THE ECONOMIC ANALYSIS OF FARM TRACTOR ADOPTION IN SOUTH SULAWESI, INDONESIA

At present, the Government of Indonesia is carrying out the Third National Five Years Development Plan (from 1979-1984). First priority in the Plan is placed on Agricultural Development.;The primary objective of the present study is to determine the optimum economic level of mechanical, animal and labor inputs for land preparation for two major rice-producing districts of South Sulawesi. In order to achieve the objective, we determine the optimum level of power, not for individual farmer, but for the region as a whole.;Data used in this study come primarily from the research project on the Consequences of Small Farm Mechanization on Income, Rural Employment and Production, a project organized jointly by the Government of Indonesia and the International Rice Research Institute, Philippines.;The survey data suggest there is no consistent pattern to show that farmers with tractors plant and harvest earlier than those farmers without tractors.;The mechanization of land preparation is seen by some policy-makers as a possible means of increasing production, and cropping intensity. However, the economic and social impact of mechanization has been a matter of considerable controversy in Indonesia for a number of years.;The LP Model was designed to determine the optimum combination of farm power. The results show that, in order for tractors to become profitable, the price of tractors has to be reduced, or a cheaper two-wheel, six hp. power tiller has to be substituted for the relatively expensive four-wheel tractor currently being used.;At the existing rental rate there is a strong demand for tractors, but even with triple cropping, or an increase in the rental rate under the existing cropping patterns, the return per tractor is inadequate to cover the break-even cost, particularly if the opportunity cost for family labor is low.;In the two crop system, timeliness is not an important factor in raising yields and rice production. By introducing a third crop into the region, tractor ownership becomes profitable but only if the rental rate is increased.;The South Sulawesi experience has brought to light no evidence that the mechanization of land preparation will lead to higher yields or increased production. Thus there is little justification for the government's subsidizing tractor loans, which probably induce inefficiency.