision are analyzed using logit regression analysis and the impact on farmers income are analyzed using income distribution analysis. The research was conducted from February to March 2013 in Jambi Luar Kota Subdistrict, Muaro Jambi Regency. It applied a survey method using structured questionnaires. Primary data collected from rubber farmers and oil palm farmers who converted their rubber plantation. Secondary data also collected from relevant agencies. The results showed that a decrease of rubber plantation area in Muaro Jambi Regency during 2005 to 2010 about 3 429 hectares while in the same period the area of palm oil plantation increasing with average of 2 242.33 hectares per year. Profit and financial feasibility analysis of rubber farming is higher than oil palm farming. Influencing factors of land conversion are farmers education, frequency of rubber tapping and dummy other income sources at ten percent probability level. The job creation of rubber farming is less than oil palm farming for daily worker there.