‘Perseduaan’ Social Capital to Develop Beef Cattle Breeding Agribusiness with a Profit-Sharing System in Rural West Sumatra

Muhammad Ikhsan Rias, Dwi Yuzaria, Arfa’i, Khasrad

Abstract

This paper discusses the use of ‘perseduaan’ profit-sharing system as a source of capital among cattle breeders. Beef cattle’s sharing is an Indonesian traditional economic system based on local wisdom values. Even though it is a traditional system, it is based on the principles of good cooperation. Because breeders involved in this system often face the issue of capital, perseduaan profit-sharing system is used as a solution even though its effectiveness has not been proven. Based on that, this research describes the economic perspective, particularly effectiveness of Indonesia's local cattle sharing system. The data were obtained through a survey of 216 profit-sharing partners. The data were analyzed using PLS-SEM. The results of the study show that the beef cattle business partnerships are quite effective in increasing the production and income of farmers. All indicators have a significant effect on the 5% significance level as a measure of constructing partnership effectiveness. Furthermore, the partnership is significantly effective on the farmers’ income. The income contribution of profit-sharing activity to family income is 34.5% which is considered low compared to income from other sources such as civil servants and rice farming. This study concludes that the government must make policies to increase the livestock population by strengthening the "Profit Sharing" institution as a source of capital among breeders.

 

Keywords: social capital; beef cattle breeding; agribusiness; profit-sharing system; farmer income

 


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