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international journal of recent technology and engineering ijrte issn 2277 3878 online volume 8 issue 6 march 2020 impact of land conversion on oil palm production and income edison abstract ...

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                                                                               International Journal of Recent Technology and Engineering (IJRTE)  
                                                                                               ISSN: 2277-3878 (Online), Volume-8 Issue-6, March 2020 
                
                Impact of Land Conversion on Oil Palm Production 
                                                                            and Income 
                                                                                        Edison 
                     Abstract: Objective of study was to evaluate impact of land               In  the  meantime, productivity improvement should not be 
               conversion on oil palm production, evaluate its impact on income                done  by  using  more  efficient  technology,  biological 
               of oil palm, and explore effect of social-economic aspects to land              technology,  mechanical technology and social technology. 
               conversion of oil palm. Research used cross section data of 200                 However,  this  technology  certainly  leads  to  savings  of 
               respondents.      Data  was  analysed  using  qualitative  and                  labour in the sector concerned (Adriani et al. 2017). 
               quantitative  method.  Results  showed  that  a  significant  factors                 In agricultural business, production is obtained through 
               affected oil palm production which included land acreage, labour                a long and risky process. The time gap required is not the 
               and capital. Significant factors affected income were selling price             same depending on the type of commodity being cultivated. 
               and  capital.  Then,  socio-economic  factors  affected  land                   Not  only  time,  the  adequacy  of  production  factors  also 
               conversion of oil palm such as education, income and saving. It 
               found that paddy fields are more converted to oil palm fields, in               contribute as a determinant of production achievement. In 
               which  paddy  fields  were  more  in  dryland  than  technical                  terms  of  time,  the  plantation  business  requires  a  longer 
               irrigation.  Then,  in  terms  of  farming  analysis,  efficiency               period compared to food crops and some horticultural crops. 
               smallholder oil palm was higher than efficiency paddy (B/C on                   Each type of plant also has a different periodization of each 
               paddy was of 1.02 and B/C on oil palm was of 1.71).                             other (Edison, 2020). 
                                                                                                     The  new  production  process  can  run  if  the  required 
               Keywords: land conversion, oil palm, production, income                         requirements can be met, this requirement is better known as 
                                    I.     INTRODUCTION                                        the  production  factor.  Input  contain  four  components,  i.e. 
                     Agricultural sector is a very crucial sector of its role in               land,  labour,  capital,  and  skill  or  management  (Daniel, 
               economy in most of developing countries. It can be found                        2012). Each of these factors has different functions and they 
               from role of agricultural programme in supporting people as                     are related to each other. If one factor is not available, then 
               well  as  providing  employment  opportunities  to  people,                     the  production  process  will  not  run,  especially  the  three 
               contributing  national  income  and  supporting  to  various                    factors  mentioned  above.  These  factors  of  production  are 
               product.  Various  data  explored  that  in  some  developing                   something  that  absolutely  must  be  available  that  will  be 
               countries over 68% of people is in agricultural sector and                      more perfect if  sufficiency  requirements  can  be  met.  The 
               over  45%  of  national  income  is  come  from  agricultural                   capital production factor is partially allocated to provide the 
               sector  and  almost  all  exports  are  agricultural  commodity                 input  of  physical  production,  i.e.  seeds,  fertilizers  and 
               (Todaro, 2008).                                                                 pesticides.  Production  input  is  one  of  the  determinants  of 
                     Development  and  modernization  of  agriculture  in                      production  activities,  because  plants  need  it  to  grow  and 
               developing countries can contribute to increase production,                     develop well (Asni, 2015). 
               increase farmer income and provide markets for industrial                             Production  activities  are  activities  in  a  rather  narrow 
               sector  production,  expand  employment  opportunities,                         scope and therefore discuss the micro aspects. In studying 
               increase  exports  and  create  savings  for  development.                      this aspect, the role of input production and output (output 
               Agricultural and rural development actually contains many                       or production) relationships gets the main concern. The role 
               dilemmas (Wildayana and Armanto, 2018). On the one hand                         of  input  can  not  only  be  viewed  in  terms  of  its  kind  or 
                                                                                               availability in a timely manner, but also can be reviewed in 
               agricultural production and productivity must be improved.                      terms  of  efficiency  of  its  use  (Alwarritzi  et.al.  2015). 
               Increased production and productivity is a must because it is                   Because of these  factors  the  productivity  gap  (yield  gap) 
               the basis and prerequisite for the process of industrialization                 between productivity and productivity produced by farmers 
               (De  Vos,  2016).  If  high  growth  rates  of  the  agricultural               is  required.  In  many  cases,  as  long  as  this  productivity 
               sector can be achieved, changes in production structures that                   occurs because of factors that are difficult to overcome by 
               reduce the level of relative productivity and even then will                    human (farmers) such as the existence of technology that 
               not be avoided unless the employment structure can also be                      can  not  be  moved  and  the  existence  of  environmental 
               changed following changes in the production structure.                          differences, such as climate. Since these two factors are very 
                                                                                               difficult to overcome by farmers, the resulting differences 
                                                                                               caused  by  these  two  factors  lead  to  the  productivity  gap 
                                                                                               from the experimental results and from the potential of a 
               Manuscript received on February 10, 2020.                                       farm. (Soekartawi, 2006). 
               Revised Manuscript received on February 20, 2020.  
               Manuscript published on March 30, 2020.  
               * Correspondence Author                                                                     II.      REVIEW OF LITERATURE 
                   Edison*,  Dept.  of  Agricultural  Economics,  Universitas  of  Jambi, 
               Indonesia. E-mail: ediedison950@yahoo.co.id                                           Land as one of the factors of production is a factory of 
                                                                                               agricultural products which is the place of the production 
               ©  The  Authors.  Published  by  Blue  Eyes  Intelligence  Engineering  and     process and the production is obtained. In agriculture, the 
               Sciences Publication (BEIESP). This is an open access article under the CC      factor  of  land  production  has  a  very  important  position. 
               BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/) 
                                                                                               According to Schwarse et al.  
                      
                 Retrieval Number: F7408038620/2020©BEIESP 
                 DOI:10.35940/ijrte.F7408.038620                                                    Published By: 
                 Journal Website: www.ijrte.org                                                     Blue Eyes Intelligence Engineering 
                                                                                           337      & Sciences Publication  
                                                                                  
                                        Impact of Land Conversion on Oil Palm Production and Income 
              
                  (2005), the change of function of land is the change of          employment  opportunities,  and  the  increasingly  damaged 
             one land use to another, so that many problems arise related          environment  (Saswattcha  et  al.  2016).  Based  on  previous 
             to land use policies.                                                 studies, in this study it is suspected that there are factors that 
                   This  transfer  of  land  functions  generally  involves        influence the decision of farmers to transfer land functions. 
             transformation in allocating land resources from one use to           These factors are the area of land with adequacy irrigation 
             another. Change of function of agricultural land is an issue          water, difference in revenue from rice farming with cocoa 
             that needs attention because the community's dependence on            and oil palm, the tendency of the development of paddy, 
             the agricultural sector, especially food. In land conversion          cocoa and palm oil prices. 
             activities,  it  is  very  closely  related  to  land  demand  and 
             supply, where supply or supply is very limited while land                               III.    OBJECTIVES 
             demand  is  not  limited  (Krishna  et  al,  2016).  Factors             Objective  of  research  was  to  evaluate  impact  of  land 
             affecting  land  supply  are  natural  physical  characteristics,     conversion on oil palm production, evaluate its impact on 
             economic  factors,  economic  factors,  and  institutional            income of oil palm, and explore effect of social-economic 
             factors.  Besides  the  factors  that  demand  for  land  are  the    aspects to land conversion of oil palm. 
             population,    technological     developments,      habits    and 
             traditions,  education  and  culture,  tastes  and  goals,  and                   IV.     RESEARCH METHODS 
             changes in attitudes and values caused by age development 
             (Irawan, 2012).                                                                Research  method  conducted  using  a  survey 
                  According to Pastusiak et al. (2017), land use change            method. Research area was identified purposively in Tanjab 
             generally involves transformation in the allocation of land           Timur  District  and  Muaro  Jambi  District.  Because  Jambi 
             resources from one use to another. According to Vijay et al.          becomes one of best production of oil palm in Indonesia. 
             (2016),  changes  in  land  use  patterns  are  essentially           Tanjab Timur District and Muaro Jambi District had high 
             permanent  and  can  also  be  temporary.  If  the  technically       number land conversions to oil palm in Jambi.  
             irrigated  paddy  field  turns  into  a  residential  or  industrial           Cluster  Sampling  methods  was  used  to  identify 
             area, then land conversion can be permanent. However, if              respondents. In order to cover attentions from varies aspects, 
             the  rice  fields  are  turned  into  plantations,  then  the         number of samples are 200 households (65 respondents on 
             conversion of land can be temporary, because in the coming            paddy farmers, 65 respondents on oil palm farmers and 70 
             year it can be turned into fields again. The conversion of            respondents  on  paddy  with  oil  palm  farmers).  Study  was 
             permanent  land  functions  is  usually  greater  than  the           evaluated in 2019. 
             temporary transfer of function. Irawan (2012) revealed that                    Cobb-Douglas production function model used in 
             the negative impact of the conversion of paddy land is the            this  study.  Mathematically,  expression  of  Cobb-Douglas 
             degradation  of  the  carrying  capacity  of  national  food          production function model is: (Soekartawi, 2009) 
             security,  declining  agricultural  income,  and  increasing                             1    2    m
                                                                                            Q =   I     I   .. I    v ………………… 1 
             poverty of local communities. In addition, other impacts are                           1   2     m
             the  destruction  of  paddy  ecosystems,  as  well  as  cultural      And it can be expressed in logit form as: 
                                                                                            Log Q = log   +   log I  +  log I  + ... +   log 
             changes from agrarian to urban culture, causing crime.                                         0    1      1    2      2         m
                                                                                   I  + e …………………………………….. 2 
                  According Wuepper et al. (2018) that land use change             m
                                                                                   Where, Q is yield, I  ... I  are inputs component, and   ..... 
             that occurs has both direct and indirect impacts. The direct                               1    n                               1
                                                                                     = regression coefficient. 
             impacts  caused  by  land  conversion  include  loss  of  fertile      n       Input used consists land acreage, input labour, and 
             agricultural   land,    loss   of   investment  in  irrigation        input capital. There are factors that affect  income assumed 
             infrastructure,  natural  damage  to  the  landscape,  and            including  yield,  price,  input  labour,  and  input  capital. 
             environmental problems. From the studies mentioned above,             Linkage input that affects yield and income is expressed in 
             it  can  be  seen  the  factors  that  influence  the  decision  of   Cobb-Douglas production function (Gujarati, 2008). 
             farmers to switch from rice to non-paddy rice. In this study                   Cobb-Douglas production function will be used to 
             the  factors  that  caused  farmers  to  change  their  land  use     know effect input on paddy production as: 
             include the area of land owned by farmers in the study area,                              1   2   3
                                                                                            Q =   I      I    I   u ………………. 3 
             the adequacy of irrigation water for wetland rice, differences                        0 11   12   13   1
             in revenue from rice farming with cocoa and oil palm, and             Through logarithmic formulation, equation (3) is stated to 
             trends in the development of prices for lowland rice, cocoa,          linear equation using Ordinary Least Square (OLS) method 
             and palm (Hadi, 2014). There are several causes of the high           as: 
                                                                                            Log Q  = Iog   +   log I  +   log I  +   log I  
             land use change including low profitability of lowland rice                           1         0    1     11     2     12    3      13
                                                                                   + u ……………………………..  4 
             farming, non-compliance with spatial regulations (weak law               1 
             enforcement on spatial planning), desires to get short-term           Where, Q1  is yield, I11 is land acreage, I12 is labour, I13 is 
                                                                                   capital, and    -   =  regression coefficient. 
             benefits  from  the  conversion  of  paddy  land,  and  low                          1   3
             coordination between institutions and departments related to                   Equation model that expressed paddy income is as 
             use planning land (Amurtiya et al., 2016).                            follows: 
                                                                                            Log Q  = log   +   log I  +   log I  +   log 
                  Land is a strategic resource and has economic value.                             2         0     1      21    2      22     3
                                                                                   I  +   log I  + u ……………. 5
             The area of agricultural land continues to decline each year,         23     4      24    2                 
                                                                                   Where, Q  is paddy income, I  is yield, I  is price, I  is 
             especially  paddy  fields.  Extensive  paddy  fields  are  very                 2                      21            22           23
             important to obtain maximum production results. But along             input  labour,  I   is  input  capital,     -   is  regression 
                                                                                   coefficient.     24                         1   4
             with the land use change that occurred, the area of wetland 
             rice has declined. In addition there are some losses that must                  
             be calculated as a negative impact of the function of rice 
             fields, such as the loss of potential rice production, loss of 
              Retrieval Number: F7408038620/2020©BEIESP                                Published By: 
              DOI:10.35940/ijrte.F7408.038620                                          Blue Eyes Intelligence Engineering 
              Journal Website: www.ijrte.org                                   338     & Sciences Publication  
               
                                                                     International Journal of Recent Technology and Engineering (IJRTE)  
                                                                                    ISSN: 2277-3878 (Online), Volume-8 Issue-6, March 2020 
              
                       Input model that explain oil palm yield is expressed         expressed that oil palm needed few labour than rubber plant 
             as:                                                                    which became one of crucial plants.  
                       Log Q  = log   + 1 log I  +   log I  +   log I            
                              3        0           31    2      32    3     33      Agricultural Production Costs.  
             + u ……………………………..  6 
                 3                                                                       In  traditional  paddy  farming,  some  costs  are  linkage 
             Where, Q  is oil palm production, I  is land acreage, I  is 
                        3                             31                    32      labour  costs  from  preparation  till  harvest.  Meanwhile, 
             labour used, I  is capital,   -  is  regression coefficient. 
                            33              1  3                                    improvement in paddy cultivation using machinery, paddy 
                       Furthermore, input  model that explain income of 
             oil palm is expressed as:                                              becomes  more  expensive.  Production  costs  paddy  was  2 
                       Log Q  = log   +   log I  +   log I  +   log I           million IDR/ha/year per planting season. It covered fertiliser 
                              4             1     41    2      42    3      43     costs  (26%),  land  processing  and  harvest  costs  (74%). 
             +   log I  + u  …………………. 7 
                 4      44    4                                                     Furthermore,  cost  on  oil  palm  is  about  3  million 
             where, Q  is oil palm revenues, I  is yield, I  is selling 
                        4                           41             42               IDR/ha/year.  It  covered  fertiliser  costs  (38%  ),  and 
             price,  I   is  labour  used,  I   is  capital,   -   is  regression 
                      43                    44              1   4                   harvesting costs (62%). Cost for cultivation and harvesting 
             coefficient.                                                           in paddy was about 68% of production costs.  
                       Finally, equation input model that affect area paddy               
             that convert model to oil palm plantation is as:                       Paddy and Palm Oil Productivity.  
                       Log Q  = log   +   log I  +   log I  +   log I  
                              5             1      51    2      52    3      53         Paddy productivity is about 5.5 tons/ha/time, then when 
             +   log I  +   log I  +   log I  + u …..  8 
                 4      54    5      55    6      56    5                           farmer  cultivates  twice  in  a  year,  productivity  is  11 
             Where, Q  is oil palm income, I  is yield, I  is price, I  is 
                        5                        51           52            53      tons/ha/year. However, farmers grow mostly one each year 
             input labour, I  is input capital, I  is land acreage, I   is 
                              54                    55                    56        with  productivity  about  2,75  tons/ha/year.  This  condition 
             water availability,  -   is regression coefficients. 
                                   1   6                                            caused  paddy  farmers  had  small  income  than  oil  palm 
                        V.      RESULT AND DISCUSSION                               farmers. Indonesian Central Bureau of Statistics data (2018) 
                                                                                    showed  that  productivity  of  dryland  paddy  was  5.31 
             Characteristics of Respondents                                         tons/ha/year. This meant that paddy productivity carried out 
                  Farm size. Farm size each farmer was in average 2,00              in  research  area  is  smaller  than  paddy  productivity  in 
             hectare,  and  area  farming  owned  was  generally  unity  in         Indonesia.  Meanwhile,  oil  palm  productivity  on  averages 
             different  cropping  patterns.  In  average,  farm  size  of  rice     was 22.5 tons of fresh fruit bunches/ha/year in research area. 
             farmers was 1,58 hectare while farm size of oil farm farmers           When, It was compared to other plantations results about 24 
             was 1,69 hectare. With variation cultivated land, agricultural         tons/ha/year, that result was closed to 1 ton/ha/month.  
             activity  is  classified  as  small  farmers.  In  research  area,      
             respondents plant oil palm by changing their paddy in the              Input Affecting Production and Income on Paddy  
             existing land and it was not allow to extent their cultivation         (a). Analysis Input Affecting Production on Paddy 
             land only if they buy other land. Therefore, cultivated paddy                    To  test  Hypothesis  in  this  research,  it  is  used 
             area is usually  little bit different from oil palm cultivated         quantity  model from cross-section data about 65 samples. 
             area. Land conversion from paddy to oil palm, did not cause            Estimation of input affecting paddy production was 
             much different in their farming land. Before farmers change             
             to  use  new  technology,  farmers  were  not  successful  on                    Table 1. Estimation of Paddy Production 
             paddy cultivation. Some of them move to do other job to                    Item       Coefficient    Std. Error   t- value    Probability 
             look  for  new  better  life.  Others  leave  their  land  to           Constanta       -12.672                                     
             inheritance of land cultivation to their children.                        Log I          0.489         0.129       3.78         0.0007 
                                                                                           11 
                                                                                       Log I         0. 012         0.015       0.78         0.0782 
                  Labour Use. Labour use in paddy was in averages of                       12
                                                                                       Log I         0. 594         0.120       4.93         0.0002 
             27,9 workdays/cultivation season on per existing land. This                   13
                                                                                                                                                 
             is rather high because they did not use mechanization. This                 2
             condition can be seen when they worked on land preparation                R adj         0.8142                                      
                                                                                       F-stat         74.25                                      
             and  harvesting.  If  they  used  only  human  labour,  it  took        
             around 25 workdays per hectare. When it used machine to                                                                      2
                                                                                         From estimation,  it  found  that  adjusted  R   equals  of 
             harvest,  it  needed  only  around  4  hours  per  hectare.            0.8142.  It  had  meaning  that  input  of  land  acreage,  input 
             Mechanisation can increase farmers ability to operate their            labour and input capital was to explain paddy production. 
             land. On research area, considering movement agricultural              Model can explain problem about 81.425 and about 18.58% 
             mechanisation, it had changed paddy farming from labour                was influenced other problems not included in model. F-test 
             intensive to capital intensive. Mechanization has been used            was  74,25.  It  had  a  meaning  together  (simultaneously) 
             in land cultivation i.e. hand tractor. Doing seedling did not          among land acreage, input labour, and input capital affected 
             also used because of existing of tabela (direct seed planting          variation paddy production. 
             without seedling method). It also used Combined harvesters              
             for  harvesting.  Condition  was  the  same  as  Brhanu  (2018)        (b). Analysis of Input Affecting Paddy Income 
             who  stated  that  applying  mechanical  technology  could                  Paddy income covers income earned from paddy after 
             increase productivity significantly.                                   deducting cost incurred to  get paddy. Estimation of input 
                  Labour on oil palm cultivation is not really different            affecting paddy income was 
             from paddy. Oil palm joining to private plantation do all                    
             activities for their activities. Oil palm used labour was only               
             about 18 workdays for every 6 months for 2 ha. Therefore,                    
             farmers’ leisure time is high, allowing farmers to work on                   
             other activities. Result was the same as Krishna et al. (2016)               
               Retrieval Number: F7408038620/2020©BEIESP                                  
               DOI:10.35940/ijrte.F7408.038620                                          Published By: 
               Journal Website: www.ijrte.org                                           Blue Eyes Intelligence Engineering 
                                                                                339     & Sciences Publication  
                                                                                                
                                               Impact of Land Conversion on Oil Palm Production and Income 
                
                          Table 2. Estimation Income on Paddy                                    production,  price,  input  labour  and  input  capital  affected 
               Item             Coefficient       Std. Error    t- value      Probability        variation oil palm income. 
               Constanta        31.113                                                           Analysis Input Causing Paddy Converting to Oil Palm  
               Log I            3.903             1.297         3.01          0.0001 
                     21                                                                                     It  found  that  estimation  of  input  affecting  paddy 
               Log I            3.284             0.623         5.27          0.0009 
                     22                                                                          converting to oil palm can be seen as follows: 
               Log I            0.924             1.593         0.58          0.0000 
                     23
               Log I            0.884             0.902         0.98          0.0028 
                     24                                                                               Table 5. Estimation Input in Oil Palm Conversion 
                                                                               
                 2                                                                               Item             Coefficient       Std. Error    t- value     Probability 
               R adj            0.8269                                                           Constanta        18.254                                        
               F-stat           91.78                                                            Log I            0.712             0.172         4.13         0.0001 
                                                                                                      51 
                                                                                                 Log I            0. 538            0.217         2.48         0.0009 
                                                                              2                       52
                     It  found  from  estimation  that  adjusted  R   equal  of                  Log I            0. 607            0.116         5.78         0.0000 
                                                                                                      53
               0.8269.  It  had  meaning  that  input  quantity,  price,  input                  Log I            0. 671            0.227         2.96         0.0028 
                                                                                                      54
                                                                                                 Log I            0. 328            0.388         1.87         0.0046 
               labour  and  input  capital  was  to  explain  paddy  income.                          55
                                                                                                 Log I            - 0.209           0.127         1.64         0.0053 
               Model can explain variation paddy earnings about 82,69%.                               56
                                                                                                                                                                
               And  about  17.31%,  was  influenced  other  variables  not                         2
                                                                                                 R adj            0.8109                                        
               included  in  model.  F-test  was  91,78.  It  had  a  meaning                    F-stat           46.32                                         
               together  (simultaneously)  among  production,  price,  input                      
               labour and input capital affected variation paddy income.                               Result found that adjusted R2 was about 0.8109. It had 
                                                                                                 meaning  education  factor,  social  factor,  income  factor, 
               Input Affecting Oil Palm Production and Income                                    money factor, land suitability, water factor was to influence 
               (a). Analysis Input Affecting Oil Palm Production                                 land conversion of oil palm. Model can explain variation of 
                     Estimation  production  on  oil  palm  used  cross-section                  oil palm about 81.09%. And, about 18.91% was influenced 
               data about 65 samples. Estimation input affecting oil palm                        not included in model. F-test was 46.32. It has a meaning 
               production can be seen as follows:                                                together  (simultaneously)  among  social  factor,  income 
                                                                                                 factor, money factor, land suitability, water factor affected 
                        Table 3. Estimation Production on Oil Palm                               converting oil palm. 
               Item             Coefficient       Std. Error    t-value       Probability              Therefore, social factors (such as education, interested), 
               Constanta        21.618                                                           economic factors (such as income, money), and land factors 
               Log I            0.589             0.125         4.73          0.0001 
                     31                                                                          (such as land, water) have impact significantly in conversion 
               Log I            0. 972            0.190         5.11          0.0009 
                     32                                                                          paddy  to  oil  palm.  Specifically,  factors  caused  land 
               Log I            1.002             0.138         7.26          0.0000 
                     33
                                                                                                 conversion paddy to oil palm which was economic factor 
                 2
               R adj.           0.8293                                                           and social factor. 
               F-stat           41.94                                                                  Based on estimation, it found that water factor showed 
                
                                                                                   2             negative effect but not significant. It meant that paddy that 
                     It  found  that  from  estimation  that  adjusted  R   equal                convert to oil palm was not technical irrigation land. Result 
               0.8293. It had meaning that land acreage, input labour and                        also explored that level education of farmers, paddy acreage 
               input capital was to explain oil palm production. Model can                       had  impact  to  switch  to  oil  palm  plantation  as  well  as 
               explain  variation  oil  palm  production  about  82.93%.  And                    income  factor  and  money  factor.  Good  education  factor 
               about 17.07% was influenced  not included in model. F-test 
               was  41,94.    It  had  a  meaning  together  (simultaneously)                    caused farmers to be better knowledge in use technology or 
               among land acreage, input labour and input capital affected                       innovation and conversion to be more valuable crop.  
               variation oil palm production.                                                          On  economic  point  of  view,  oil  palm  had  better 
                                                                                                 economic aspect than paddy which can be seen on oil palm 
               (b). Estimation of Input Affecting Oil Palm Income                                efficiency  (B/C  value)  better  than  paddy.  Oil  palm  is  a 
                           Income is oil palm earned from production of oil                      prospect  crop  that  creates  better  guaranteed  income  than 
               palm minus costs incurred to get production. Estimation of                        other crop i.e. paddy. Good economic value oil palm creates 
               input affecting oil palm income can be seen as follows:                           farmers  interest  to  grow  oil  palm,  rather  than  to  paddy. 
                                                                                                 Based  on  economic  analysis,  it  found  that  it  has  good 
                           Table 4. Estimation Income of Oil Palm                                opportunity  cost  of  conversion  from  paddy  to  oil  palm. 
               Item             Coefficient       Std. Error    t- value      Probability        Expenditure cost paddy was IDR. 1,658,500, - per hectare 
               Constanta        4.249                                                            each year and it created income of IDR. 1,667,250, - per 
               Log I            0.642             0.253         2.54          0.0001 
                     41 
               Log I            0. 997            0.216         4.61          0.0009 
                     42                                                                          hectare  per  year.  Meanwhile,  oil  palm  cost  was  IDR. 
               Log I            0. 926            0.857         1.08          0.0000 
                     43                                                                          4,612,625, - per hectare every year and it got income IDR. 
               Log I            1. 121            0.143         7.82          0.0028 
                     44                                                                          7,824,148,  -  per  hectare  per  year.  So,  difference  between 
                                                                               
                 2
               R adj            0.7528                                                           cost of oil palm and paddy per hectare was IDR. 3.295,625, 
               F-stat           32.89                                                            - and income gap was of IDR. 6.156.898, -. It had meaning 
                                                                                                 that  each  additional  cost  IDR.  3.295,625,  -  from  paddy, 
                     Result found that adjusted R2 was about 0.7528. It had                      farmers  got  more  income  of  IDR.  6.156.898,  -  from  oil 
               meaning  that  production,  price,  input  labour  and  input                     palm. Therefore, opportunity cost of land conversion paddy 
               capital  was  to  explain  income  of  oil  palm.  Model  can                     to palm oil was IDR. 6.156.898. This analysis showed that 
               explain  variation  of  oil  palm  about  75.28%.  And,  about                    B/C ratio paddy was 1.02 and 
               24.72% was influenced not included in model. F-test was                           B/C ratio oil palm oil was 1.71. 
               32,89.  It  has  a  meaning  together  (simultaneously)  among                           
                 Retrieval Number: F7408038620/2020©BEIESP                                            Published By: 
                 DOI:10.35940/ijrte.F7408.038620                                                      Blue Eyes Intelligence Engineering 
                 Journal Website: www.ijrte.org                                             340       & Sciences Publication  
                  
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...International journal of recent technology and engineering ijrte issn online volume issue march impact land conversion on oil palm production income edison abstract objective study was to evaluate in the meantime productivity improvement should not be its done by using more efficient biological explore effect social economic aspects mechanical research used cross section data however this certainly leads savings respondents analysed qualitative labour sector concerned adriani et al quantitative method results showed that a significant factors agricultural business is obtained through affected which included acreage long risky process time gap required capital were selling price same depending type commodity being cultivated then socio only adequacy also such as education saving it found paddy fields are converted contribute determinant achievement dryland than technical terms plantation requires longer irrigation farming analysis efficiency period compared food crops some horticultural...

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