The Farmers' Risk Behavior in Facing Production and Income Risks in Organic and Inorganic Rice Farming in Serdang Bedagai Regency
Abstract
This study analyzed the income differences between organic and inorganic rice farming, the level of risk faced by farmers, and farmers' behavior in dealing with risk in Serdang Bedagai District, North Sumatra. Data were collected through interviews with farmers, field observations, and secondary sources. Analysis methods include income analysis, R/C ratio, risk analysis with certainty equivalent, and risk behavior analysis using utility functions. The results showed that the average production of organic rice was lower (1,924 kg/ha) than inorganic rice (4,668 kg/ha). However, the income risk in organic farming is more controllable than the inorganic system, with a coefficient of variation of 1 and 1, respectively. The stability of organic farming income is supported by higher organic grain prices and the use of environmentally friendly inputs. Income over total costs of organic rice is IDR 32,148,364/ha/growing season, higher than inorganic rice (IDR 27,277,691/ha/growing season), although organic production costs are also greater. Most organic farmers (45%) are classified as risk takers, while inorganic farmers are more dominant in this category (61%). The results of the R/C ratio analysis show that both systems are economically viable, with an R/C ratio value of 1.96 for organic rice and 2.03 for inorganic rice. This study confirms that organic rice farming is more stable and sustainable in the long term despite the challenge of high production costs.
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