Assessing income distribution and economic viability of smallholder rubber farming in tropical agroecosystems

Income distribution is an analysis being used to assess the extent of income sharing within a specific social or economic class of people. Income distribution is usually assessed by identifying various sources of income of sample farmers, namely income from rubber farming, non-rubber farming income and non-agricultural income. This study was conducted on household income of rubber farmers in Kuapan Village, Tambang District, Kampar Regency. 50 rubber farmers were sampled, divided into two groups, namely non-owner tapping farmers (15 farmers) and tapping farmers who were also owners (35 farmers). The sample was identified using proportionate stratified random sampling and snowball sampling. Based on the results of the study, there was no income inequality in either the group of non-owner tapping farmers or the group of tapping farmers who were also owners, with a combined Gini ratio of 0.19, reflecting a relatively equitable income distribution. Economic viability analysis that was assessed using Net Present Value (NPV) and Internal Rate of Return (IRR), demonstrated that rubber farming remains financially feasible, yielding an NPV of IDR 457,197,858 and an IRR of 31.49%. Income equity among the farmers was attributed to: (1) tapping farmers have other income besides rubber farming; (2) non-owner tapping farmers benefit from a profit-sharing system with a ratio of 1:2; (3) tapping farmers who are also owners have to pay maintenance and land clearing costs; and (4) non-owner tapping farmers only incur costs for tools and operational materials. To further reduce income inequality and enhance economic viability among smallholder rubber farmers, the study recommends implementing integrated strategies such as promoting income diversification, enhancing profit-sharing arrangements, capacity building through extension services, stabilizing market prices, investing in infrastructure and appropriate technology, and improving financial support and access to credit.