Key findings:

The study highlights significant income inequality among rice farmers in Cokrokembang Village, Pacitan Regency, Indonesia, with a Gini coefficient of 0.88, indicating high disparity. Most farmers earn below the District/City Minimum Wage. The findings point to broader economic challenges, including political instability, climate change, and potential recession impacts.

What is known and what is new?

The study reaffirms that Indonesia's agricultural sector plays a crucial role in the economy, yet many farmers, particularly in isolated and impoverished regions like Pacitan Regency, face significant economic challenges. What is new in this research is the detailed analysis of income inequality among rice farmers in Cokrokembang Village using the Gini coefficient, revealing a high inequality level of 0.88. 

What is the implication, and what should change now?

The study's findings on high income inequality among rice farmers in Cokrokembang Village have several critical implications. Policymakers and stakeholders must prioritize targeted interventions to alleviate poverty and reduce economic disparity in rural areas. This could include increasing access to financial services, providing subsidies or support for modern farming techniques, and improving infrastructure to facilitate better market access. Additionally, enhancing education and training programs for farmers can help increase their productivity and income potential.

The characteristics of Indonesia as an agricultural country imply that the agricultural sector plays an important role in this country. The designation as an agricultural country is not without reason. Indonesia, which is an archipelagic country, is inhabited by the majority of the population living in rural areas and depending on the primary sector, especially agriculture. The role of the agricultural sector in the Indonesian economy in general is: (1) forming the Gross Domestic Product (GDP); (2) a source of foreign exchange earning; (3) food supply for the population and raw materials for industry; (4) one of the sectors that can alleviate the problem of poverty; (5) employment providers; (6) a source of increasing people's income; and (7) a source of strengthening national food security [1]. However, despite the robustness of the agricultural sector in facing economic shocks and its position as an important sector in Indonesia, it is ironic that in a country rich in natural resources, the life of the farming community is still far from prosperous. Arifin (2015) [2] says that 70% of Indonesia's poor are currently farmers. This is contrary to the notion that Indonesia is an agrarian country, but in fact the agrarian fundamental factors are mostly poor. Poor farmers tend to be rural farmers. This causes the emergence of economic inequality in the dimensions of income distribution. Economic inequality in the dimension of income distribution is a reality in the midst of society, both in rural and urban areas and is still an important issue to be addressed. This phenomenon requires an evaluation to be carried out. The evaluation process will be an important indicator in determining future change strategies. The process of improving the quality of community welfare is expected to be followed by improving the quality of society as a whole. One of them is by equitable distribution of people's income in various economic groups.

Poverty in Indonesia does not only occur in rural or agricultural (rural) communities, but also occurs in urban communities. But usually, poverty is synonymous with rural areas where the majority of people are actors in the agricultural sector. This is in accordance with Noto (2012) [3] which states that regions are divided into 6 (six) categories, namely:

1. Category (I): per capita GRDP above provincial GRDP, district/city poverty poverty under East Java Province poverty, high inequality (regency/city Gini index above provincial Gini index): Malang City, Surabaya City and Madiun City

2. Category (II): GRDP per capita below East Java Province, District/city poverty below East Java Province poverty, High inequality (District/city Gini Index > Provincial Gini Index): Blitar City

3. Category (III): GRDP per capita above East Java Province, Poverty in districts/cities below poverty in East Java Province, Low Inequality (District/city Gini Index below Provincial Gini Index): Sidoarjo Regency, Pasuruan Regency, Mojokerto Regency, Kediri City and Stone City.

4. Category (IV): GRDP per capita above East Java Province, Poverty in districts/cities above poverty in East Java Province, Low Inequality (District/City Gini Index below Provincial Gini Index): Gresik Regency, and Bojonegoro Regency.

5. Category (V): Per capita GRDP below East Java Province, Poverty districts/cities below East Java Province poverty, Low Inequality (district/city Gini Index below Provincial Gini Index): Pasuruan City, Mojokerto City, Tulungagung Regency, Banyuwangi Regency , Blitar Regency, Malang Regency, Magetan Regency, Jombang Regency, Jember Regency, Ponorogo Regency and Lumajang Regency.

6. Category (VI): GRDP per capita below East Java Province, Poverty in districts/cities above poverty in East Java Province, Low Inequality (District/city Gini Index below Provincial Gini Index): Bangkalan Regency, Pacitan Regency, Ponorogo City, Ngawi Regency , Trenggalek Regency, Tuban Regency, Bondowoso Regency, Probolinggo Regency, Sumenep Regency, Pamekasan Regency, Lamongan Regency, Nganjuk Regency, Kediri Regency, Situbondo Regency, Madiun Regency and Sampang Regency

East Java ranks first in terms of the number of poor people according to data from the Central Statistics Agency as of March 2022 with a total of 4,181 million poor people (Central Statistics Agency, 2022). East Java consists of 29 regencies and 9 cities. One of the districts in East Java which is an isolated area in terms of location is Pacitan Regency. Pacitan Regency is located at the southwestern tip of East Java Province, directly bordering Ponorogo Regency and Wonogiri Regency (Central Java) to the north, Trenggalek Regency and Ponorogo Regency to the east, Wonogiri Regency (Central Java) to the west and the Indian Ocean to the west. south. This isolation causes vulnerability to the welfare of the community from an economic standpoint, moreover, almost the entire area of Pacitan Regency is rural which is synonymous with agriculture and poverty due to the fact that the majority of its people are farmers and farm labourers.

Pacitan Regency, according to Noto (2012) [3], is included in category VI, namely GRDP per capita below the GRDP of East Java Province, low inequality (the gini index of Pacitan Regency is below the gini index of East Java Province), and the poverty of Pacitan Regency is above the poverty of East Java Province. One of the causes of inequality and poverty is the size of the working workforce. According to data from the Central Bureau of Statistics (2022), the number of working population aged 15 and over by main field of employment is as follows:

Table 1. Number of Working Population 15 Years and Over According to Main Employment of Pacitan Regency in 2020 – 2022

Source: Badan Pusat Statistik (2022) [4]

Pacitan Regency has an area of 1,389.92 km2 with geographical conditions mostly barren hills which makes the area more suitable for growing cassava or cassava, cloves, coconut and cocoa. Based on the results of the population census in 2020, the population of Pacitan Regency is 580,661 people with the number of poor people increasing in 2021 to 84,190 people from previously in 2020 as many as 80,820 people. This poverty causes inequality between the rich and the poor as measured using the Gini ratio. The Gini ratio can represent a measure of inequality and can represent the entire population.

Figure 1. Pacitan Regency Gini Ratio 2008 - 2021 Source: Badan Pusat Statistik (2021) 

Based on Figure 1 above, it is known that the inequality that occurs in Pacitan Regency shows a fluctuating graph, the highest occurred in 2019 and the lowest occurred in 2009. The lower the inequality, the better the harmony of life that occurs, but on the contrary the higher the inequality indicates that there is A wide gap between the rich and the poor. Ngadirojo District as one of the sub-districts in Pacitan Regency has a land elevation above sea level which is only around 10 MDPL making Ngadirojo District on average a lowland. In addition, Ngadirojo District is one of the sub-districts in Pacitan Regency which is included in the category of class III karst areas where mining activities are permitted under the provisions of the applicable law. The potential for gold and nickel mining threatens environmental sustainability including but not limited to the world of agriculture, even though the majority of the people in Ngadirojo District make a living in agriculture, including as farmers, farm labourers, breeders, gardeners, and in the fishery sector, but most of them work as farmers and farm labourers. This existing agricultural potential needs to be maximized in order to face future challenges in dealing with other sectors that could threaten the existence of agricultural actors. However, it is necessary to have a preliminary study regarding the condition of agriculture, especially farmers and farm laborers as the most livelihoods in agriculture in Ngadirojo District, Pacitan Regency.

Table 2. Livelihood Data for Population in Ngadirojo District in 2022

Source: Village Data in Ngadirojo District (2022)

Based on the data in Table 2 above, it is known that in the agricultural sector it is dominated by 13,548 farmers and 4,025 farm workers. The population of Ngadirojo District in 2022 based on the livelihoods of 18 villages in Ngadirojo District is 34,069 people with a proportion of 39.76% working as farmers, 11.81% working as farm laborers, 5.62% working as breeders, 0, 24% work as planters, 1.46% work in the fisheries sector and 41.08% work outside the agricultural sector. Other livelihoods consist of a variety of jobs outside the agricultural sector, including civil servants, military, police, bricklayers, carpenters, retirees, students, nurses and so on. With regard to mining activities, currently one village in Ngadirojo District, namely Cokrokembang Village, has been carrying out nickel mining activities where the impact is starting to be seen, namely the color of the river water changing as a result of nickel mining waste. In fact, based on the data in Table 3.2 there are 16 farmers. However, this data is recorded in the village, while data from Agricultural Field Extension Officers (PPL) for the number of farmers in Cokrokembang Village is as many as xxxx people. The problem of inequality in income distribution causes big problems both now and in the future. Apart from threats from other sectors that could destabilize the agricultural sector in Ngadirojo District, there are also various problems, including increases in fuel tariffs, political stability ahead of the 2024 elections, world political stability amidst the cold war in several countries, changing weather and climate. extremes, as well as a haunting recession. In addition, the internal problems of the agricultural sector are also very complex, including land conversion, high prices for production inputs, agricultural institutions that are still not well organized, coupled with the distinctive characteristics of primary agricultural products and the lack of expertise of agribusiness actors in providing added value. and so forth. It is feared that these problems will increase inequality in people's incomes. Coupled with the threat from the mining sector in Cokrokembang Village, it is a separate threat to the existence of agriculture there. The agricultural sector, whichhas been reliable so far, cannot be separated from the shadow of fear over the various problems mentioned above, moreover the lives of farmers and farm workers who have so far been far from prosperous. Inequality in the distribution of income is an important problem for the region to solve immediately because the impact that will occur is not only from an economic perspective, but also from a social perspective. Inequality in an area has become a classic problem that can be found anywhere. Therefore, this inequality is not something that can be eradicated, but can only be reduced little by little to a level that is acceptable by a certain social system so that there is harmony in this matter so that it is maintained in the process of growth [5]. Based on the background above, it is necessary to conduct a study on "Inequality of Farmers' Income in Cokrokembang Village, Ngadirojo District, Pacitan Regency" to face future challenges so that the agricultural sector, especially rice farmers in Cokrokembang Village, Ngadirojo District, Pacitan Regency can continue to exist amidst the many issues development of other sectors including but not limited to the gold and nickel mining sector. Farmers must be properly ascertained regarding their income inequality and welfare position so that a strategic program can be designed that can save farmers from poverty.

The research was conducted in Ngadirojo District, Pacitan Regency, East Java Province from March to April 2023. The objects of this research were farmers and farm workers in Ngadirojo District, Pacitan Regency. Respondents are people who provide information about a fact that is experienced. According to Sugiyono (2017) [6], to determine the sample to be used in research, various sampling techniques are used. In this study, the sampling technique used was the slovin formula. The total population of rice farmers in Cokrokembang Village is 527 people, where the distribution is presented in the following table.

Table 3. Population of Rice Farmers in Cokrokembang Village

Source: Agricultural Extension Officer, Ngadirojo District (2023)

The total population of farmers is 527 people. Then calculate the number of respondents using the slovin formula as follows:

n                = N / 1 + {N.(e²)}

= 527 / 1 + {527.(0,1²)}

= 84,051 rounded up to 100 souls Information:

n             = Number of samples

N            = Total population

e             = significant level or margin of error (10% with 90% confidence level)

The number of samples based on the slovin formula is 100 respondents, which will be distributed to 4 (four) hamlets, as shown in Table 1.3. The sampling technique used is proportional sampling which uses the following proportional allocation formula:

Ni              = ni / N . n Information:

ni            = the number of sample members according to stratum n          = the total number of sample members

Ni           = the number of members of the population by stratum N         = the total number of members of the population

Then, the number of farmer respondents for each hamlet is as follows:

1. Kwangen Hamlet

Ni                              = ni / N . n

= 96 / 1 + (527 x 0,1²)

= 15,31 rounded up to 20 respondents

1. Barak Hamlet

Ni                              = ni / N . n

= 209/ 1 + (527 x 0,1²)

= 33,33 rounded up to 40 respondents

1. Prancak Hamlet

Ni                              = ni / N . n

= 148/ 1 + (527 x 0,1²)

= 23,60 rounded up to 25 respondents

1. Cerbon Hamlet

Ni                              = ni / N . n

= 74/ 1 + (527 x 0,1²)

= 11,80 rounded up to 15 respondents

Gini Ratio Analysis. The Gini Index, Gini Ratio, or Gini Coefficient is a measure of aggregate inequality that was first developed by an Italian statistician named Corrado Gini and published in 1912 (International NGO Forum on Indonesia Development, 2018). Income inequality is a condition in which the distribution of income received by the community is unequal. The Gini index is expressed as a number with a value of 0 to 1. If the Gini index has a value of 0, it means perfect equality, whereas if it has a value of 1, it means perfect inequality. According to the Central Bureau of Statistics, the Gini Index is based on the Lorenz Curve, which is a cumulative expenditure curve that compares the distribution of a certain variable (eg income) with a uniform distribution that represents the cumulative percentage of the population. The Gini index assists the government in analyzing the level of people's economic capacity because it is an indicator of the degree of justice in a country. The formula for calculating the value of the Gini Ratio or Gini Index according to BPS (2017) is as follows.

Information:

G                : Gini Index

G = 1 − ∑^k

Pi (Qi+Qi-1) 1000

Pi               : Percentage of households in the i-income class Qi : Percentage of cumulative income up to class -i

Qi-1           : The percentage of cumulative income up to class i minus 1 k             : Lots of income classes

the gini index value ranges between 0 and 1, if:

G < 0,3                      : low inequality

0,3 ≤ G ≤ 0,5            : moderate inequality G > 0,5          : high inequality

The steps to analyze income inequality using the Gini ratio are as follows: Table 4. Calculation of IncomeGini Index of Agribusiness Actors

Gini Index : 0,99482885

Gini Ratio Analysis Steps

1. Enter data on income group, percentage of number of agribusiness actors and average income value into Microsoft Excel. This data is obtained from the results of the questionnaire
2. Calculating cumulative income with the formula income group 1 plus income group 2; class 2 income plus class 3 income and so on
3. Calculate the cumulative income opportunity with the formula for each cumulative income divided by the cumulative income of the highest class
4. Calculating the opportunities for agribusiness actors with the formula for the percentage of agribusiness actors divided by 100
5. Calculate the cumulative percentage of income plus the cumulative percentage of income minus 1 according to the Gini index formula
6. Multiply the opportunities of agribusiness actors with the results from step 5
7. The multiplication result of step 6 is added up
8. Calculate the gini ratio with formula 1 minus the result from step 7 The criteria for the Gini ratio analysis are as follows:

Table 5. Gini Ratio Criteria

Source : Badan Pusat Statistik (2023)

Lorenz Curve. According to Todaro and Smith (2006) the Lorenz curve is a curve that depicts the national cumulative distribution among the population. On the curve there are squares on the upright side showing the cumulative percentage of national income and on the flat side showing the cumulative percentage of the population. The steps for creating a Lorenz curve are as follows:

1. Enter income data for each class of agribusiness actors into Microsoft Excel and then sort them from the smallest income to make it easier to create a curve

Table 6. Income of agribusiness actors (agriculture)

1. To make it easier to make curves, the data is reduced from 10 parts to 5 parts

Table 7. Dividing Data Into Smaller Parts

1. Calculate the percentage of income by adding up the income of person 1 with the income of person 2 divided by the total income

Table 8. How to Calculate Income Percantage

1. Determine meeting points. The intersection point is the sum of income

Table 9. Determining Intersection Points

1. Figure the intersection results in a curve

Figure 2 Example of Lorenz Curve Results

According to Arsyad (1997) [7], the Lorenz curve that is getting closer to the diagonal (more straight) indicates that the distribution of national income is more even, conversely if the Lorenz curve is farther from the diagonal (more curved), then it shows that the situation is getting worse, and the income distribution of actors agribusiness is increasingly lame and uneven.

The Level of Income Inequality of Rice Farmers in Cokrokembang Village. Income distribution is one aspect of poverty that needs to be looked at because it is basically a measure of relative poverty. The uneven distribution of income can trigger income inequality which is the beginning of the emergence of poverty problems in Indonesia. Income inequality in urban communities is widening compared to rural communities. One of the causes is inequality in access to education, health and basic infrastructure services as well as uneven welfare growth. This has resulted in rural communities migrating to earn a living in cities by working in the informal sector. As a result, the city gets an abundance of residents from low-income groups. Villagers migrate to cities because they think villages are no longer capable of being a source of livelihood. While many policies in urban areas are unfriendly to the informal sector which is the source of life for the poor. Now, the number of urban residents is increasing rapidly, the number of farmers is decreasing, the number of sending Indonesian workers (TKI) abroad has also increased. Based on the information obtained from the sample farmers, it is also stated that many people in Cokrokembang Village also work in the city, especially those who are young and not a few children of farmers in Cokrokembang Village are not prioritized to become farmers to continue their parents but are directed to work in other sectors. This is due to the experience of farmers in the agricultural sector where land is decreasing and income is low. So that many of the parents who work in the agricultural sector do not want their children to experience the same thing as what these parents felt. The Gini coefficient (Gini Ratio) is an analysis tool for income distribution inequality used by researchers to calculate the income inequality level of 100 sample farmers in Cokrokembang Village. The value of the Gini coefficient (Gini Ratio) ranges from 0 (perfect equality) to 1 (perfect inequality). The income distribution will be more even if the Gini coefficient value is close to 0 and conversely if the Gini coefficient value is close to 1 then the income distribution will be more unequal or unequal. For more details regarding the value of the Gini coefficient (Gini Ratio) of the sample farmers in Cokrokembang Village, it can be seen in the following table.

Table 10. Results of Gini Ratio Analysis

Based on table 10 above, it can be seen that the average total household income of rice farmer respondents is IDR 6,990,649.00 per year. Then, the value of the Gini coefficient (Gini Ratio) to see the inequality of income distribution of farmers in Cokrokembang Village is 88% or 0.88. Referring to the BPS income inequality level indicator (Gini Ratio), it can be seen that the income inequality level of rice farmers in Cokrokembang Village is in the high category. This is because the difference in income earned by farmers results in a high Gini coefficient (Gini Ratio). The difference in income between one rice farmer and another is due to the very low quality of human resources in Cokrokembang Village. The large number of rice farmers who do not go to school makes their ability to develop rice farming technology not optimal. The age factor also affects the income of rice farmers because they cannot be optimal in carrying out other activities outside of rice farming so that they can help increase the income of these farmers. The factor of the number of family dependents and working family members also affects the amount of income earned by rice farmers. Based on the gini ratio table, about 48% of the total rice farmer respondents have the lowest income or even minus. This means that the income generated is not sufficient to meet their daily needs. Based on the results of an interview with one of the farmer respondents (Hariyono, 2023) said that: “... if you want to cover the need for the appearance of riyin teng arisan, wonten sing will appear teng bloom but for example if you want agricultural capital, you still want investment capital, because the gift of winih will marry me, I won't be able to harvest too much, even though dados can't afford it, wong nggih can't afford pancen keep it niki…” “(… yes, to cover the need to borrow first from social gatherings, some are going to bloom, but for example, for agricultural capital, you still use your own capital, because like seeds, I use seeds from previous crops, so I don't need to buy anymore. like this…)" (Interview on March 19, 2023 at 08.30 WIB in Cokrokembang Village) It is not uncommon for rice farmer respondents in Cokrokembang Village to take advantage of a government program, namely PNM Mekaar, to obtain loans to cover their daily needs. PNM Mekaar is an acronym for Madani National Capital Fostering a Prosperous Family Economy. This capital institution was established by the government in 2015 to help underprivileged women who are MSME actors with capital. Some of the wives of male rice farmer respondents and female rice farmer respondents joined the program to obtain loans. The loan amount that can be obtained is IDR 2,000,000.00 to IDR 5,000,000.00 with an interest of 25%. The ease of borrowing money at PNM Mekaar is a special attraction for the community, especially rice farmers in Cokrokembang Village because they do not require any collateral. Because the Mekaar PNM program is in groups, namely at least 10 women, indirectly the rice farmer respondent's family will invite other women in their environment so that debt cannot be avoided. Moreover, the economic condition of the farmer respondent's family is unstable. As many as 19% of rice farmer respondents who also have low incomes, however, still have incomes in positive numbers and are able to meet their household needs. As many as 19% of rice farmer respondents have an income of between IDR 5,000,000.00 to IDR 10,000,000.00 per year, then as much as 10% of rice farmer respondents from the total rice farmer respondents have an income of between IDR 10,000,001.00 to IDR 15,000,000.00 per year and the remaining 4% have income of more than IDR 15,000,000.00 per year. Furthermore, the Gini coefficient (Gini Ratio) can also be explained through a Lorenz curve graph which is divided into 2 (two) axes where the horizontal axis depicts the cumulative percentage (%) of income recipients (rice farmer respondents), while the vertical axis states the cumulative percentage (%) of the total income received by rice farmer respondents. In addition, the Lorenz curve graph also has a linear line along the diagonal of the graph, this line is called the leveling line. The farther the distance between the Lorenz curve line and the equity line, the higher the level of inequality. Vice versa, the closer the distance between the Lorenz curve line and the equity line, the lower the level of inequality or the more even distribution of income. For more clarity regarding the Lorenz curve graph which depicts the income distribution of rice farmer respondents in the study area, it can be seen in the following Figure.

Figure 3. Lorenz Curve for Rice Farmers in Cokrokembang Village

Each point on the equalization line symbolizes that the cumulative rice farmer respondents have received cumulative income evenly or in other words, each rice farmer respondent has received the same amount of income. From the Lorenz curve it is known that the distance on the curve formed is very wide. This indicates that income inequality among rice farmer respondents in Cokrokembang Village is high. The District/City Minimum Wage (UMK) for Pacitan Regency per 2022 is IDR 1,961,154.00 per month or the equivalent of IDR 23,533,848.00 per year, while the income of rice farmers from rice farming per year is 14,279,545. 25, meaning that the income of farmers from rice farming is below the Regency/City Minimum Wage (UMK) of Pacitan Regency. Thus, the life of rice farmer respondents in Cokrokembang Village belongs to the poor category

The income inequality between rice farmer respondents in Cokrokembang Village is 0.88. This figure is included in the high inequality category and is shown in the Lorenz curve where the widened shape of the curve indicates income inequality between rice farmer respondents included in the wide or gap category.

SUGGESTION

To ensure the realization of a solution to the inequality of income distribution of rice farmers in Cokrokembang Village, the researchers provide suggestions for policy makers at the village, sub-district and district levels in order to improve income inequality that occurs, so alleviation of the problem of environmental pollution due to mining activities is urgently needed. On the other hand, it is necessary to monitor field officers in the context of knowledge transfer, especially regarding technical methods or solutions that can be applied by farmers to overcome environmental problems that occur. In addition, there is also a need for careful and detailed verification at each level of government, so that the e-RDKK application can minimize the invalidity between the proposal and the actual need for fertilizer. Furthermore, there is also a need for further research related to the technicalities of rice farming cultivation given the changing environmental conditions and the need for a solution including but not limited to materials that can replace or minimize the use of chemical fertilizers. With regard to price stability, the revision of the HPP for grain and rice is urgent and relevant to be carried out by the government. The HPP proposal needs to be accompanied by other factors, namely the change of Perum Bulog to become a limited liability company or its function is expanded.

Conflict of Interest

The authors declare that they have no conflict of interest.

Funding: No funding sources 

Ethical approval: The study was approved by the Institutional Ethics Committee of University on Pembangunan Naisonal

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