Author : Sakti M.H. Tampubolon

Summary : The impact of the Bimbingan Massal (BIMAS) Rice Intensification Loans (RIL) on land productivity, input use, and income distribution were analyzed. Data from the Indonesian Consequences of Small Rice Farm Mechanization of the International Rice Research Institute were used. The study employed three main hypotheses namely: that credit rationing seems biased in favoring of wealthy farmers; that given the production possibility boundaries and that farmers are rational, BIMAS-RIL program farmer participants tend to use higher level of inputfactors with higher level of output that results in farm income and since the RIL reduces financial stress, it results in the effective price of input factors; and that the wealthy farmers tend to employ more non-land capital instead of labor and its fertilizer and chemicals complements. Test of independence indicated that participation in the BIMAS-RIL program cannot be independent of farm wealth and thus it conformed with the first hypothesis. Using the T-test procedure, with an analysis of variance as a cross-check, it was concluded that, particularly in wet season, land productivity for the participant farmers tended to be higher than nonparticipant ones due their greater use of fertilizer and chemicals. While not more productive than less wealthy ones, wealthy farmers tended to use more per hectare non-land capital instead of labor and its fertilizer and chemicals complements of the input demand econometric model further suggested that RIL had no effect on pre-harvest (hired and total) labor employed and positive effect of non-land capital. Also, farm wealth (and so farm size) had negative effect on pre-harvest labor employed but positive on non-land capital. Patterns of shares, absolute and relative, indicated that participant farmers belonging to the less wealthy ones tended to be more productive than other groups but per hectare from income belongs to the lowest because of considerable amount of land-rent payment and at the same time, this group tended to pay the hi...