Indonesia ranks fourth after Brazil, Vietnam, and Colombia as the largest coffee producer in the world. The high rank is evidenced by the volume of coffee exports from Indonesia which is increasing from year to year. Exports volume in 2010 reached 433,6 thousand tons with a total value of US$ 814,3, while in 2017 the volume increased to 467,8 thousand tons with the total value amount of US$ 1.187,16 [1]. Indonesia's export destinations include the United States, Germany, Malaysia, Italy, Japan, Russia, Egypt, England, Belgium, and Canada which show that Indonesian coffee is in great demand, especially by developed countries [2]. Indonesia does not only export coffee in bean variant, but also in the form of processed coffee such as roasted coffee, ground coffee, and dissolved coffee. As one of the largest export commodities in Indonesia, coffee has a fairly important role in economic activities, namely as a foreign exchange earner in addition to oil and gas [1]. Coffee plantation has the ability to push the upstream and downstream industries. The coffee plantation can serve as a provider of employment and source of income for farmers and other economic operators engaged in the plantation results’ cultivation and processing.

The highly-demanded type of coffee from Indonesia by the world market is the Arabica coffee (70%), whereas the robusta coffee enthusiast represents only 5% of the total coffee production in Indonesia [3]. Arabica coffee type also has a quite high price at US $2,54, or two times the price of robusta coffee in 2015. The high demand for arabica coffee needed to be managed professionally so that profits are obtainable. What can be done is to pay attention to the competitiveness and entrepreneurship. Entrepreneurship is the driver of a country’s economic growth. An increase in the number of entrepreneurs is positively correlated with an increase in economic growth [4].

The largest coffee producer in Indonesia is spread across 13 provinces including Jambi Province. One of the coffee center in Jambi Province is located in the Kerinci Regency, where the most coffee type grown is the Arabica coffee. The Kerinci Regency area is 380.850 Ha. The area that can be utilized is 189.028 Ha, and the rest is the TNKS region. Based on the extensive acreage that can be utilized, there is an area of 147.408 Ha utilized as cultivation farming land, while the area covering 41.620 Ha used as the non-agricultural area [5]. Area of coffee plants in Kerinci Regency is 6.772 Ha with an average production of 533,47 kg/Ha. The number of coffee farmers in Kerinci Regency is 7.665 households [6]. The research result shows that coffee plantation in Kerinci Regency is a base sector hence it acts as the main driver of the economy. Coffee plantations generate high income and employment [7]. The research objective is to analyse the level of arabica coffee commodity competitiveness business by the farmers in Kerinci and analyse the impact of government policies on the competitiveness of arabica coffee in Kerinci Regency.

The research design is cross sectional. The research was conducted in Kerinci Regency by selecting three districts, namely: Siulak, Gunung VII, and Kayu Aro. The research duration needed is eight months. The object of research is the Arabica coffee comparative competitiveness, Arabica coffee competitive competitiveness, and the impact of government policy on the Arabica coffee competitiveness (input policy, output policy, and input-output policy). The source of research data was from primary and secondary data. Primary data were taken by means of observation, direct interviews, in-depth interviews, and Focus Group Discussions (FGD). Secondary data were obtained from reports of related institution/agencies, journals, and reports of other research related topics.

Methods of collecting data through interviews were conducted in a structured manner from selected research samples (respondents) using instruments or questionnaires. The collection of the data through questionnaires was done by giving a number of questions (open and close ended questions) or written statement to be answered the by the respondent. Research respondents are farmer owner who work directly on Arabica coffee farming. The respondent data or farmer analysis unit was taken by simple random sampling in each village with the number of respondents is 180 people taken from 20 households. The data in this study were analyzed using the PAM (Policy Analysis Matrix) method [8]. The analytical tool is used to determine the economic efficiency and the magnitude of incentives or the impact of interventions in the undertaking of various Arabica coffee farming activities as a whole and systematically.

Arabica Coffee Farming Competitiveness

Competitiveness is the ability of a commodity to compete in foreign markets or the ability to survive in the domestic market and compete with commodities from abroad [9]. One of the most competitive commodities in Indonesia is coffee. Indonesia’s processed coffee has been internationally marketed or exported [10]. Products or services that have competitiveness are in great demand by consumers. These products or services generally have good quality and are produced by companies that are able to compete [11]. The competitiveness of a commodity can be measured through two approaches, namely the level of generated profit and farming efficiency. The level of profits generated can be observed from two perspective that is the private profit and social profit [12].

The research result shows that the of arabica coffee competitiveness in Kerinci Regency is very high and profitable either through the private or social price. The average profit at the private price is in positive value of Rp 24.181.757,07 per Ha/year and at the social price is in positive value of Rp 44.897.494,46 per Ha/year. Based on the private prices, output acceptance of arabica coffee gained is Rp 35.589.564,06 per Ha/year with a tradable input cost of Rp 736.603,33 per Ha/year and the cost of non-tradable input is Rp 10.671.203,66 per Ha/year. Overall, the private profit was Rp 24.181.757,07 per Ha/year (Table 1). The result indicates that the arabica coffee competitiveness is very profitable. The results of this study are in line [13,16].

Competitive Advantage and Comparative Advantage

Based on Table 1, other things that are very interesting to study are indicators of competitiveness, both competitive advantage and comparative advantage. The results of the analysis showed that the competitive advantage obtained from the PCR in (0,31) value, while the comparative advantage was obtained from the DRCR in (0,25) value. Competitive advantage is a measure of the feasibility of a farming activity, where private profits are calculated based on market prices and prevailing money values according to financial analysis. The value of competitive advantage is indicated by the ratio of total domestic factor costs to the difference between revenues and costs of tradable inputs. One of the factors that determine the competitive advantage of a farming activity is technology. Technological advances are able to produce the same number of outputs through a more efficient combination of input use [17]. Indicators of competitive advantage are shown by the ratio of private costs or known as Private Cost Ratio (PCR) and Private Profitability (PP).

The results showed that Arabica coffee farming in Kerinci Regency has a competitive advantage with a PCR value of 0,31 and a Private Profitability (PP) value of Rp 24.181.757,07 per Ha/year. That is, the expense needed for Arabica coffee farming development are only 31 percent of the total cost. The finding indicates that the management of Arabica coffee farming in Kerinci Regency is efficient and profitable. The competitiveness results of this study are higher and profitable compared with research conducted by Viana et al [18] on coffee commodity competitiveness in Grabag District, Magelang. The PCR value obtained in said study was 0,78 and the Private Profitability (PP) was Rp 9.508.999 per Ha/year. The coffee competitiveness in this study is also higher than the competitiveness in the research by Santosa et al [19] on Robusta coffee competitiveness for farmers in Bondowoso Regency with PCR values of 0,4261 and the Private Profitability (PP) value of Rp 8.916.000,- per Ha/year.

The domestic resource costs allocation of each input is urea and SP-36 fertilizers by 95 percent, while for other inputs by 100 percent. The foreign costs allocation of private prices for urea and SP-36 fertilizers is 5 percent and for pharmaceuticals is 100 percent of the total cost of each input use. The allocation is based on the input-output table of the Central Statistics Agency. Cost of domestic resource private prices obtained is Rp 10.671.203,66 Ha/year while the foreign resources cost by private price of Rp Rp 736.603,33 Ha/year are derived from the allocation of the foreign component of urea and SP-36 fertilizer as well as pharmaceuticals. The total domestic and foreign cost was Rp 11.407.806,99 Ha/year with the output receipt of arabica coffee at the farmer’s level amounting to Rp 35.589.564,06 Ha/year so that the earned profit is  Rp 24.181.757,07 Ha/year. The costs incurred from domestic resources are greater because the inputs used are mostly obtained from domestic/domestic sources, while the foreign components are only a few percent of the total.

Another thing that is analyzed besides competitive advantage is comparative advantage. Comparative advantage is related to economic feasibility, which assesses economic activity for the community as a whole, regardless of who is involved in the economic activity. Comparative advantage can be seen from the value of social benefits and domestic resource cost ratio DRCR (Domestic Resource Ratio). This value is an indicator of competitiveness without government assistance. The difference between the analysis of private profits and social benefits is that the input and output components of social benefits are valued using shadow prices. Based on Table 1, the social profit for arabica coffee farming value is Rp 44.897.494,46 per Ha/year with a DRCR value of 0,25. The positive value of social benefits indicates that Arabica coffee farming in the study area is economically profitable. Results of competitiveness through arabica coffee comparative advantage in the Kerinci Regency is also better than the research by Viana et al [18] on coffee commodity comparative competitiveness in Grabag District, Magelang with DRCR value of 0,617 and Social Profitability (SP) amounting to Rp 20.750.852 per Ha per year. The results of competitiveness through comparative advantage in this study are also better than those of Santosa et al [19] on Robusta coffee competitiveness for the farmers in Bondowoso Regency with DRCR value of 0,5135 and the Social Profitability (SP) value of Rp 1.483.742 per Ha /year.

The total cost of domestic resources during the development of Arabica coffee farming in Kerinci Regency is Rp 14.575.666,37 per Ha/year, while the total foreign resources is Rp 942.101,37 per Ha/year. The total cost of foreign resources for Arabica coffee farming in this study is smaller than the total cost of domestic resources. It is because the resources that have foreign components are only found in urea fertilizer, SP-36 fertilizer, and pharmaceuticals. The total cost incurred at the social price level is Rp 15.517.767,73 Ha/year. The total costs do not vary much with the total cost by the private prices because there is only a change of price in the input of urea and SP-36 fertilizer. The profit of Arabica coffee farming in social prices level is amounting to Rp 44.897.494,46 Ha/year. The comparative advantage of Arabica coffee farming in Kerinci Regency is observable by indicators of the ratio of the domestic resources usage in the farming and the profit at the social price level. The success of arabica coffee farming competitiveness in Kerinci Regency is in line with research conducted by Nalurita et al [20] which states that Indonesian coffee has competitiveness in the international market comparatively with an average RCA index of 6,54. Suprayogi's [21] research also states that Indonesia shows a comparative advantage and is better as a coffee exporter country through analysis of the RCA and ISP indexes.

Impact of Government Policy on Arabica Coffee Competitiveness

Government policies in economic activities can have both positive and negative impacts. The positive impact of government policy is that it can help domestic producers to increase profits by marketing their products for export, while the negative impact of government policy is it can hinder the farming of a commodity. According to Pearson et al[8], policy impact indicator on PAM consists of input policy (Input Transfer, Nominal Input Protection Coefficient, Factor Transfer), output policy (Output Transfer, Nominal Output Protection Coefficient), and input-output policy (Effective Protection Coefficient, Net Transfer, Profit Coefficient, Subsidy Ratio for Producers).

The results showed that the input policy (IP) of Arabica coffee farming in the research area was negative, namely Rp – 205.498,04. This value showed government subsidies to foreign inputs, so that producers do not pay the full amount to buy the inputs that although it is worth quite the less. Subsidy policies on tradable inputs provide benefits to farmers. This is because farmers do not need more money to buy urea fertilizer, SP-36 fertilizer, and pharmaceuticals. This is line with the Minister of Trade Regulation No. 17/M-DAG/PER/6/2011 on distribution of subsidized fertilizer to agriculture sector related to the cultivation of food crops, horticulture, and folk plantation including urea, SP-36, ZA, and NPK fertilizer [22] and Kerinci Regency Regulation Number 3 Year 2017 concerning the management of subsidized fertilizer [23]. In addition to tradable inputs, farmers also use non-tradable inputs (domestic factors). Transfer factor value (TF) shows the magnitude of government intervention on non-tradable inputs such as seed assistance for Arabica coffee farmers in Kerinci Regency. The value of TF in the research area is negative, namely Rp –3.904.462,71. This value indicates that the price of non-tradable inputs issued by the government at the private price level is lower than the cost of non-tradable inputs issued at the economic or social price level. The results of this study are in line with research conducted by Murtiningrum et al [24] which states that the government's policy on tradable production inputs in the form of subsidies is very beneficial for farmers to increase income.

The government's policies towards the development of Arabica coffee in Kerinci Regency include the interventions on Output Policies and Input-Output Policies. The government's policy on output is through the output transfer value (OT) and the nominal output protection coefficient (NOPC). Output transfer is the difference  between  revenue  at  private prices and social prices. The output transfer value shows the intensity of society towards producers. The output transfer value (OT) generated from Arabica coffee farming in Kerinci Regency has a negative value of Rp –24.825.698,13 Ha/year. This indicates that the government has not been able to intervene in the output of Arabica coffee in the international market, especially the price. A negative OT value indicates the impact of government policies that cause the private price of Arabica coffee output to be lower than the social price. This shows that consumers or the public can buy Arabica coffee products at a lower price than the actual price, causing losses for farmers. Another indicator of the output policy is the calculation of NOPC. This calculation is used to measure the impact of government policies that cause differences in output values based on private prices and social prices. The NOPC value of Arabica coffee farming in Kerinci Regency is 0,59 (Table 1). This  shows  the  ineffectiveness of government  policies for Arabica coffee farmers, resulting in a reduction of the farmers' income. The government's policy towards the development of Arabica coffee farming in Kerinci Regency has an impact on the input-output policy. Input-output policy is the combination of input and output policy. One indicator of input-output policy is the value of effective protection coefficient (EPC). The value of the effective protection coefficient (EPC) is an indicator of the overall impact of input and output policies on the production system of a domestic commodity. The results showed that the EPC value of Arabica coffee farming in Kerinci Regency was 0,59 (<1). The low EPC value indicates that the government's policy on output prices and tradable input prices received by farmers is only 59 percent of the supposed price/shadow price. This finding indicates that the development of Arabica coffee farming in Kerinci Regency has no added value because the private price tends to be lower than the social price.

Table 1: Results of the Policy Analysis Matrix (PAM) on Arabica Coffee Farming in Kerinci Regency, 2019

The development of Arabica coffee farming in Kerinci Regency has high competitiveness and is profitable. The average profit gained by the farmers through the private price is equal to Rp 24.181.757,07 per Ha/year and through the social price is Rp 44.897.494,46 per Ha/year.

The Arabica coffee farming in Kerinci Regency has a competitive advantage with a PCR value of 0,31 and a Private Profitability (PP) value of Rp 24.181.757,07 per Ha/year. Arabica coffee farming also has the comparative advantage with DRCR value of 0,25, and social profit of Rp 44.897.494,46 per Ha/year. The advantage obtained from Arabica coffee farming in Kerinci Regency is in the allocation of domestic resource costs from each input with details for urea fertilizer and SP-36 fertilizer by 95 percent and for other inputs by 100 percent. The allocation of foreign costs for private prices for urea and SP-36 fertilizers is 5 percent respectively and for pharmaceuticals is 100 percent of the total cost of each input use. The success of developing Arabica coffee farming in Kerinci Regency is due to government policies such as intervention on inputs that can increase income, but policies on output and input-output policies are unable to increase the added value of farmers' income.

Acknowledgment

We would like to thank the Institute for Research and Community Service at the University of Jambi for the research and article publishing fund. This study was funded by DIPA PNBP LPPM Professor Acceleration Research Scheme of the University of Jambi for Fiscal Year 2019, Number: SP DIPA 042.01.2.400950/2019 on December 5th, 2018, according to Research Contract Agreement Letter No. B/1590/UN21.18/PT.01.03/2019 on May 17th, 2019.

1. Badan Pusat Statistik Indonesia. Statistik Kopi Indonesia Tahun 2017. 2018, ISBN: 978-602-438-187-5.

2. International Coffee Organization. World Coffee Statistics. 2019, www.ico.org.

3. Bank Indonesia. Pola Pembiayaan Usaha Kecil (PPUK) Perkebunan Kopi Arabika. Bank Indonesia, Direktorat Kredit UMKM, 2018.

4. Zainura, U. et al. “Perilaku kewirausahaan petani kopi arabika gayo di kabupaten bener meriah provinsi aceh.” J Penyuluhan, vol. 12, no. 2, 2016, ISSN (online): 2442-4110.

5. Badan Pusat Statistik Kabupaten Kerinci. Kabupaten Kerinci dalam Angka (Kerinci Regency in Figures). 2018, ISSN: 0215-241X.

6. Kerinci District Forestry and Plantation Agency. Peraturan Daerah Kabupaten Kerinci Nomor 3 Tahun 2017 tentang Pengelolaan Pupuk Bersubsidi. Pemerintah Kabupaten Kerinci, 2017.

7. Suandi, D. et al. “The role of coffee plantation in the kerinci regency regional’s economy.” SOCA: J Sosial Ekonomi Pertanian, vol. 14, no. 3, 2020, pp. 499–510.

8. Pearson, S. et al. Aplikasi Policy Analysis Matrix (PAM) pada Pertanian Indonesia (Terjemahan). Jakarta: Yayasan Obor Indonesia, 2005.

9. Suandi, H.D. et al. “Model pengembangan kelembagaan dan daya saing komoditas jeruk siem di kabupaten kerinci.” Laporan Penelitian, Universitas Jambi, 2018.

10. Zakaria, A. et al. “Strategi pengembangan usaha tani kopi arabika (kasus pada petani kopi di desa suntenjaya kecamatan lembang kabupaten bandung barat, provinsi jawa barat).” J Sosioteknologi, vol. 16, no. 3, 2017, pp. 325–339.

11. Porter, M. et al. “Executive summary: Competitiveness and stages of economic development.” In The Global Competitiveness Report, 2001–2002, edited by M. Porter, J. Sachs, P.K. Cornelius, J.W. McArthur, K. Schwab, Oxford University Press, 2002, pp. 16–25.

12. Dirgantoro, C. Keunggulan Bersaing Melalui Proses Bisnis. Jakarta: PT. Grasindo, 2002.

13. Amisan, R.E. et al. “Analisis pendapatan usahatani kopi di desa purwerejo timur kecamatan modayag kabupaten bolaang mongondow Timur.” Agri Sosio Ekonomi Unsrat, vol. 13, no. 2A, 2017, pp. 229–236.

14. Audry, R.J. et al. “Analisis pendapatan usahatani kopi java preanger pada kelompok tani margamulya desa margamulya kecamatan pengalengan bandung.” J Ilmu Pertanian dan Peternakan, vol. 6, no. 1, 2018, pp. 31–38.

15. Anggita, D. et al. “Analisis faktor produksi dan strategi pengembangan usahatani kopi rakyat di desa gombengsari kecamatan kalipuro kabupaten Banyuwangi.” J Ilmu-Ilmu Pertanian “AGRIKA”, vol. 12, no. 2, 2018, pp. 118–132.

16. Guampe, F.A. “Analisis pendapatan petani kopi (studi pada petani kopi di desa toinasa kecamatan pamona barat kabupaten poso).” J Economix, vol. 7, no. 1, 2019, pp. 69–76.

17. Permata, P. and Rahmi. “Analisis daya saing dan dampak kebijakan pemerintah terhadap komoditas teh (studi kasus: ptpn viii rancabali afdeling rancabali III).” 2017.

18. Viana, C.D.N. et al. “Analisis daya saing komoditas kopi di kecamatan grabag, kabupaten magelang.” J REP, vol. 5, no. 1, 2020.

19. Santosa, T.H. et al. “Model peningkatan daya saing kopi robusta bagi petani di kabupaten bondowoso.” J Agribest, vol. 4, no. 2, 2020.

20. Nalurita, S. et al. “Analisis daya saing dan strategi pengembangan agribisnis kopi Indonesia.” J Agribisnis Indonesia, vol. 2, no. 1, 2014, pp. 63–74.

21. Suprayogi, B.M. et al. “Analisis daya saing ekspor kopi indonesia, brazil, kolombia, dan vietnam.” J Administrasi Bisnis (JAB), vol. 50, no. 2, 2017, pp. 189–194.

22. Anonim. Peraturan Menteri Perdagangan Nomor 17/M-DAG/PER/6/2011. Kementerian Perdagangan Republik Indonesia, 2011.

23. Anonim. Peraturan Daerah Kabupaten Kerinci Nomor 3 Tahun 2017 tentang Pengelolaan Pupuk Bersubsidi. Pemerintah Kabupaten Kerinci, 2017.

24. Murtiningrum, F. et al. “Analisis daya saing usahatani kopi robusta.” J Agrisep, vol. 13, no. 1, 2014, pp. 1–14.