Farmer Behavior on Facing Production Risk of Organic Rice Farming in Indonesia

This study identified farmer behavior on facing production risk of organic rice farming in Dlingo Village, Mojosongo District, Boyolali Regency, Central Java Province, Indonesia. This research used Just and Pope’s function model and statistical package for the social sciences method. The aim of this study is to determine farmer behavior and the most significant factor influencing production risk. The research was conducted on 216 organic rice farmers as a sample during two planting seasons with purposive sampling method. The result of the research shows that the most significant factor influencing production risk of organic rice farming is tractor’s rental fee with coefficient of 0.310. The farmer behavior on facing production risk are 46,30% farmers (100 people) make risk averse decision (risk averse) and 53,70% other farmer (116 people) dare to face the risk (risk seeking).


Determination of Research Site
The study was conducted in Dlingo Village, Mojosongo District, Boyolali Regency, Central Java, Indonesia. Boyolali was chosen as a research area because there are still many farmers who run organic rice farming. The reasons for the study were conducted in the area were: (i) both groups are located in the same area, (ii) they have the same water source from soil water irrigation, (iii) they are separated from other farmer' groups, and (iv) they can carry out three planting seasons in a year.

Sample of Farmers
Total population of organic rice farmers with ICS (Internal Control System) and nationally certified from seven villages (Catur, Jatisari, Dlingo, Metuk, Andong, Wates, and Glonggong) and five districts (Andong, Simo, Mojosongo, Sambi, and Nagasari) in Boyolali Regency as many as 521 people. From the population of farmers, the sample of 216 (organic rice farmer with national certified) was taken through purposive sampling method during two planting seasons.

Data Analysis
To determine the farmer behavior on facing production risk on organic rice farming system in Boyolali Regency was used Just & Pope's production risk function model, i.e., production function plus the production risk function. Measurement of production risk (Just & Pope 1979) refers to the method of (Moscardi & de Janvry 1977). Measurements are made by selecting the most significant factors that influence the determination of regression results. The most significant influencing factor parameters are used to determine the level of farmer behavior on facing production risk based on econometric approach. The production risk function can be formulated as follows: y = fj(x, z) + u = fj(x, z) + hj(x, z) ε (1) where: y = the number of output x = vector of the number of variables input (xi,..., xj) z = vector of the number of quasi fixed input (zi, ..., zk) fj(x,z) = production function hj(x, z) ε = production risk function u = heteroskedastic error term with mean = nol and varians = (h (.)) 2 ε = homoskedastic error term with mean = nol and varians = 1 If hj(x,z) is positive, it means the addition of input j can raise the risk, on the contrary, if hj(x,z) is negative, it means the addition of input j can reduce the risk. The description of the translation of the formula is: fj(x,z) = production function Y = organic rice production (kg/ha/planting season) X1 = land area used by the farmers in one planting season (ha/planting season) X2 = the number of seeds (kg/ha/planting season) X3 = solid organic fertilizer (kg/ha/planting season) X4 = liquid organic pesticide (liter/ha/planting season) X5 = liquid organic pesticide (liter/ha/planting season) X6 = solid organic pesticide (kg/ha/planting season) X7 = labor from outside the family (man days/ha/planting season) X8 = labor within family (man days/ha/planting season) X9 = tractor's rental fee (IDR/ha/planting season) To calculate the farmer behavior on production risk is used a function of behavior on risk as follows: (2) where: where: fj = marginal product with input j wj = normalized input price j hj = first derivative of risk function to input j θi = production risk behavior

Hypotheses
Testing hypotheses about farmer behavior in dealing with risks and on choosing the level of production risk on organic rice farming in Boyolali Regency, Central Java, Indonesia is carried out in the form of the following

The Most Significant Factors Influence
The production of organic rice is determined by the use of its inputs, such as the area of land, the number of organic rice seeds, the amount of organic fertilizer (solid and liquid), the amount of organic pesticides (solid and liquid), wage labor (in the family and outside the family) tractor's rental fee. For the risk is caused by the production function by choosing the most significant factors that influence the determination of regression results. The most significant influencing factor parameters are used to determine the level of farmer behavior in facing production risk based on econometric approach. Table 1 shows the parameters of the most significant factors that influence the determination of regression results. These parameters will be used to determine the level of farmer behavior in facing production risk based on econometric approach. Based on Table 1, the most significant factor influencing and contributing greatly to the risk of organic rice production is tractor's rental fee with coefficient of 0.310. In order to match production function {f (x, z)} and production risk function {h (x, z) ε} it is necessary to look at the factor of production which has the greatest contribution to organic rice production, i.e. tractor's rental fee factor (X9). Furthermore, it should be seen that fj (marginal product with input j), wj (normalized input price j), hj (first derivative of risk function to input j) and θi (production risk behavior) from calculation result using SPSS (Statistical Package for the Social Sciences) method (Pallant 2010). As the most dominant factor, tractor's rental fee is very influential on organic rice production and production risk. If the tractor's rental fee is higher, the organic rice production will be greater; and if the tractor's rental fee is higher, then the behavior of farmers in making decisions facing production risk in terms of risk seeking will be even greater.

Farmer Behavior toward Organic Rice Production Risk
Farmer behavior towards organic rice production risk is assumed to maximize the expected utility from normalized profit with price. The attitude of organic rice farmers in Boyolali, Central Java, Indonesia on making decisions can be shown in Table 2 Table 2 can be seen that from the 216 samples, there are 46.30% of the farmers (100 people) making decisions are afraid of risk (risk averse). Organic rice farmer behavior shows that if there is an increase of variance in profit then the farmers will compensate by raising the expected profit and it is a measure of satisfaction level of the farmers. While 53.70% of other farmers (116 people) are dare to take risk (risk seeking). The farmer's behavior shows that if there is an increase in profit range, the farmers will compensate by lowering the expected profit. Furthermore, to see the level of risk faced by farmers, the coefficient of variation was used. The greater value of coefficient of variation shows the greater risk of organic rice production and conversely, the smaller value of coefficient of variation shows the smaller risk of production risk of organic rice farming.

Conclusion
In this study, organic rice farming is very important because in addition to eco-friendly, indirectly it can be long term alternative solution for the next generation to increase environmental health. Organic rice farming system is expected to be more efficient by reducing the number of production risks, namely by identifying factors that influencing to the production risk and farmer behavior in the face of existing production risk.
The most significant factor that influencing and contributing greatly to the production risk of organic rice farming is tractor's rental fee with a coefficient of 0.310. As the most dominant factor, tractor's rental fee is very influential on organic rice production and production risk. Farmers behavior on facing production risk are 46.30% farmers make risk averse decision (risk averse) and 53.70% other farmers dare to face the risk (risk seeking). It's mean the farmers on organic rice farming in Boyolali, Central Java, Indonesia make risk seeking decision or more dare to face the production risk.