Capital Preference of Rice Farmers on Income Improvement

Abstract

The availability of capital is pivotal in increasing the income of rice farmers, hence fostering economic growth and enhancing the overall well-being of these agricultural workers. Adequate cash enhances the potential for farmers to boost production, increase product quality, diversify their company operations, add value to their products, and explore new market opportunities. The objective of this study is to examine the capital preference of rice farmers and its influence on income improvement. The research was conducted in Bone Bolango Regency, targeting 333 rice farmers. The research approach used a Mix Method- Explanatory Sequential Design. The analysis employed Analytical Hierarchy Process (AHP) without hierarchy, also known as Simple Additive Weighting (SAW), and qualitative analysis by Miles and Huberman. The research findings revealed that the capital preference of rice farmers tends to support the use of self-capital as it positively impacts income improvement. In contrast, loan capital has various cost consequences that reduce income levels. Farmers’ capital also needs to be supported by social capital by emphasizing local wisdom values in agricultural cooperation networks and intellectual capital support, especially the implementation of Good Agricultural Practices (GAP) and various pest and disease management. Additionally, 70% of rice farmers’ capital sources are based on self-capital and loan capital (from grain millers). These results indicate that the capacity development of farmers should not only rely on financial capital assistance, but also strengthen the non-financial aspects of rice farmers’ efforts to increase income and welfare and reduce extreme poverty, which has been dominant among agricultural communities.