Profitability and land-use systems in South and Southeast Sulawesi, Indonesia
Assessing the profitability of existing farming systems generates information about which are most efficient and make more income for smallholding farmers, say Arif Rahmanulloh, Muhammad Sofiyuddin and Suyanto in a new working paper
All farmers need to make an income from their labours; even subsistence farmers have cash needs. In the dynamic landscapes that make up the provinces of South and Southeast Sulawesi in Indonesia, smallholding farmers engage in a range of land uses in order to support their families and improve their returns to labour.
Assessing the profitability of existing farming systems generates information about which are most efficient and provide the most income. Understanding efficiency also helps farmers when allocating their resources. They are able to invest in the systems that provide the highest financial return, leading to improvements in their livelihoods.
As well as profitability it’s important to understand the labour engagement of farming systems. Labour engagement is closely linked to the demographics of an area. By understanding the figures of labour engagement of existing systems, we can analyse the workforce availability for proposed developments.
As part of the ‘Agroforestry and Forestry in Sulawesi: Linking Knowledge with Action’ project, which is funded by the Canadian International Development Agency, we collected information on existing farming systems and estimated profitability for each land use. The profitability indicators used in our study were ‘net present value’, ‘equivalent annuity’ and ‘return to labour’.
Our estimation using the equivalent annuity measure showed that in South Sulawesi the most profitable land use was clove gardens, followed by coconut-cocoa mixed gardens and then coconut gardens. However, timber gardens generated the highest return to labour of the other land uses, while coconut used in a sugar system generated the lowest (USD 6 per day).
In Southeast Sulawesi, using the same measure, we found that the most profitable land-use system was timber gardens (specifically, teak) followed by pepper monoculture and patchouli monoculture. Teak gardens generated the highest return to labour, too, while cocoa monoculture generated the lowest (USD 10 per day).
In our working paper, we discuss how we reached the results mentioned above and other factors involved in improving the livelihoods of smallholders and the sustainability of their farming practices. For example, we concluded that assisting farmers to manage mixed gardens would reduce the environmental risks caused by the practice of crop planting that dominates in the mountainous areas. Incentives should be provided for focusing on tree-planting instead of on crops such as maize. Another assistance option is to assist farmers to access better germplasm, such as for cocoa and coffee. Coffee farmers were experiencing unproductive periods and this system should be rejuvenated. The cocoa farmers also need assistance in reducing pests and disease.
Edited by Robert Finlayson
Read the working paper
Rahmanulloh A, Sofiyuddin M, Suyanto. 2012. Agroforestry and Forestry in Sulawesi series: Profitability and land-use systems in South and Southeast Sulawesi. Working Paper 157. Bogor, Indonesia: World Agroforestry Centre (ICRAF) Southeast Asia Regional Program.
This work is related to the CGIAR Research Program on Forests, Trees and Agroforestry