Author : Sakti M.H. Tampubolon

Summary : Even if the farmers undervalued the soil loss externalities, soil and water conservation could still be promoted to eliminate these externalities if the measures adopted are embodied in profitable output- and employment- augmenting farming techniques. In the upper Citanduy River Basin, such farming practices have been experimented and introduced through the establishment of a number of demonstration sites or model farms. The Model Farm Program was aimed at increasing farm productivity, farmers' income and rural employment opportunities, and controlling soil erosion. To the majority of upland farmers, family labor is the most important resource. The most significant component in controlling soil erosion is terracing. This study was aimed at ascertaining the effect of terracing on farm production and income as associated with the newly introduced technological package through the Model Farm Program. It was hypothesized that conservation practices would improve farm production and income because of deffered productivity degradation. A Cobb-Douglas type of production or revenue function was employed to verify the hypothesis. Cost and return analysis was also performed to assess the nature of the benefits gained. The study used the 1985 USESE's (Socio and Economic Study and Evaluation Unit of the Citanduy Watershed Area Development) socioeconomic impact study survey within 535 sample farmers drawn scatteredly from the whole upper watershed. The samples represented farmers from the model farm sites, expansion area, and outside the project. Cost and return analysis suggests that terraced farms had higher value of output than unterraced ones but they differed in performance across soil depths as also confirmed by the regression models. In general, terraced farms exhibited higher gross and net farm incomes but they incurred higher level of direct and indirect farm costs. The result implies that a better farm income is associated with a proper choice of input combination based on the agro-physical condition.