Loyalty and Satisfaction of Sugar Cane Farmers in Partnering with the Kebon Agung Sugar Factory, Malang, East Java (Case Study in KUD “Sari Bumi” Bululawang)

Loyalty and Satisfaction of Sugar Cane Farmers in Partnering with the Kebon Agung Sugar Factory, Malang, East Java (Case Study in KUD “Sari Bumi” Bululawang)

Reyhan Abbiyu Hartono¹, Sri Tjondro Winarno², Nisa Hafiidhoh Fitriana^3
1Student at Department of Agribusiness, Faculty of Agribusiness, University of Pembangunan Nasional Veteran of East Java, Surabaya, Indonesia
^2,3Lecturer at Department of Agribusiness, Faculty of Agriculture, University of Pembangunan Nasional Veteran of East Java, Surabaya, Indonesia

DOI: https://dx.doi.org/10.47772/IJRISS.2023.7731

Received: 16 May 2023; Accepted: 16 June 2023; Published: 19 July 2023

ABSCTRACT

Kebon Agung Sugar Factory is a sugar factory that collaborates with sugarcane farmers in Malang in terms of providing raw materials. However, due to limited land and internal problems of farmers, the supply of raw materials is not fulfilled properly. This study aims to analyze the satisfaction and loyalty of sugarcane farmers as well as the pattern of partnership between sugarcane farmers and the Kebon Agung Sugar Factory. The respondents in this study were 82 farmers. Processing of research data using Descriptive Methods, CSI, and CLI. The results showed that 1) The partnership pattern used by Kebon Agung Sugar Factory with sugarcane farmers is the plasma core pattern. 2) Through CSI analysis, it is known that sugarcane farmers are satisfied with the partnership pattern of Kebon Agung Sugar Factory with a value of 79.8%. 3) Through CLI analysis, it is generally known that partner sugarcane farmers are loyal to the Kebon Agung Sugar Factory partnership with a CLI value of 83.93%.

Keywords: Partnership, Satisfaction, Loyalty, Sugar Cane Farmers, Sugar Factory

INTRODUCTION

Kebon Agung Sugar Factory is one of the largest sugar producers in East Java with a capacity of 13,000 TTH (Tons of Sugarcane per Day). Even though it is a large sugar factory , it does not make the Kebon Agung Sugar Factory in carrying out its production activities do not experience problems. Kebon Agung Sugar Factory has constraints in the availability of raw materials that are increasingly limited, this is because land ownership per individual or per company is relatively narrow in Java Island where the land owned by Kebon Agung Sugar Factory is only wide. The land owned by the Kebon Agung Sugar Factory cannot meet production needs, so there is a need for a supply of sugarcane raw materials from outside. Meanwhile, sugarcane farmers themselves also have problems in sugarcane farming activities. The problem is low productivity and the resulting yield. The low productivity is caused by land discrepancies, suboptimal cultivation techniques, credit/capital difficulties, government policy bias, and price instability.

Table 1. Ton Cane Capacity per Day (TCD) East Java Sugar Factory

Source: (Buletin AGI IKAGI, 2020)

One way to get each other’s benefits between sugar mills and sugarcane farmers is by implementing a partnership system, where companies collaborate with farmers to get sufficient raw materials and good quality. Partnership is a business strategy carried out by two or more parties for the purpose of mutual benefit and joint development within a certain period of time (Nurihayanti, 2022).

Figure 1 Number of Kebon Agung Sugar Factory Farmers for the 2021 and 2022 Milling Seasons

Source: KUD “Sari Bumi” Bululawang, 2022 (processed)

Figure 2 Number of Sugarcane Milled (Tons) in 2019 – 2021 Kebon Agung Sugar Factory

Source : Kebon Agung Sugar Factory, 2021 (processed)

The partnership run by Kebon Agung Sugar Factory with its partner farmers did not always go according to plan. There are obstacles faced in partnership activities. The obstacle is the existence of competing sugar mills that seize partner farmers by making attractive offers to them. Things like this make the loyal farmers of the Kebon Agung Sugar Factory change direction to a competing sugar factory, where they will send raw material supplies to competing sugar factories rather than the Kebon Agung Sugar Factory.

Obstacles that occur in the implementation of partnerships between the Kebon Agung Sugar Factory and farmers will affect the number of partner farmers and the supply of sugarcane raw materials received. As seen in figure 1 and figure 2, the Kebon Agung Sugar Factory experienced a decrease in the number of partner farmers and a decrease in the number of milled sugarcane.

Farmers who are dissatisfied with the course of the partnership will be very likely to move to another sugar factory. If this is left unchecked, the Kebon Agung Sugar Factory could lose its partner farmers. Consumer satisfaction is the level of a person’s feelings after comparing what he feels about product performance and what he expects (Indrasari, 2019). With the loss of partner farmers, the Kebon Agung Sugar Factory will experience a decrease in the supply of sugarcane raw materials so that the milling target will not be achieved. Therefore, it is necessary to study more deeply the satisfaction of partner sugarcane farmers with the existing partnership so that farmers will feel satisfied and loyal to the Kebon Agung Sugar Mill, and can recommend other farmers to join the partnership and also continue to supply their sugarcane stably to the factory. Loyalty between partner farmers and partnerships can facilitate farming activities and can facilitate production activities as well as in the marketing process (Hestiningtyas et al., 2022). So that it will increase sugar productivity at the Kebon Agung Sugar Factory.

Purpose of the study

Based on this background, the purpose of this study is to analyze the partnership pattern carried out by the Kebon Agung Sugar Factory, analyze the level of satisfaction of partner sugarcane farmers with the implementation of the partnership with the Kebon Agung Sugar Factory, analyze the level of loyalty of partner sugarcane farmers to the implementation of the partnership with the Kebon Agung Sugar Factory.

Research Methods

This study used a quantitative type of research. According to Sinambela (2020), quantitative research is a type of research that uses numbers in processing data to produce structured information.

Population and Sample

The sampling method used to answer the first, second, and third objectives in this study is a non-probability sampling method with purposive sampling techniques. To answer the formulation of the first problem, the researcher chose one respondent, namely the administration of the Kebon Agung Sugar Factory tan aman bureau. The respondent was a person who had sufficient understanding of the partnership process established between the Kebon Agung Sugar Factory and partner farmers. Then to answer the formulation of the second and third problems, researchers chose partner farmers of Kebon Agung sugar factory who are members of KUD “Sari Bumi” Bululawang. The total population of sugarcane farmers in KUD “Sari Bumi” Bululawang in partnership with Kebon Agung Sugar Factory is 575 farmers. The population will be selected to be used as a research sample and used to answer questions related to the level of satisfaction and loyalty of sugarcane farmers who partner with the Kebon Agung Sugar Factory.

Sample measurements

Sample measurements were measured using the Slovin Technique because the number of study populations was known. Sample measurements can be used using the following formula:

n =

Information:

n = Number of samples taken

N = Total population

e = Sampling error rate

By using this formula, a sample of the following is obtained:

n =

n =

n = 82,14 82

From the results of the calculation above, 82 farmer respondents were obtained at KUD “Sari Bumi” Bululawang.

Data Analysis Methods

The analysis methods used in this study are: (1) Validity and Reliability Test, (2) Descriptive Analysis, (3) Customer Satisfaction Index (CSI) Analysis, and (4) Customer Loyalty Index (CLI) Analysis. Software used to facilitate the data analysis process is Microsoft Excel 2016 and SPSS version 23.

Variable Measurement

The variables observed in this study are variables such as the level of farmer satisfaction which consists of several variables seen from the partnership aspect, namely: credit assistance, frequency of coaching and assistance from the Kebon Agung Sugar Factory to partner farmers, saprodi facilities (production facilities), the implementation of milled logging, and payment of crops. Each of these variables consists of 5 satisfaction indicators as stated by Rondhi et al., (2020). Then the next observed variable is the level of farmer loyalty. The measurement in this analysis uses a scale of 5 ranks, namely the Likert scale. The Likert scale is a scale that shows the relationship between statements and a person’s attitude towards something.

RESULTS AND DISCUSSION

Pola Kemitraan antara Pabrik Gula Kebon Agung dengan Petani

Analyzing the partnership pattern of Kebon Agung Sugar Factory with partner sugarcane farmers is carried out by knowing the registration process carried out by farmers before carrying out the partnership program. New farmers who want to partner with Kebon Agung Sugar Factory must first join a farmer group that will later guide the new farmer to partner with the company. The farmer group represented by the group leader submitted a letter requesting cooperation to the Sugar Factory Field Officer (PLPG) which was later submitted to the Head of the Plant Section. This submission is also known and assisted by the Village Unit Cooperative (KUD). Farmers who register as partner farmers are directly processed by the plant administration by submitting several required requirements such as Identity Card, Family Card, location, and land area. Then PLPG will survey the land that has been registered and make a map of the land which will later be used as evidence that the farmers have proposed partners with the Kebon Agung Sugar Factory. If land checks have been carried out to determine the feasibility, potential of the plantation, a partnership contract will be drafted and signed a contract agreement by the parties concerned.

Figure 3. Kebon Agung Sugar Factory Partnership Pattern

The partnership pattern used by the Kebon Agung Malang Sugar Factory with sugarcane farmers is classified as a plasma core pattern. Because in the field findings, it is stated that the Kebon Agung Sugar Factory acts as a partner/core company that partners with sugarcane farmers (partner farmers/plasma). As the core company of Kebon Agung Sugar Mill, it has obligations such as providing assistance to sugarcane farmers in obtaining capital costs or credits for sugarcane cultivation, providing assistance for production facilities such as seeds, fertilizers, and tractor services, providing counseling and coaching to partner sugarcane farmers to monitor sugarcane cultivation activities carried out by farmers, providing market guarantees to farmers. Meanwhile, the obligation that must be done by farmers is to provide quality millable sugarcane products by meeting the criteria of SCW (Sweet, Clean and Fresh).

Validity and Reliability Testing

Before carrying out further data analysis, validity and reliability tests were carried out as assessment benchmarks. Validity and reliability tests were carried out on 30 respondents who had similar characteristics to the research subjects.

Sampling to test the validity and reliability of this study was based on the opinion of Sugiyono (2014) to obtain a distribution of measurement values ​​close to normal, so the number of respondents for the questionnaire test with validity and reliability tests was at least 30 respondents. Respondents used in this study were sugarcane farmers partners of the Krebet Baru Sugar Factory.

Validity Test

Table 2. Validity Test Results

Based on the results in the table, all indicators used in this study were declared valid from the results of the validity test which showed the value of r count > r table, namely 0.361 so that these indicators could be used to retrieve data on research respondents.

Reliability Test

Table 3. Realiability Test Results

Based on the results in the table, all indicators used in this study were declared reliable from the results of the reliability test which showed a Cronbach Alpha value > 0.6 so that these indicators could be used to collect data on research respondents.

Level of Satisfaction of Partner Sugar Cane Farmers Against Kebon Agung Sugar Factory Partnership

Knowing the level of satisfaction of partner sugarcane farmers with the Kebon Agung Sugar Factory partnership as a whole can be measured by the Customer Satisfaction Index (CSI) analysis method based on a comparison of the level of performance and the level of importance. The calculation results from the CSI analysis can be seen in the following table:

Table 4. CSI Value Calculation

Information :

A1 = Provision of convenience from the factory to farmers regarding applying for credit to banks to carry out sugarcane farming

A2 = Adequacy of credit assistance provided by the Kebon Agung Sugar Factory to partner farmers

A3 = Accuracy of the schedule for extending credit assistance to farmers (early planting season period)

A4 = Service and instructions given by Kebon Agung Sugar Factory when there are obstacles in the credit assistance problem

A5 = Benefits obtained from credit assistance provided by the factory

B1 = Whether or not the Kebon Agung Sugar Factory often provides guidance to partner farmers related to sugarcane cultivation to harvest so as to reduce problems in sugarcane cultivation.

B2 = Submission of messages that are easily understood by farmers in the implementation of guidance and assistance

B3 = Good performance of field extension workers at Kebon Agung Sugar Factory in providing guidance

B4 = Providing input from field extension officers regarding the cultivation problems they are facing

B5 = Benefits obtained from the implementation of coaching and mentoring

C1 = Provision of inputs in the right amount

C2 = Ease of obtaining inputs

C3 = Timely delivery of input assistance

C4 = Quality of production inputs provided by the factory (seeds, fertilizers, logging and transport services) as a form of assistance to obtain sugarcane yields that meet the criteria

C5 = Benefits obtained from input facilities provided by the factory

D1 = Time for cutting and transporting milled set by the factory

D2 = There is an SPTA (A Cut and Transport Order) issued by the factory

D3 = Availability of logging and transport services provided by the factory

D4 = Implementation of sugar cane milling by the Kebon Agung Sugar Factory

D5 = Benefits obtained from the implementation of milled cutting and transport

E1 = Speed ​​of returning money from sugar cane milling from the Kebon Agung Sugar Factory to partner farmers

E2 = Total profit sharing in accordance with the agreement

E3 = Calculation of the yield value of the right cane milling results

E4 = Compensation given by the Kebon Agung Sugar Factory if farmers can send sugarcane with the SCF* category

E5 = Sanctions given by the Kebon Agung Sugar Factory if farmers send cane that does not meet the criteria

Based on the calculation results in table 4, the total average importance value is 99.97 and the average total value of performance is 99.27. The average total value of the importance level that exceeds the average total value of the performance level shows that the Kebon Agung Sugar Factory partnership in general has not met the expectations of farmers. From the calculation results, the CSI index value was 79.8%. With this index, it shows that overall partner sugarcane farmers are satisfied with the Kebon Agung Sugar Factory partnership, because the value is in the range of 60%-80% which means satisfied. This is in line with research conducted by Utami (2019) where the level of satisfaction of farmers doing partnerships analyzed using the Customer Satisfaction Index (CSI) showed 78.56% results which were included in the good and satisfactory category.

Loyalty Level of Partner Sugar Cane Farmers To Kebon Agung Sugar Factory Partnership

This study uses Customer Loyalty Index (CLI) analysis to find out how much the level of loyalty of partner sugarcane farmers to the Kebon Agung Sugar Factory partnership. In CLI analysis, the first step is to calculate the mean of each loyalty indicator or called a willing statement. This study uses three indicators to measure the loyalty of partner sugarcane farmers, where these indicators refer to indicators of customer loyalty according to Griffin (2005). Each mean of the indicator is then divided by the highest Likert scale value, which is five and then multiplied by 100%. Then from these calculations the average will be found to get the overall CLI value. The following are the results of the CLI of farmer partners of the Kebon Agung Sugar Factory.

Table 5. CLI Value Calculation

The Customer Loyalty Index (CLI) value of the Kebon Agung Sugar Factory obtained is 83.93%, which is in the range of 70% to 90%, which can be interpreted that the current partner sugarcane farmers are loyal to the implementation of the Kebon Agung Sugar Factory partnership. All CLI indicators show a high index, with the L2 indicator having the highest index of 86% which indicates partner sugarcane farmers will re-register as partner farmers of Kebon Agung Sugar Factory in the next planting period. This illustrates that what the Kebon Agung Sugar Factory is doing today can make farmers loyal and return to their partnerships. While the lowest index is found in the L3 indicator, which is recommending to non-partner farmers. These results show that although farmers feel loyal to the Kebon Agung Sugar Factory, they are less interested in recommending the Kebon Agung Sugar Factory partnership to non-partner farmers.

CONCLUSION

Based on the results of the analysis and discussion that has been carried out, the following conclusions can be obtained: (1) The partnership pattern used by the Kebon Agung Malang Sugar Factory with sugarcane farmers is classified as a plasma core pattern, (2) Through the Customer Satisfaction Index (CSI) analysis, it is generally known that partner sugarcane farmers are satisfied with the partnership of the Kebon Agung Sugar Factory with a CSI value of 79.8%, (3) Through the analysis of the Customer Loyalty Index (CLI), it is generally known that partner sugarcane farmers are loyal to the Kebon Agung Sugar Factory partnership with a CLI value of 83.93%.

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