AGB 100_ASU_ASSIGNMENT_2024_ANALYSIS OF STRATEGIC AGRIBUSINESS DEVELOPMENT IN CILACAP DISTRICT

ANALYSIS OF STRATEGIC AGRIBUSINESS DEVELOPMENT IN

CILACAP DISTRICT

1.1 Introduction :

Cilacap Regency is the largest regency in Central Java. The district covers an area of

225,360.84 hectares, which is divided into 24 sub-districts, 269 villages and 15 urban villages.

As a district with a large area, Cilacap Regency has the second highest population in Central

Java after Brebes Regency. The population at the end of 2019 reached 1,937,427 people

consisting of 979,745 men and 957,682 women. The regency is located at the southwestern tip

of Central Java with boundaries to the south of the Indonesian ocean, to the north bordering

Banyumas Regency, Brebes Regency and Kuningan Regency of West Java Province, to the

east bordering Kebumen Regency and to the west bordering Ciamis Regency and Banjar City

of West Java Province.

Cilacap Regency has a strategic location in the economy, as there is a port that becomes

the axis of the sea route in the southern region of Java. In terms of topography, Cilacap

Regency consists of oceans, lowlands and some highlands. The highest area is in Dayeuhluhur

Subdistrict with an altitude of 198 m above sea level and the lowest area is in Central Cilacap

Subdistrict with an altitude of six meters above sea level. Cilacap Regency has the longest

coastline in Java, 201.9 km long. This is a big potential in improving the community's

economy, especially for coastal fishermen. In addition, 80 percent of the area of Cilacap

Regency is currently used as agricultural land. Looking at the topography, Cilacap Regency

has several potential renewable natural resources, such as in the agriculture, forestry and

fisheries sectors. Food agriculture in Cilacap Regency was the largest rice producer in Central

Java in 2017. Other food crops such as corn and cassava also produce quite high production.

Cilacap Regency has several processed products from real sectors that have been marketed to

international markets. Some of the exported processed products can be seen in Table 1.

In addition to being supported by natural resources through the agriculture, forestry, and

fisheries sectors, the economy of Kabupaten Cilacap is also supported by sectors such as: (1)

the manufacturing industry; (2) the wholesale and retail trade sector; and (3) the construction

sector (Appendix 3). Based on the role of GRDP in the economic structure of Cilacap

Regency, in 2019 the industrial sector played a large role, reaching 60.79 percent of GRDP by

ADHB business field with oil and gas and 31.86 percent of GRDP by ADHB business field

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without oil and gas (Appendix 4). The next largest GDP sectors are agriculture, forestry and

fisheries (9.94 percent with oil and gas and 15.53 percent without oil and gas) and wholesale

and retail trade (6.46 percent with oil and gas and 11.23 percent without oil and gas). There is

a large difference between the manufacturing sector and other sectors in GRDP with oil and

gas. This is due to the presence of an oil processing industry in Cilacap Regency, namely PT

Pertamina Refinery Unit IV, which is one of the largest oil processing units in Indonesia.

The economic structure of Cilacap Regency in GDRP without oil and gas and with oil

and gas is dominated by the industrial sector. This is followed by the agriculture, forestry, and

fisheries sector; the wholesale and retail trade sector; and the construction sector. The

presence of oil and gas in the GRDP biases the economy of Cilacap Regency. The income of

Cilacap Regency with oil and gas is much higher than without oil and gas.

Increasing the growth of the industrial sector is the focus of the Cilacap Regency

government in realizing regional economic development. One indicator of regional

development is regional economic growth. The process of increasing production capacity that

signifies economic growth can be realized in the form of increased income. One indicator of

the success of regional economic growth is realized from the growth of GRDP. The GDRP of

Cilacap Regency is currently dominated by the processing industry sector. So that the

government's strategic plan in the economic development of Cilacap Regency as stated in the

2017-2022 Regional Short-Term Development Plan (RPJMD) will increase its industrial

sector. Cilacap's economic development is accompanied by increased infrastructure

development and efforts to increase development in the agricultural sector. On the other hand

In addition to the development of the processing industry sector, development in the

agricultural sector is carried out to realize food sovereignty by raising the cultivation of local

excellence.

The contribution of economic sectors in Cilacap Regency, when viewed from the GDRP

of Cilacap Regency, is dominated by the processing industry sector both with and without oil

and gas. Oil and gas make a large contribution to the revenue of Cilacap Regency. However,

the oil and gas industry is a capital-intensive business and is included in unrenewable

resources. The processing industry sector without oil and gas still contributes significantly to

the Cilacap Regency economy, amounting to 31.86 percent in 2019. Another contribution is

by creating jobs. The small processing industry is able to absorb labor on a fairly large scale.

The food processing industry is the processing of a material into finished or semi-finished

food. These materials come from agricultural, plantation, and fishery products. Meanwhile,

the beverage industry category is based on the results of the economic census with the Cilacap

Regency 2016 listing (SE2016-L), such as the alcoholic and non-alcoholic beverage industry,

mineral drinking water, beer and wine, and distilled alcoholic beverages. Other processing

industries include the wood and wood products industries, the apparel industry, the excavated

goods industry, and other industries. Efforts to increase the industrial sector for Cilacap

Regency are government efforts in economic development to reduce unemployment and

poverty.

Currently, Cilacap Regency still has problems related to unemployment and poverty.

Unemployment and poverty in Cilacap Regency are still high. BPS Cilacap recorded that the

number of unemployed people in 2019 was still quite high at 7.31 percent of the total

population. Meanwhile, poverty in Cilacap District in 2019 amounted to 10.73 percent, which

is in the yellow zone of the poverty rate in Central Java, which is 10.80 percent.

The poor in Kabupaten Cilacap are spread across all kecamatan. The percentage of poor

people in Kabupaten Cilacap by working status and employment sector can be seen in Table

1.4. According to BPS (2020), the poor with an informal working status are the poor whose

main occupation is self-employment, business with the help of non-permanent laborers/unpaid

laborers, independent workers, or family workers/unpaid workers. The poor with a formal

working status are the poor whose main occupation is working with the help of permanent

workers/paid laborers or laborers/employees/employees. The poor in the agricultural sector

are the poor whose main occupation is in the agricultural sector, such as rice and secondary

crops or food crops, horticulture, plantations, fisheries, livestock, forestry, and other

agriculture. The poor in the non-agricultural sector are the poor whose main occupation is

other than the agricultural sector, such as mining and quarrying, manufacturing, trade,

electricity and gas, construction, hotels and restaurants, transportation, finance, services, and

others.

The poor population working in the agricultural sector reached 21.50 percent. Based on

data recorded by BPS Cilacap Regency, it shows that agriculture is the sector that absorbs the

most labor. In 2017, employment in agriculture reached 55.76 percent with an average

percentage for the three years 2015 to 2017 of 56.16 percent or more than half of the

population e a r n i n g a living as farmers, fishermen, or breeders. This is because the

resources available in Cilacap Regency support the development of the agricultural sector,

both on land and sea. Labor absorption in Cilacap Regency can be seen in Table 3.

The agricultural sector is a sector that has high linkages with other economic sectors.

Widyawati (2017) examined the analysis of agricultural sector linkages and their influence on

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the Indonesian economy using input-output analysis tools. Widyawati (2017) revealed that the

agricultural sector has high direct linkages to: (1) the electricity, gas, and clean water sector;

(2) the mining and quarrying sector; (3) the finance, rental, and corporate services sector;

(4) the manufacturing sector; (5) the trade, hotel, and restaurant sector; and

(5) transportation and communication sector. Meanwhile, high direct backward linkages are

in: (1) electricity, gas, and clean water sector; (3) building sector; (4) manufacturing sector;

and (5) transportation and communication sector.

In addition to its potential and opportunities, the development of the agricultural sector

in Cilacap Regency also has an impact on the development of other sectors, as well as on

labor absorption and poverty alleviation. Efforts to alleviate poverty and unemployment

through employment require a strategic plan that can have a direct impact on the community,

especially in the agricultural sector. In addition, as a step to support the RPJMD of Cilacap

Regency, which focuses on increasing the industrial sector and increasing the agricultural

sector as a food security program. Based on this statement, it is necessary to conduct research

on "Analysis of Strategic Agribusiness Development in Cilacap Regency".

1.2 Problem Formulation

According to Todaro and Smith (2009), economic development in the past was

generally viewed in relation to planned changes or the structure of production and

employment opportunities, so that the role of the agricultural sector would decline to provide

opportunities for the emergence and development of the manufacturing and service sectors.

Therefore, development strategies usually focused on rapid industrialization processes, often

to the detriment of agricultural and rural development.

The agricultural sector plays an important role in the economic development of the

Cilacap Regency. In addition to having great natural potential stretching from the west to the

east of Cilacap Regency, according to Mellor (1995) in Nizwar et al. (2003) the agricultural

sector is also useful as: (1) supporting economic growth and providing employment, (2)

providing food needs for the community or country, (3) generating foreign exchange, (4)

driving the growth of the industrial sector, and (5) alleviating poverty and the welfare of rural

communities. The agricultural potential of Cilacap Regency includes subsectors of food crops,

fisheries, plantations, forestry, horticulture, and livestock. As a region that has natural

potential as an agricultural area, Cilacap Regency is known as one of the rice producers and

the region with the longest coastline. But apart from that, there are many potential

commodities that have not yet emerged as branding in Cilacap Regency, both from its

agricultural products and its agricultural products industry.

Based on data from the 2016 Economic Census (SE2016-L), analysis of the listing

results shows that the industrial sector in Cilacap Regency is dominated by agribusiness-based

industries, namely food processing (58.45 percent), wood and wood products (12.44 percent),

and apparel (8.85 percent). In addition, based on data from Medium, Small, and Micro

Enterprises (MSMEs) registered at the Cilacap Regency PLUT (Integrated Business Service

Center) in 2018, there were 1,261 MSMEs, 67 percent of which were agribusiness-based.

These agribusiness businesses include restaurants/eateries/caterers, food and beverage

processing industries, plantation processing industries, trade in agricultural products and basic

necessities, wood craftsmen, farming businesses, and batik making. Some of them are

categorized as processing industries, trading, cultivation or farming, and services.

Most labor absorption in Cilacap Regency is in the agricultural sector. In addition, the

trade, hotel and restaurant sector, and the industrial sector have a strong role in

l a b o r

absorption. Based on SE2016-L, there were 83,475 businesses in the wholesale and retail

trade sector, as well as car and motorcycle repair that absorbed 122,793 workers. In the

processing industry sector, there were 54,538 businesses that absorbed 115,750 workers. This

figure shows that more than twice as many workers in the processing industry sector can be

absorbed by the number of existing businesses. The largest absorption of labor in the trade

sector and processing industry sector is in MSMEs compared to large businesses. This is

because MSMEs are labor-intensive while large enterprises are capital-intensive. Increasing

MSMEs as a step to increase labor absorption may be the right step to reduce poverty and

unemployment.

The agribusiness sector in Cilacap Regency, based on its role in GRDP and labor

absorption, shows a significant contribution to the Cilacap Regency economy. Fields or

subsystems in agribusiness such as input procurement activities (procurement of

a g r i c u l t u r a l inputs), on farm or farming activities, output activities (processing industry,

marketing), and supporting subsystems (financial services, consulting services, transportation,

and others). Agribusiness can be a source of economic growth, a provider of employment,

develop regional development, and a large source of foreign exchange (Saragih 2010).

However, the potential and role of agriculture and agribusiness in the economy has not

yet had a real impact on poverty and unemployment alleviation. In addition, there are no

specific commodities or agribusiness fields that are the flagship of Cilacap Regency in

contributing to the economy and having a direct impact on unemployment and poverty issues.

Based on these problems, it becomes the basis for selecting the agribusiness sector to be

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analyzed. Sector or subsector analysis is intended as a selection of sectors or subsectors that

are more focused in policy making for the government. So this research was conducted to

analyze the agribusiness sector which is included in the strategic sector as a step to develop

the economy and overcome the problem of unemployment and poverty. Efforts to increase

economic growth certainly require high productivity both in terms of output and in terms of

workers. So to increase productivity, it is necessary to analyze its development strategy.

Strategic sectors must also have a positive impact on the growth of other economic sectors, so

as to create sustainable economic growth.

From this statement, the following problem can be formulated:

1. What economic sectors are the strategic agribusiness sectors of Cilacap Regency?

2. What is the role of Cilacap Regency's strategic agribusiness sector in the economy of Cilacap

Regency?

3. What is the strategic agribusiness development strategy of Cilacap Regency?

2.1 Regional Autonomy

Based on local government legislation, each regional area has its own authority to

regulate and manage its own government affairs. Decentralization regulations are stipulated in

Law No. 32/2004 on Regional Government and Law No. 33/2004 on Financial Balance

between Central Government and Regional Government. The existence of these regulations,

the regions have the rights, authorities, and obligations to regulate and manage their own

government affairs and the interests of local communities in accordance with statutory

regulations. Law No. 32 of 2004 is a revision of Law No. 22 of 1999, and Law No. 33 of 2004

is a revision of Law No. 25 of 1999. According to Koswara in Tambunan (2001), the main

purpose of Law No. 22 of 1999 is to realize a strong legal basis for the implementation of

regional autonomy by considering the discretion to the region to make an autonomous region

that is independent in order to uphold the NKRI government system in accordance with the

1945 Constitution. Meanwhile, according to Sidik in Tambunan (2001), the main objectives

of Law No. 25 of 1999 are efforts to empower and improve regional economic capacity,

create a regional financing system that is fair, proportional, rational, transparent, participatory,

responsible and certain, and realize a good financial balance system between the central

government and local governments.

Regional autonomy gives authority to the government in government, economic, and

social affairs. According to Rasyid in Haris (2005), regional autonomy in the economic

context means an expansion of opportunities for communities and local governments to

prosper and advance themselves. Meanwhile, in a social context, it means an opportunity for

local governments to develop the quality of their communities and as a responsibility to the

central government in services in the fields of education, health, and other social services.

Based on research conducted by Sasana (2009) on the analysis of the impact of

economic growth and gaps between regions and the absorbed workforce on welfare in the

districts / cities of Central Java Province in the era of fiscal decentralization. The purpose of

the study was to analyze the effect of economic growth on welfare, to analyze the effect of

gaps on welfare, and to analyze the effect of absorbed labor on welfare in

districts/municipalities in Central Java Province. The results of the analysis show that

economic growth has a significant effect and has a positive relationship to community

welfare, economic disparity between regions has a significant effect and has a negative

relationship to welfare, and absorbed labor has a significant effect and has a positive

relationship to community welfare.

Based on research by Sudiyanto (2006) on comparative analysis of investment and

regional economy before and after the implementation of regional autonomy in the Special

Region of Yogyakarta Province in 2006. Objective The research was to determine the

comparison of FDI, GRDP, PAD before and after the implementation of regional autonomy in

DIY Province from 1998 to 2003. The results showed no effect of FDI before and after the

enactment of regional autonomy. While there is an influence of PMDN, GRDP, PAD before

and after the implementation of regional autonomy in DIY Province.

Another study was conducted by Wirakusuma et al. (2015) on the role of the

agricultural sector in East Java Province before and after the implementation of regional

autonomy. The study aimed to determine the agricultural sector or subsector included in the

leading sector in East Java Province, determine the trend of the contribution of the agricultural

sector to GRDP and employment in East Java, and determine the growth factors of the

agricultural sector. The study used LQ and DLQ analysis methods, Shift Share analysis, and

linear trend analysis. The results show that in the period before the regional autonomy era, the

subsector that became the leading sector was the food crop subsector, while in the regional

autonomy era, the livestock subsector became the leading subsector in East Java Province.

Labor absorption both by the agricultural sector in East Java Province before regional

autonomy and after regional autonomy experienced a downward trend. And the national

economy is the most dominant factor for the agricultural sector and all agricultural subsectors

in East Java both before and after regional autonomy.

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2.2 Base Economic Theory

The economic base theory states that the main determinant of a region's economic

growth is directly related to the demand for goods and services from outside the region

(Arsyad 2002). Activities in the regional economy are categorized into two sectors of activity,

namely base sector activities and non-base sectors. Base activities are activities that carry out

export-oriented activities (goods and services) outside the boundaries of the economy

concerned. Base activities have a role as a primary mover in the growth of a region. The

greater the exports of a region to other regions, the more advanced the growth of the region,

and vice versa. Any changes that occur in the base sector will cause a multiplier effect in the

regional economy. Meanwhile, non-base activities are activities that provide goods and

services needed by people within the boundaries of the economy. The scope of production and

marketing is local (Adisasmita 2005).

Based on research conducted by Yaqin (2018) on the analysis of non-oil and gas and

potential base sectors as regional development priorities of Cilacap Regency in 2018. The

purpose of the study was to analyze and find out the non-oil and potential base economic

sectors in Cilacap Regency, and to find out how Islamic economics views regional economic

development priorities in order to realize regional e c o n o m i c d e v e l o p m e n t in

Cilacap Regency that is sustainable and equitable. The data used in the research is the GRDP

of Cilacap Regency and Central Java province. The analysis method used is LQ and Typology

analysis Klassen. The results of research with LQ analysis show the results that the basic and

potential sectors in non-oil and gas economic sectors are the manufacturing industry sector

(without oil and gas) and the mining and quarrying sector. According to the results of Klassen

typology analysis, the mining and quarrying sector is a developed and fast-growing sector,

while the manufacturing sector is a developed but depressed sector. The analysis results in

alternative development strategies including: (1) two-track investment development, namely

investment policies that prioritize the development of basic and advanced sectors, and

investment facility policies that encourage potential sectors; (2) increasing and equalizing

people's income; (3) building synergy between basic and advanced sectors; (4) socialization

of government programs; (5) training aimed at competitive human resources; and (6)

prioritizing local labor for local industries.

Based on research conducted by Husna et al. (2013). regarding the analysis of the

development of local economic potential to strengthen regional competitiveness in Gresik

Regency in 2012. The research objectives were to analyze the development of local economic

potential in Gresik Regency, as well as the efforts of the Gresik Regency local government in

supporting the development of superior local potential to strengthen regional competitiveness.

The research method uses a quantitative approach. The data used is secondary data. The

research method was carried out using the LQ analysis method and Shift Share analysis.

Husna et al. (2013) mentioned that efforts to increase regional competitiveness to optimize

regional development, the government must develop its superior economic potential. The

results showed that the most potential sectors or basic sectors were the manufacturing industry

sector; electricity, gas, and clean water sector; and mining and quarrying sector. Meanwhile,

the results of the Shift Share analysis show that these basic sectors have high competitiveness,

but the processing industry sector and the electricity, gas and clean water sector have slow

growth, while the mining and quarrying sector has a fast growth rate. The Gresik Regency

Government according to the RPJMD and RPJPD, as well as the APBD allocation prioritizes

the development of the processing industry sector and less potential sectors, such as the trade,

hotel and restaurant sector; and the agricultural sector.

Based on research conducted by Sofiyanto (2015) on analyzing the role of agricultural

subsectors in regional development in Batang Regency with the Location Quotient and Shift

Share Analysis approaches. The purpose of the study was to analyze the growth and

competitiveness of the agricultural sector and the position of the agricultural sector in the

Batang Regency economy, find out the agricultural subsectors that are superior subsectors and

analyze the growth and competitiveness of these subsectors, and analyze the priority

formulation of agricultural subsector development in advancing the agricultural sector in

Batang Regency. The data used in the research is secondary data. Data processing methods

using LQ analysis and Shift Share analysis. The results of the research using LQ analysis

stated that the agricultural sector in Batang Regency is included in the leading sector.

Meanwhile, based on Shift Share analysis, the agricultural sector is experiencing slow growth

and has low competitiveness. Based on the growth profile, the agricultural sector is in

quadrant III position, i.e. the agricultural sector is a backward sector in the economy. Based

on the analysis of agricultural subsectors, the leading subsectors are plantation crops,

livestock and their products, forestry, and fisheries. The leading subsectors that have

proportionally fast growth are livestock and its products, forestry, and plantation subsectors.

Meanwhile, subsectors that have good competitiveness are fisheries and foodstuff crops.

Agricultural subsectors that have progressive growth are fisheries, forestry, and livestock

subsectors. Sofiyanto (2015) mentioned that the priority formulation proposed for agricultural

development in Batang Regency is the fisheries subsector as the main priority because it has

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progressive growth and good competitiveness. The next priorities are food crops, forestry,

livestock, and plantation subsectors.

Based on research conducted by Purwantina (2009) on the economic analysis of Depok

City from 2003 to 2007 (Shift Share and LQ analysis). The study aimed to analyze the

contribution, growth rate, competitiveness, growth profile, and net shift of Depok City's

economic sectors, as well as to identify Depok City's leading sectors. The study used Shift

Share analysis and LQ analysis methods. Purwantina (2009) stated that the largest GDRP

contribution was the manufacturing sector and the smallest GDRP was the mining and

quarrying sector and the agricultural sector. The sector that experienced the fastest growth

rate was the trade, hotel and restaurant sector, while the lowest growth rate was the mining

and quarrying sector and the agricultural sector. The competitiveness of Depok City's

economic sectors is generally still unfavorable when compared to other sectors in West Java,

except for the finance, rental and corporate services sector. The leading sectors of Depok City

are the electricity, gas and drinking water sector; the building or construction sector; the trade,

hotel and restaurant sector; the transportation and communication sector; the finance, renting

and corporate services sector; and the services sector. The progressive sectors are the

manufacturing sector; the trade, hotel and restaurant sector; and the finance, rental and

corporate services sector.

2.3 Agribusiness Development Strategy

Strategy is a way or tool to achieve organizational goals. The implementation of

strategies in achieving goals is one of the strategic management activities. Strategic

management activities include environmental observation, strategy formulation, and

evaluation and control. One of the steps in formulating a development strategy, an

organization needs to make environmental observations. According to David (2009), the

purpose of external environmental analysis is to develop a limited list of opportunities that

can be utilized and threats that must be avoided. While the analysis of the internal

environment is to see the strengths and weaknesses contained in an organization. The results

of identifying the internal and external environment will determine the organization in

formulating strategies.

Based on research conducted by Nugroho et al. (2018) on plantation agribusiness in

Cilacap Regency, Central Java Province. The research used primary data through field

observations and farmer interviews as well as farmer interviews government, and secondary

data in the form of RTRW, RPJMD, regional profiles, and previous studies on agribusiness in

Cilacap. The analysis methods used are the LQ method, Rasmussen's Dual Criterion (RDC),

and SWOT analysis. The LQ results and adjusted to the results of previous studies and central

and regional government policies, stated that the leading commodities for plantation crops in

Cilacap Regency are deres coconut, rubber, and nutmeg. The results of the RDC analysis, the

coconut deres commodity has a score of 28 which means in the superior category, the rubber

commodity has a score of 27 which is also included in the superior category, and the nutmeg

commodity has a score of 24 which means in the superior category. Recommendations for

development strategy programs that need to be carried out are improving the quality of

agricultural human resources and group activities, extensification policies, controlling land

conversion, guaranteeing superior commodity prices, mitigating climate change, developing

infrastructure, and facilitating credit for farmers. In addition, the provision of information

needs to be provided to investors as an effort to promote superior commodities.

Based on research by Darlen et al. (2015) on regional development based on superior

potential in East Manggarai Regency, NTT province as a new autonomous region. The

objectives of the study were to identify superior potentials that can be developed and provide

more economic value, evaluate existing land use based on land capability, and formulate

regional development strategies for East Manggarai Regency. The methods used were Input-

Output (IO) analysis, LQ analysis, Shift Share analysis, and SWOT analysis. The results

showed that the leading sectors of East Manggarai Regency are the food crop sector, the non-

oil and gas industry sector, and the trade sector. The largest land use is shrubs, so it has

opportunities for regional development. Meanwhile, most of the land use is not in accordance

with its designation, which needs to be considered in the RTRW mapping. East Manggarai

Regency has many opportunities to be developed, so it requires strategies, such as community

empowerment, technology development, improving the community economy by mobilizing

cooperatives and other economic institutions, intensifying agricultural businesses to improve

the quality and quantity of production and optimizing the use of natural resources, increasing

the integration of activities between sectors, utilizing agricultural product processing

technology, improving the system of cooperation and coordination between agencies,

structuring the regional spatial system.

Based on research conducted by Permatasari (2012) on regional development strategies

through base sector analysis on growth in Sragen Regency. The purpose of the study was to

analyze the economic sector that became the base sector in Sragen Regency, knowing the

right strategy to support the achievement of economic growth in Sragen Regency. The

methods used in the study were Location Quotient (LQ) analysis, Shift Share analysis, and

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SWOT analysis. The results showed that the base sectors in Sragen Regency are agriculture;

electricity, gas and water sector; finance sector; rental and corporate services sector; and

services sector. SWOT analysis resulted in potential economic development strategies,

namely conducting counseling and maintenance of the agricultural sector, utilizing technology

and improving quality.

products so that export opportunities are wider, improving regional infrastructure, cooperation

between the government and the community in realizing the vision and mission of the region.

1.1 Theoretical Framework

The theoretical framework is a framework that reveals the theories regarding the subject

matter of the research that will be used as the basis of a study. This theoretical framework

includes the concept and definition of regional income; economic base theory; regional

development concept; strategy concept; strategic management concept; agribusiness concept;

vision, mission, and organizational goals; government environmental analysis; and SWOT

analysis.

1.1.1 Concept and Definition of Regional Opinion

According to Tarigan (2005), regional income is the income level of people in the

analysis area. The income level can be measured by the total average income of the people in

the region. There are several parameters that can be used to measure regional development.

One of the most important parameters is to increase people's income. Some of the concepts

and definitions used in regional income studies are gross domestic product (GRDP) at market

prices, net regional domestic product (NDRP) at market prices, net regional domestic product

(NDRP) at factor costs.

a. Gross Regional Domestic Product (GRDP) at Market Prices Gross regional domestic product

(GRDP) at market prices is

The sum of gross value added arising from all sectors of the economy in a region. Gross value

added is the value of production minus intermediate costs. Gross value added includes the

factor components of income: wages and salaries, interest, land rent, and profits; depreciation;

and net indirect taxes.

Gross regional domestic product (GRDP) is one of the indicators in measuring the level

of regional economic development, in this case the increase in the production of goods and

services in a region. GRDP is the sum of added value generated by the final unit of goods and

services produced by all economic units. GRDP can be divided into two, namely GRDP at

constant prices and GRDP at current prices.

GRDP at constant prices describes the value added of goods and services calculated

using prices prevailing in a given year as a basis or in other words regional income that does

not take into account the element of inflation. Based on the base year, GRDP at constant

prices can be used to determine economic growth from year to year. The calculation of GRDP

at constant prices on an ongoing and periodic basis can be used to determine the development

of economic sectors in real terms (Sukirno 2008). Meanwhile, GRDP at current prices

describes the value added of goods and services calculated using prices prevailing in each

year or in other words, income that takes into account the element of inflation.

b. Net Regional Domestic Product (NDRP) at Market Prices

Net regional domestic product (NDRP) at market prices is GRDP at market prices minus

depreciation. Depreciation refers to the value of wear and tear or reduction in the value of

capital goods, such as machinery, equipment, vehicles, and others due to use in the production

process or time factor.

c. Net Regional Domestic Product (PDRN) on the Basis of Factor Costs

Net regional domestic product (PDRN) on the basis of factor costs is PDRN at market

prices minus net indirect taxes. Net indirect taxes are indirect taxes minus subsidies in the calculation

of regional income. These indirect taxes include sales taxes, export and import duties, customs duties,

and others, excluding income and personal taxes.

1.1.2 Economic Base Theory

According to Tarigan (2005), the base theory explains that the main determinant of a

region's economic growth is directly related to the demand for goods and services from

outside the region. The theory argues that the rate of economic growth of a region is

determined by the size of exports from the region. The economic base theory in an economy

is divided into two, namely the base sector and the non-base sector. Base sectors are sectors

that export goods and services or labor to places outside the boundaries of the region

concerned. In addition, base sector exports can be in the form of spending by foreigners in the

area on immovable goods, such as tourist attractions, historical relics, museums, and so on

(Priyarsono et al. 2007). Meanwhile, according to Tarigan (2005), the basic sector is a sector

that is able to meet the needs of the region and other regions. The base sector is a sector that is

able to increase the regional economy beyond its natural growth. In this case, the sale of

products and services to other regions will bring income from outside the region. According

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to Glasson (1997), the more base sectors there are in a region, the more income flows there

will be. Then, as the number of leading sectors in a region increases, the volume of non-base

sectors will also increase.

Theoretically, the base sector or non-base sector is not static, but dynamic or

changeable. This means that a basic sector in a certain year does not automatically become a

basic sector in the following year. A sector can experience progress or regression, so the

definition of a base or non-base sector can shift.

Determining whether a sector is a basic sector or a non-basic sector can use the direct

measurement method and the indirect measurement method. The direct measurement method

uses direct survey data to identify sectors that are basic sectors. This direct measurement

method can determine the base sector precisely, but it requires a lot of cost, time, and labor.

Indirect measurement methods include (1) the assumption approach, (2) the location quotient

method, a combination of methods (1) and (2), and (4) the needs method minimum. Based on

these four methods, Glasson (1997) suggested using the location quotient method to

determine the base sector.

According to Tarigan (2005), the LQ method is a method that compares the role of a

sector in a region to the role of that sector nationally or in a larger region. In addition to LQ,

the Shift Share Analysis method can analyze the economic structure of a region by looking at

the growth of economic sectors in the region. Shift Share Analysis is one of the analytical

tools used to identify the source of economic growth both in terms of income and labor in a

region (Priyarsono et al. 2007).

According to Adisasmita (2005), the tools used to analyze the economic base of a

region are Location Quotient and Shift Share Analysis. Location Quotient (LQ) is used to

determine the level of specialization of the basic or leading sectors. Meanwhile, Shift Share

analysis is used to compare regional changes that occur in a region between two specific

points in time, and specifically concentrates on whether the regional change is greater or less

than the national average change, i.e. with an upward or downward shift.

a. Location Quotient (LQ) Analysis

According to Tarigan (2005), Location Quotient (LQ) is a comparison with the role of a

sector or industry in a region to the role of the sector or industry nationally. LQ analysis is

used to see whether a sector is included in the base sector or non-base sector. The basic sector

in the LQ analysis results is indicated by the LQ value > 1, while the non-basic sector is

indicated by the LQ value < 1. Tambunan (2001), the rationale for the LQ method is as

follows, for example in a region there are two industries, namely A and B. Industry A serves

local markets and markets outside the region (exports), this industry is called basic industry.

While industry B is a non-basic industry or local industry because it only serves the local

market. The premise of this theory is the economic base theory.

b. Shift Share Analysis (SSA)

Shift Share analysis is a very useful technique in analyzing changes in the structure of

the regional economy compared to the national economy. The purpose of this analysis is to

determine the performance or productivity of the regional economy by comparing it with a

larger region (regional/national).

This analysis provides data on economic performance in three areas that are related to

each other, namely (Arsyad 2002):

(1) Regional economic growth is measured by analyzing aggregate sectoral changes

compared to changes in the same sector in the benchmark economy.

(2) The proportional shift measures the relative change in growth or decline in the

region compared to the larger economy as a benchmark. Thus it can be known

whether the regional economy concentrated in industries that are growing faster than the

benchmark economy.

(3) Differential shifts are used to determine how competitive the regional industry is

with the benchmark economy.

There are components that affect the growth of an economic sector in a region in Shift

Share analysis, namely:

(1) National Growth Component (PN)

Priyarsono et al. (2007) PN component is a change in production or employment

opportunities in a region caused by changes in national production or employment

opportunities, changes in national economic policy, changes in the regional economy, or

changes in matters affecting the economy of all sectors and regions. If it is assumed that there

are no differences in economic characteristics between sectors and between regions, then the

consequences of these changes will have the same impact on each sector and region. Each

sector or region will experience change and growth at a rate similar to that of the national

economy. However, in reality, some sectors or regions experience faster growth than other

sectors or regions.

(2) Proportional Growth Component (PP)

The PP component arises due to sectoral differences in final product demand, differences

in the availability of raw materials, differences in industrial policies (taxation, subsidies, and

price support policies), and differences in market structure and diversity.

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(3) Proportional Growth Component (PPW)

The PPW component arises due to an increase or decrease in GRDP or employment

opportunities in a region compared to other regions. The rapid growth of a region compared to

other regions is determined by the comparative advantage, access to markets, institutional

support, socioeconomic infrastructure, and regional economic policies in the region.

1.1.3 Regional Development Concept

Regional economic growth is the increase in people's income that occurs in a region,

namely the increase in all added value that occurs in the region (Tarigan, 2005). Economic

growth as a depiction of the prosperity of a region. According to Putong (2003), economic

growth is one indicator of successful economic development. The higher the economic

growth, the higher the welfare of the people. Economic growth is useful for measuring

economic progress as a result of national and regional economic development.

There are three most important components of economic growth, namely (Todaro and

Smith, 2009):

a. Capital accumulation includes all new investments in land, physical equipment, and

human resources through improved health, education, and job skills. Accumulation

Capital will occur if a certain portion of current income is saved and invested to increase

future output and income. Such savings or investments take the form of capital stock,

economic infrastructure, and human capital. Capital stock is the total amount of physical

goods that exist at any given moment, which have been produced for use in the production of

other goods and services. The availability of a country's physical capital stock enables efforts

to increase output to be achieved. Investments in economic and social infrastructure are

productive direct investments, such as roads, electricity, clean water and sanitation,

communications and so on. Economic infrastructure facilitates and integrates various

economic activities. Human capital investment improves the quality of human capital, which

has an equal or greater impact on production. The advancement of education can have a

tremendous impact on improving the quality, leadership and productivity of the workforce. In

addition to education, the level of health also affects the productivity of human resources.

b. Population growth eventually leads to the growth of the labor force. Population

growth resulting in an increase in the size of the labor force is seen as a positive factor

to boost economic growth. A larger labor force means more productive workers. A

large overall population will increase the size of the domestic market. However, this

issue must be accompanied by the ability of the economic system to absorb and

productively employ the surplus labor.

c. Technological progress, new ways that make work easier and increase productivity.

Technological progress is the increased application of new scientific knowledge in the

form of inventions and innovations regarding physical and human capital.

Technological progress is divided into three classifications, namely neutral

technological progress, which occurs when a higher level of output is achieved, labor-

saving technological progress, and capital-saving technological progress.

Rapid economic growth is associated with worsening poverty or inequality in society.

Meanwhile, policies that reduce poverty will reduce the rate of economic growth. Todaro and

Smith (2009) mention five reasons why policies that focus on reducing poverty do not always

slow down the rate of economic growth, including:

a. Widespread poverty will create conditions where the poor cannot get loans, cannot

afford education, and make children an investment in old age because they have no

financial or monetary investment opportunities. This factor causes per capita growth to be

less than it would be if income distribution was even.

b. The rich in many poor countries are generally not frugal or save enough and invest

their income in the local economy.

c. The low income and standard of living of the poor results in poor health, nutrition, and

education, thus lowering their economic productivity which directly or indirectly

slows down the rate of economic growth.

d. Rising income levels of the poor will stimulate increased demand for local products to

fulfill daily needs, while the rich will spend most of their income on imported luxury

goods. The increased demand for local products will stimulate local production,

employment opportunities and investment, thereby increasing the rate of economic

growth and wider community participation.

e. Mass poverty reduction can promote healthy economic expansion because it serves as

a material and psychological incentive to expand public participation in the

development process. Conversely, wide income gaps and substantial absolute poverty

can create negative material and psychological incentives for economic progress.

Meanwhile, development according to Todaro and Smith (2009) is a physical reality as

well as a mental state (state of mind) of a society through a certain combination of social,

economic, and institutional processes to realize a better life. As for the components included

in a better life, development in society has at least the following three objectives:

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a. Increasing the availability and expanding the distribution of basic necessities of life such as

food, shelter, health and protection.

b. Improved standards of living include not only increased income, but also more jobs, better

education, and greater attention to cultural and human values. Overall, this not only improves

material well- being but also fosters individual and national self-esteem.

c. The expansion of economic and social options for individuals and the nation as a whole,

which not only liberates them from the environment of servitude and dependence on other

people and countries/nations but also from the factors that lead to ignorance and misery.

Regional development is an effort to harmoniously marry natural resources, people, and

technology by taking into account the capacity of the environment itself. The concept of

regional development that It is intended to minimize the growth gap and welfare inequality

between regions (Mahi 2016). According to Mahi (2016), strategic development region

mapping, a development area is expected to have strategic elements, including natural

resources, human resources, and infrastructure that are interrelated and complementary so that

they can be developed optimally by paying attention to the nature of synergism between them.

In other words, regional development is an effort to empower stakeholders in an area in

utilizing natural resources with technology to add value to what is owned by the region in

order to improve the quality of life of its people.

Government regulations regarding the development of businesses supporting the

regional economy are contained in Article 1 Paragraph 1 of Permendagri Number 9 of 2014

concerning Guidelines for the Development of Regional Superior Products. The regulation

states that development efforts are an effort made by the government, local governments, and

the community through planning, organizing, financing, supervising, controlling, and

evaluating activities. The determination of regional superior products or regional potential can

be analyzed by referring to GRDP, types of jobs or livelihoods of the population, and land use

in the region. Some criteria for a product to be categorized as a regional superior product

include criteria such as employment absorption, contribution to the economy, regional base

sector, renewable, socio-cultural, market availability, raw materials, capital, production

facilities and infrastructure, technology, business management, price. Regional development

policy in this context is to continue to consider income distribution and reduce poverty.

Based on the results of research from Dermoredjo and Noekman (2000) on the analysis

of determining the main indicators in the development of the agricultural sector in Indonesia,

the analysis method used is the principal component analysis approach. The results of the

analysis show that one of the indicators used so far to evaluate the performance of the

development sector includes gross domestic product (GDP), employment, foreign exchange

providers and its role in reducing the number of poor people. The growth variables of non-

agricultural gross regional domestic product (GRDP) and agricultural gross regional domestic

product are positively correlated, meaning that in the creation of added value these two types

of GRDP do not eliminate each other because they are complementary, as well as the growth

of processed agricultural exports and processed agricultural imports show a positive

correlation. This shows that in spurring the economic development of a region a combination

of import substitution and export promotion is needed and increasing the output of the

economic sector is important in the economic development of a region.

1.1.4 Strategy Concept

Strategy is the means and tools used to achieve the ultimate goal (Prawironegoro and

Rivai 2015). According to Porter (1996), strategy is a very important tool for achieving

competitive advantage. Strategy is a potential action that requires top management decisions

and large amounts of company resources (David and David 2016). Strategy according to

Chandler (1996) in Rangkuti (2006) is the long-term goal of a company, as well as the

utilization and allocation of all resources that are important to achieve this goal. According to

David (2009), strategy is a means along with long-term goals to be achieved. Business

strategies include geographic expansion, diversification, acquisition, product development,

market penetration, tightening, divestment, liquidation, and joint ventures.

Based on the opinions of experts regarding the concept of strategy, it can be concluded

that strategy is a tool or way to achieve the ultimate goal by allocating existing resources and

considering competitors. Each organization has a unique and different strategy according to

its needs. Strategy formulation considers all internal and external factors so that an

organization can achieve competitive advantage.

1.1.5 Strategy Management Concept

According to David (2009), strategic management is the art and knowledge of

formulating, implementing, and evaluating cross-functional decisions that enable an

organization to achieve its goals. According to Glueck and Jauch (1993) in Prawironegoro

and Rivai (2015), strategic management is a flow of decisions and actions that lead to the

development of an effective strategy or strategies to help achieve company goals. Meanwhile,

according to Wheelen and Hunger (2012), strategic management is a series of managerial

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decisions and actions that determine the long-term performance of a company. Strategic

management activities include observing the environment, both internal and external

environments, strategic strategy formulation or long-term planning, strategy implementation,

and evaluation and control.

Strategic management is necessary for an organization to formulate a managerial

decision. This is done to achieve organizational success. Strategic management helps to

decipher the complexity of the problem, making it easier to determine strategic steps through

a more systematic, logical, and rational approach.

1.1.6 Agribusiness Concept

Agribusiness is a complete and interrelated system among all economic activities,

namely upstream agricultural subsystems, cultivation subsystems, crop processing

subsystems, agricultural product marketing subsystems, and agricultural services or support

subsystems that are directly related to agriculture (Saragih 2010). According to Drillon (1974)

in Krisnamurthi (2001), agribusiness is defined as the sum total of all activities related to the

manufacture and distribution of agricultural inputs, including farming, storage, processing,

and distribution of agricultural products and other products resulting from agricultural

products agriculture. According to Krisnamurthi (2001), agribusiness is defined as a system

consisting of interrelated elements, because it is a system that cannot be separated from one

another and is mutually integrated. Agribusiness activities cover the agricultural sector, which

includes fisheries, livestock, forestry, and the industrial sector. The combination of the

agricultural sector and the industrial sector will create economic growth, both on a national

and local scale.

According to Krisnamurthi (2001), the subsystems in the agribusiness system include at

least four subsystems, namely: (1) up-stream agribusiness subsystem, namely economic

activities that produce (upstream agro-industry) and trade in primary agricultural production

facilities (such as the fertilizer industry, medicines, seeds or seeds, agricultural tools and

machinery, etc.); (2) on-farm agribusiness subsystem, which in the past was referred to as the

primary agricultural sector; (3) down-stream agribusiness subsystems, which are economic

activities that process primary agricultural products into processed products, either in the form

of ready to cook or ready to be used or ready for consumption (ready to eat) along with their

trading activities in domestic and international markets; and (4) supporting service subsystems

such as financial institutions and financing, transportation, extension and agribusiness

information services, research and development, government policies, agribusiness insurance,

and others.

1.1.7 Vision, Mission, and Goals of the Organization

David (2009) mentions that the determination of vision and mission is the first step in

the planning process, while the determination of objectives follows strategy formulation. The

nature of a business's vision and mission present the company's competitive advantages and

weaknesses. Well-designed vision and mission statements are important for formulating,

implementing, and evaluating strategies (David and David 2016).

A vision is the desired state of an organization in the future. A clear vision is the basis

for developing a comprehensive mission statement. A vision is a short statement, preferably in

one sentence, and is the result of managers' thinking in the development process. According to

Umar (2008), vision is the first stage in strategic planning related to what the company wants

to achieve. While the mission is a formulation of what must be done or completed. The

mission is a declaration of the reason for the existence of an organization. A clear mission

statement is important for formulating effective goals and strategy formulation. Mission

statements outline the values and priorities of an organization and describe the f u t u r e

direction of an organization.

1.1.8 Government Environment Analysis

Environmental analysis is an important factor in strategic management. Environmental

analysis becomes an analytical tool in helping to create strategic decisions that an

organization will use. Environmental analysis includes internal analysis and external analysis

of the organization. The internal environment is the environment that is within the

government organization and has control over its sustainability. While the external

environment is an environment that is outside the government organization and cannot

directly control it.

Internal environmental analysis is an analysis conducted on the situation within an

organization. The internal environment is a factor that comes from within the organization

that affects the direction and actions of an organization. According to David (2009), states

that the internal environment is the environment that occurs in the company's activities. This

relates to the existence of strengths and weaknesses. Every organization has unique and

different strengths and weaknesses. Internal environmental analysis is a tool to determine the

strengths and weaknesses of an organization, so that it becomes the basis for making strategic

decisions. In addition, one of the steps in strategy formulation is t o analyze the external

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environment of the organization to see opportunities and threats for the organization.

According to David (2009), the purpose of external analysis is to develop an infinite list of

opportunities that can provide benefits and threats that must be avoided.

1.1.9 SWOT Analysis

According to David (2009), strength, weakness, opportunity, and threat SWOT analysis

is based on logic that can maximize strengths and opportunities, but simultaneously also

minimize existing weaknesses and threats. SWOT analysis focuses on two things, namely:

a. The first fundamental focus is on opportunities, which are important favorable situations in

the company's environment, as well as threats, which are important unfavorable situations in

the company's environment.

b. The second fundamental focus is the identification of internal strengths, i.e. resources, skills,

or advantages relative to the competition and the needs of the markets the company serves or

wants to serve, and internal weaknesses, i.e. limitations or deficiencies in resources.

The SWOT matrix (strengths, weaknesses, opportunities, threats matrix) is a tool to

identify strengths, weaknesses, opportunities, and threats in an organization's environment.

According to David (2009), the SWOT matrix is a matching tool that helps in strategy making

using four types of strategies:

a. An SO (strength-opportunity) strategy is one that leverages an organization's internal

strengths to take advantage of external opportunities.

b. WO (weakness-opportunity) strategy is a strategy that aims to improve internal weaknesses

by taking advantage of external opportunities.

c. The ST (strength-threat) strategy is a strategy that uses the organization's strengths to avoid or

reduce the impact of external threats.

d. WT (weakness-threat) strategies are defensive tactics designed to reduce internal weaknesses

and avoid external threats.

1.2 Operational Framework

Cilacap Regency has abundant natural potential, but poverty and unemployment rates

are still high. An increase in economic growth with an increase in real economic growth is

expected to absorb more labor. The economic structure of Cilacap Regency is supported by

several sectors, especially by regional leading sectors. In order to optimally increase

economic growth, it is necessary to know which sectors are strategic sectors that can have the

greatest impact on employment and reduce poverty. These strategic sectors are also expected

to have a positive impact on other sectors.

The determination of strategic sectors is obtained from the economic structure of

Cilacap Regency through GRDP. After knowing the strategic sector of Cilacap Regency, by

knowing the basic sector and the growth of the sector, there is a need for a development

strategy for the strategic sector. By formulating a development strategy, it will be known what

strategies can increase the competitiveness of the sector. So that economic growth planning

becomes more focused.

This analysis uses Location Quotient (LQ), Shift Share Analysis (SSA), and SWOT

analysis methods. The LQ analysis method is used to determine the base sector of Cilacap

Regency, Shift Share analysis is used to determine the growth and competitiveness of the base

sector, while SWOT analysis is used to formulate a strategic sector development strategy for

Cilacap Regency. The development of strategic sectors is expected to be taken into

consideration by the Cilacap Regency government in making policies to increase economic

growth and improve welfare.

Time and Place

The research was conducted in Kabupaten Cilacap, which is located in the southwestern

tip of Central Java province. The selection of this research location was carried out

purposively with the consideration that Cilacap Regency is a regency that has a high

unemployment rate. Data collection was conducted from January 2019 to July 2019.

4.1 Data Type and Source

The types of data used in this research are primary and secondary data. Primary data

was obtained from interviews with experts, namely from relevant agencies, such as: (1)

Regional Research and Development Planning Agency (BAPELITBANGDA); (2) Food and

Plantation Office; (3) Office of Manpower and Industry, Office of Trade, Cooperatives, and

MSMEs (DPKUKM); and (4) Integrated Business Service Center for Cooperatives and

MSMEs (PLUT KUMKM). Secondary data were obtained from Gross Domestic Product

(GRDP) data of Cilacap District and Central Java Province, GRDP of Central Java Province,

RPJMD, Strategy Plan (Renstra), agency studies, Cilacap District profile, and other

supporting data. This data was obtained from BPS Cilacap Regency, BPS Central Java,

BAPELITBANGDA, the Food and Plantation Office, the Manpower and Industry Office, and

other sources related to this research, as well as various literature from the internet and other

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sources. The GRDP data used is ADHK non-oil and gas GRDP. The use of ADHK data or on

the basis of constant prices is to see real economic developments that are not influenced by

price changes or inflation/deflation. While the use of non-oil and gas data is to see real

economic sectors that have a large multiplier impact, have a lot of manufacturing activities,

and are sourced from renewable resources.

4.2 Processing Method

Data processing and analysis are done quantitatively and descriptively qualitative.

Quantitative data processing and analysis with Location Quotient (LQ) Analysis and Shift

Share Analysis. This data analysis was conducted to determine which sectors and subsectors

are strategic sectors or subsectors for Cilacap Regency. This data processing used Microsoft

Excel 2010. Descriptive analysis was conducted to determine the strategies that can be used to

develop these strategic sectors using SWOT analysis. The approach in the LQ analysis and

Shift Share analysis used in this study uses the value-added approach or GDRP at constant

prices (ADHK) 2010 of Cilacap Regency and GDRP ADHK 2010 of Central Java as a

broader regional reference. The year used in the sector LQ analysis is the ADHK 2010 GDP

data from 2015 to 2019. While the subsector LQ analysis uses the range of 2013 to 2017 due

to data limitations. In the Shift Share analysis, the sector uses GDRP ADHK 2010 data in

2015 as the base year and 2019 as the final year. While the subsector Shift Share analysis uses

ADHK 2010 GRDP data in 2013 as the base year and 2017 as the final year. The GRDP data

used is GRDP without oil and gas, both Cilacap Regency and Central Java province data.

4.3 Analysis Method

The analysis method used to determine which sectors are strategic sectors in Cilacap

Regency is by using Location Quotient (LQ) analysis, then Shift Share analysis to determine

the growth and competitiveness of the sector. The SWOT matrix analysis method is used for

the formulation of strategic sector development strategies, so as to obtain alternative

development strategies.

4.3.1 Location Quotient (LQ) Analysis

This method is used to see the sectors that are categorized as leading sectors. In

addition, this analysis is one of the indicators that can show the size of the role of a sector in a

region compared to the upper region. In this case, a comparison is made between the income

in sector i in the lower region against the total income of all sectors in the lower region and

the income in sector i in the upper region against the income of all sectors in the upper region.

The provision in this method is that if the LQ value > 1 then sector i is categorized as a

basic sector or leading sector. The LQ value that is more than one indicates that the share of

income (labor) in sector i in the lower region is greater than the upper region and the output in

sector i is more export-oriented. This means that the role of a sector in the Cilacap Regency

economy is greater than the role of that sector in the Central Java Province economy.

Conversely, if the LQ value is <1 then sector i is categorized as a non-base sector or a non-

leading sector. An LQ value of less than one indicates that the share of income (labor) in

sector i in the lower region is smaller than in the upper region. This means that the role of a

sector in the Cilacap Regency economy is smaller than the role of that sector in the Central

Java province economy. The assumptions used in the LQ analysis are:

a. The consumption pattern of households in the lower region (Cilacap Regency) is

identical to that of households in the upper region (Central Java Province).

b. The tastes and spending patterns of one region and another across Central Java

Province are similar.

c. Every resident in Cilacap Regency has the same demand pattern for goods and

services as the demand pattern for goods and services at the Central Java Province

level.

The LQ analysis method has advantages and disadvantages. The advantages of the LQ

analysis method in identifying basic sectors are:

a. The LQ method is an analytical tool that is easy, simple, and quick to use. This

method does not require a lot of time and money in data collection.

b. The LQ method can be used as an initial analysis, and then can be continued with

other analytical tools.

c. Changes in the level of specialization of each sector can be seen by comparing the LQ

from year to year.

d. No need for complicated data processing programs. Data processing can be done using

a spread sheet from Ms. Excel or Lotus if the data is not too large.

Meanwhile, the weaknesses of the LQ method are:

a. The simplicity of the LQ analysis approach demands accuracy or validity of the data

used.

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b. Collecting highly valid data is difficult because it requires a lot of time and money.

c. Delineation of the assessment area. Delineation of the study area and scope of

activities is often unclear.

d. The LQ value is influenced by several factors. The calculated values are biased, due to

the level of disaggregation of specialization variables, selection of reference variables,

selection of comparable entities, selection of years, and data quality.

4.3.2 Shift Share Analysis

In general, Shift Share analysis can be used to see the growth of economic sectors in a

region over a certain period of time. In addition, it can also see which economic sectors in the

lower region (Cilacap Regency) contribute the most growth to the economy of the upper

region (Central Java province) and also to find out which sectors are experiencing the fastest

growth in each of the lower regions. Another use is to see the development of a region

compared to other regions and to compare the rate of economic sectors in a region with the

national growth rate and its sectors.

The main steps in the Shift Share analysis are as follows:

a. Determine the area to be analyzed. In this research, the area to be analyzed is the

Cilacap Regency area.

b. Determine economic activity indicators and analysis period. The economic activity

indicator used here is the income reflected in the GDRP value of Cilacap Regency and

the GDRP of Central Java province. Meanwhile, the analysis period used in this

research is from 2013 to 2017 for subsector analysis, while 2015 to 2019 for sector

analysis.

c. Determine the economic sectors to be analyzed. The economic sectors to be analyzed

in this study are focused on the agribusiness sector, namely: agriculture; fisheries;

forestry; processing industry; and tourism; as well as trade in Cilacap Regency.

d. Calculate changes in economic indicators.

5.1 Administration and Population

Administratively, Cilacap Regency is divided into 24 sub-districts, 269 villages, and 15

urban villages stretching from the northwest to the east. The sub-districts in Cilacap Regency

include Dayeuhluhur sub-district at the southwest tip, Majenang sub-district, Wanareja sub-

district, Cimanggu sub-district, Karangpucung sub-district, Cipari sub-district, Sidareja sub-

district, Kedungreja sub-district, Gandrungmangu sub-district, Patimuan sub-district,

Bantarsari sub-district, Kawunganten Subdistrict, Jeruklegi Subdistrict, Kampung Laut

Subdistrict, North Cilacap Subdistrict, Central Cilacap Subdistrict, South Cilacap Subdistrict,

Kesugihan Subdistrict, Maos Subdistrict, Sampang Subdistrict, Adipala Subdistrict, Kroya

Subdistrict, Binangun Subdistrict, and Nusawungu Subdistrict. The largest sub-district is

Wanareja, which has an area of 189.73 km² or 8.87 percent of the total area. The sub-district

with the smallest area is Kecamatan Cilacap Selatan, which has an area of 9.11 km² or 0.43

percent of the total area of Cilacap Regency. The area of each sub-district can be seen in

Table 6. At the end of 2019, the population of Cilacap Regency reached 1,937,427 people,

consisting of 979,745 male residents and 957,682 female residents. This number increased by

1.60 percent from the population in 2018, which amounted to 1,906,849 people consisting of

964,101 male residents and 942,748 female residents. Based on data from BPS Cilacap

Regency, the average population growth of Cilacap Regency in the last five years was 1.48

percent. The population growth of Cilacap Regency over the last five years can be seen in

Table 7.

The composition of the population by sex shows that there are more males than females,

indicated by a sex ratio of 102.3. Meanwhile, the distribution of population by sub-district at

the end of 2019, the largest population was in Majenang Sub-district, with 138,476 people or

7.14 percent, followed by Kesugihan Sub-district with 131,283 people or 6.77 percent, then

Kroya Sub-district with 114,119 people or 5.89 percent. Meanwhile, the smallest population

is in Kecamatan Kampung Laut, which is 15,566 people or 0.80 percent. In terms of

population density, Kecamatan Cilacap Selatan is the most populous kecamatan with a

population density of 9,281 people/km².

The population of Cilacap Regency based on age classification, the number of people

under 15 years old is 439,096 people or 22.66 percent, which means that the population of

Cilacap Regency is in the medium age category. Based on the population pyramid of Cilacap

Regency, it can be seen that the population structure leads to the proportion of productive age

between 15-64 years, which is 69.59 percent. The number of working-age people who are

more than non-working-age people leads to the condition of achieving a demographic bonus.

Demographic bonus is a condition in which the acceleration of economic growth due to

changes in population age is characterized by a decrease in the dependency ratio of the non-

working-age population to the working-age population. This structural change allows the

demographic bonus to be created due to the increase in the number of labor force (labor

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supply) and the quality of human resources (human capital). If this condition is not addressed

by providing sufficient employment opportunities and increasing the competence of the

productive workforce, it will lead to an increase in unemployment. However, if these

conditions can be resolved properly, it can increase economic movement in Cilacap Regency.

Based on data from BPS Kabupaten Cilacap in 2019, the number of people of working

age is 1,292,653 with 841,689 people in the labor force and 450,964 people not in the labor

force. Based on data from BPS Kabupaten Cilacap in 2017, the number of workers is

classified according to the business field of their main livelihood. The largest number of

workers is

525,002 people work in the agricultural sector. The next highest number is 109,357 people

who work in the trade sector. These figures show that the agriculture and trade sectors are the

main sectors of livelihood for the people of Kabupaten Cilacap.

The number of job seekers registered with the Cilacap District Manpower and Industry

Office in 2019 was dominated by women rather than men, 11,898 men and 11,898 women

respectively.

12,124 women. Most job seekers have a high school education or equivalent. Labor

placement through Disnakerin amounted to 10,505 people. The distribution of labor outside

the region and abroad amounted to 11,345 people. Most of the Intercountry Labor Force

(IMF) were women, totaling 4,911, while men were 1,414. More male workers were

channeled into the local labor force (LFH), totaling 3,829, while 1,173 were female. The

percentage of open unemployment rate (TPT) in Cilacap Regency has fluctuated over the past

five years. The highest unemployment rate occurred in 2018 at 8.01 percent. In 2019, the

unemployment rate reached 7.30 percent. The high unemployment rate indicates that the

provision of jobs and labor distribution still need to be improved.

Education is one of the important aspects in improving the quality of people's lives.

Education is also an important aspect of community development. The higher the quality of

education obtained, the easier it is to change society for the better. Based on data from the

Cilacap Regency Education and Culture Office and the Office of the Ministry of Religious

Affairs, the number of primary or MI students in 2019 was 183,750 students. This number

increased by 18.34 percent compared to 2018, which was as many as

155,279 students. The number of junior high school students or equivalent, increased from

66,632 students in 2018 to 84,866 students in 2019. The number of high school students or

equivalent increased from 57,502 students in 2018 to 64,760 students in 2019.

The provision of health services in Cilacap District is an important tool to support the

health of its people. Currently, each sub-district in Cilacap District has at least one health

center. The number of health centers in Cilacap District currently reaches 79 health centers

and 38 auxiliary health centers, as well as 1,132 posyandu.

The poverty line is used as a boundary to categorize people as poor or not poor. The

poverty line used by BPS consists of two components, namely the Food Poverty Line (FPL)

which consists of 52 food commodities and the non-food poverty line (NFPL) which consists

of 51 food commodities in urban areas and 47 commodities in rural areas food in rural areas,

where GK is the sum of GKM and GKNM. People who have an average monthly per capita

consumption expenditure below the poverty line are categorized as poor, which is below IDR

337,572. In 2018 the poverty line amounted to Rp 320,106. The poverty line in Cilacap

Regency is still below the poverty line in Central Java, which amounted to Rp 395,407. In

percentage terms, the poor population in Kabupaten Cilacap has decreased significantly over

the last five years. This shows the successful implementation of poverty reduction programs

by reducing the number of poor people, both from the national program, Central Java

Province, and Cilacap District. The percentage of poor people in Cilacap District in 2018 was

11.25 percent to 10.73 percent in 2019.

Poverty in Kabupaten Cilacap in 2018 and 2019 h a s decreased the number of poor

people. This decline has resulted in Cilacap District no longer being a poor district or red zone

area. In previous years, Cilacap Regency was ranked as the 11th district with the highest

number of poor people in Central Java, reaching 13.90 percent. This success is proof that

development in Cilacap Regency has improved.

5.3 Agricultural Conditions

The agricultural sector in a broad sense includes agriculture, fisheries, livestock, and

forestry. Many agricultural activities in Cilacap Regency are divided into 4 sectors, including

food crop agriculture, plantations, livestock, and fisheries. The agricultural sector still has an

important role for the people of Cilacap Regency in particular and for the people of Central

Java in general. This can also be seen from the contribution of the agricultural sector to the

GDRP of Cilacap Regency. Based on data from the GDRP of Cilacap Regency without oil

and gas, the agricultural sector is the second largest contributor to GDRP at 15.53 percent,

after the processing industry sector at 31.86 percent.

Rice and secondary crops that are widely cultivated by farmers in Cilacap Regency

include paddy rice, upland rice, corn, soybeans, peanuts, green beans, cassava, and sweet

potatoes. The commodities of paddy rice, upland rice, corn, and cassava are the most widely

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cultivated commodities in terms of land area and production. Paddy rice production in 2019

reached 722,622 tons. This production decreased from 2018 which reached 919,317. The

harvest area of paddy rice in 2019 amounted to 112,745 hectares, decreased from 2018 which

was 140,376 hectares. The average productivity of paddy rice was 64.15 quintals per hectare

in 2019, a decrease from 2018 which was 65.49 quintals per hectare. Upland rice production

in 2019 decreased, which was 25,710 tons from 2018 of 40,610 tons. The decrease in upland

rice production was due to the decrease in upland rice land area, from 8,979 hectares in 2018

to 5,547 hectares in 2019. Meanwhile, upland rice productivity increased from 45.59 quintals

per hectare in 2018 to 46.35 quintals per hectare in 2019. Corn production in 2019

experienced an increase, reaching 45,187 tons from 2018 which reached a production of

44,723 tons. Land area Corn production in 2019 was 7,878 hectares, a decrease from 2018

which wa s 7,912 hectares. Soybean production in 2019 amounted to 6,167 tons with a land

area of 4,936 hectares and productivity reached 11.88 tons per hectare, this number decreased

from 2019 with production of 16,560 tons, land area of 26,180 hectares, and productivity of

15.37 tons per hectare. Groundnut production in 2019 reached 2010 tons with a land area of

1,472 hectares and productivity reached 11.22 tons per h e c t a r e , an increase from 2018

which reached a production of 1,596 with a land area of 1,422 and fixed productivity. Mung

bean production in 2019 reached 6,047 with a land area of 4,158 and productivity of 12.61,

decreased from 2018 which reached production of 7,881 with a land area of 7,024 and

productivity of 7.54 tons per h e c tar e . Cassava or cassava production in 2019 reached

113,025 with a land area of 3,840 hectares and productivity of 253 tons per h e c t a r e , an

increase from 2018 which reached 84,281 with a land area of 3,327 and productivity of

253.32 tons per hectare. The types of vegetable crops that are widely produced by farmers in

Cilacap Regency include leaf onions, shallots, garlic, spinach, large chili peppers, cayenne

pepper, mushrooms, red beans, long beans, water spinach, cauliflower, potatoes, cucumbers,

cabbage, chayote, radish, petsai, eggplant, tomatoes, and carrots. The largest vegetable

production is the large chili commodity, which is 66,068 quintals. Meanwhile, fruit crops that

are widely cultivated by farmers in Cilacap Regency include avocado, cantaloupe, mango,

melon, watermelon, strawberry, rambutan, duku, siam orange, star fruit, mangosteen,

jackfruit, durian, guava, water guava, soursop, sapodilla, papaya, banana, pineapple, salak,

breadfruit, and watermelon. Tree fruits include melinjo, petai, and jengkol. Biopharma plants

in Cilacap Regency include ginger, galangal, kencur, turmeric, dlingo, cardamom, keji beling,

lempuyang, aloe vera, mahkota dewa, mengkudu, sambiloto, temuireng, temukunci, and

temulawak.

Plantation crops that are widely cultivated in Cilacap Regency include deep coconut,

deres coconut, aren palm, cloves, coffee, citronella, cacao, pepper, rubber, cardamom, and

nutmeg. The most common crop in each sub-district is coconut. While deres coconut is

cultivated in almost all sub-districts, only Maos and South Cilacap do not cultivate deres

coconut. Coconut cultivation in all sub-districts in Cilacap Regency has an impact on the

amount of coconut production itself, so that coconut production is the largest production of

garden products in Cilacap Regency, reaching 14,564.39 tons of coconut fruit and 42,696.82

tons of coconut deres in the form of coconut sugar. Plantation crops are generally cultivated in

western Cilacap, such as Sidareja, Cipari, Karangpucung, Wanareja, Majenang, Cimanggu,

and Dayeuhluhur sub-districts. This is influenced by the topography of western Cilacap,

which is a hilly area suitable for plantation crops.

The types of livestock cultivated in Cilacap District are divided into two types, namely

mammals and poultry. Mammal livestock commodities cultivated in Cilacap District include

dairy cattle, beef cattle, buffalo, goats, sheep, horses, pigs, and rabbits. Meanwhile, poultry

commodities include native chickens, layer chickens, ducks, geese, manila ducks, quails, and

broiler chickens. Based on mammal livestock commodities, the most widely cultivated

commodities are goats and sheep.

The fisheries potential of Cilacap Regency includes capture fisheries and aquaculture.

Capture fisheries are fish caught directly from rivers, swamps, puddles, or from the sea.

Meanwhile, aquaculture is the result of fisheries that are cultivated intentionally such as in

ponds or freshwater or ponds. The location of freshwater fish farming is almost spread across

all subdistricts in Cilacap Regency. Pond fish farming is located in Central Cilacap, North

Cilacap, Kampung Laut, Kawunganten, Jeruklegi, Bantarsari, Kroya, Adipala, Nusawungu,

and Patimuan. These sub-districts are close to the sea and therefore have potential for pond

aquaculture. Fisheries production with the highest selling price in Cilacap Regency are

jerbung shrimp, rebon shrimp, krosok shrimp, and skipjack.

5.4 Processing Industry

Cilacap Regency has several potential areas that can be developed. Some of these

potentials are in the fields of infrastructure, tourism, agriculture, plantations, fisheries, and

industry. Cilacap Regency is one of the industrial cities with large industries and small

industries or SMEs. In 2017, the number of SMEs in Cilacap Regency reached 17,811 units.

Agriculture-based industries (agriculture, fisheries, forestry, livestock). This supports the

growth of agriculture in Cilacap Regency itself. Meanwhile, large industries in Cilacap

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Regency are in the oil and gas sector, PLTU, PDAM, transportation and transportation

services, construction, agriculture, building materials, and garments. The best known large

industries in Cilacap Regency are PT Pertamina UP IV, PT Holcim Tbk. which has now

changed its name to PT Solusi Bangun Indonesia Tbk, and PLTU. The existence of these

industries makes Cilacap known as an industrial city. The oil and gas sector is one of the

sources of regional income that boosts the GDRP of Cilacap Regency. However, it is not able

to describe per capita income well because the amount of contribution from the oil and gas

industry itself is not proportional to the real per capita income of the people of Cilacap

Regency.

6.1 Strategic Agribusiness of Cilacap Regency

6.1.1 Location Quotient (LQ) Analysis

An economic sector from a region can be said to have high competitiveness if the sector

can not only meet the needs in its own region but also be able to meet the needs outside its

own region. In other words, the region is able to export products from the sector or subsector

to other regions because it has a production surplus. A sector with these characteristics is

called a base sector. The basis sector is the main driving sector of a region's economy or the

leading sector in the region. The basis of a sector or subsector can be determined using LQ

analysis.

LQ analysis is used to determine the relative advantage of Cilacap Regency compared

to Central Java province as a reference for the wider region. This analysis looks at the

comparison of sectoral contributions to total GRDP. Sectors categorized as basic sectors are

those with an LQ value of more than one (LQ > 1). Sectors that have an LQ value of m o r e

than one indicate that the sector is relatively concentrated in Cilacap Regency, which means

that the sector can meet the needs of both Cilacap Regency itself and has the potential to be

exported to other districts.

According to Glasson (1997), more and more base sectors in a region will increase the

flow of income to the region, increase the demand for goods and services in it and cause an

increase in the volume of non-base sectors. In other words, the base sector is directly related

to external demand, while the non-base sector is indirectly related, which is through the base

sector first. Thus, it can be said that the base sector is the main driver in the economy of a

region. Thus, it can be known how much sensitivity or sensitivity of income and labor

formation in the non-base sector to the formation of total income and labor. In addition, it can

also be known how much impact the basic sector has on income and labor or what is called

the multiplier effect. The multiplier effect indirectly attracts the development of the non-base

sector.

The LQ value in each sector using non-oil and gas GRDP variables, the Cilacap

Regency agribusiness-based sectors are categorized as basic sectors (LQ> 1), including: (1)

transportation and storage sector with LQ value of 1.62; (2) agriculture, forestry, and fisheries

sector with LQ value of 1.09; and (3) processing industry sector with LQ value of 1.03. The

LQ values of the Cilacap Regency sectors from 2015 to 2019 did not experience significant

changes, namely the increase or decrease in the LQ value in each sector was not too large so

that the basic sector of Cilacap Regency did not change. This shows that

Based on the LQ value, the base and non-base sectors are obtained to calculate the income

multiplier of the base sector to the non-base sector. The results of the calculation of the base

sector multiplier which is the total calculation between the agribusiness and non-agribusiness

based sectors to the non-base sector of Cilacap Regency, obtained a multiplier value in 2015

of 1.64, in 2016 of 1.66, in 2017 of 1.68, in 2018 of 1.71, and in 2019 of 1.73. The multiplier

value in 2019 shows that an increase in income in the basic sector by one million rupiah will

increase the total income of Cilacap Regency by Rp 1,730,000.

There are several subsectors that have an LQ value of more than one. In the

transportation and storage sector, there are subsectors of rail transportation, sea transportation,

and lake and ferry transportation that have an LQ value of more than one. In the agriculture

sector, there are subsectors of plantations, forestry and logging, fisheries, food crops, and

agricultural and hunting services that have an LQ value of more than one. Meanwhile, in the

manufacturing sector, there are subsectors of the food and beverage industry, the chemical,

pharmaceutical and traditional medicine industries, and the non-metallic minerals industry

that have an LQ value of more than one.

There is insufficient data on the transportation and storage sector to conclude that its

subsectors support Cilacap District's agribusiness activities. There is a sea transportation

subsector that transports agribusiness commodities, but Tanjung Intan port activities in

Cilacap Regency are managed by PT Pelindo III. Therefore, the transportation and

warehousing sector is not discussed further. Other agribusiness base sectors are the agriculture

sector and the processing industry sector. Table 9 shows the values of the LQ analysis results

on subsectors in the agricultural sector.

The results of the LQ analysis of subsectors in the agricultural sector have LQ values >

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1 are food crops, plantation crops, agricultural services and hunting, forestry, and fisheries.

While horticultural crops and livestock have LQ values < 1. The agricultural subsector which

is the base sector with the largest LQ value is in the plantation crop sector, which is 2.49

while the smallest LQ value is in the hunting subsector, amounting to 1.25.

The agribusiness sector of Cilacap Regency is also supported by its industrial sector

which has an LQ value > 1. Among the several subsectors of the processing industry of

Cilacap Regency, the food and beverage industry, and the chemical, pharmaceutical, and

traditional medicine industries are subsectors that are agribusiness-based base sectors. Table

10 shows the LQ values per processing industry subsector of Cilacap Regency in 2013-2017.

Sector and subsector bases in the results of the analysis over a period of five

consecutive years show stability in the sectors and subsectors that are the basis in Cilacap

District, only the increase or decrease in the value of the basis is different. The intersection of

the LQ analysis results on the basic sectors and basic subsectors in Cilacap Regency based on

agribusiness shows an equal increase and decrease in each year. Within five years of analysis,

the average base value in the base sector experienced fluctuations, namely a decrease in the

first three years of analysis, an increase in the fourth year and a stability in the fifth year.

Meanwhile, the agribusiness base sector, namely the agricultural sector, experienced an

increase in the first three years of analysis, namely 2016 to 2017, and a decrease in the

following years, namely in 2018 and 2019. The increase in LQ value in the agricultural

subsector was also experienced in 2013 to 201, then in 2015 to 2016 and 2017. The decline

occurred only in 2014 to 2015. In the processing industry sector, the LQ value decreased in

2017 to 2019. Slightly different from the LQ value of the subsector which experienced a

decline continuously from 2014 to 2017. The totals are shown in Table 11.

6.1.2 Shift Share Analysis

The Shift Share analysis method is used to observe economic structure and shifts by

emphasizing sector growth in Cilacap Regency compared to the same sector in Central Java

Province. The Shift Share analysis method recognizes the differences and similarities between

regions. This analytical method assumes that changes in income, production, or labor of a

region can be divided into three growth components, namely the regional growth component,

the proportional or industrial mix growth component, and the industrial mix growth

component regional share growth component (Daryanto 2012).

Shift Share analysis calculation of Cilacap Regency against Central Java Province using

non-oil and gas GRDP variables in 2015 as the base year until 2019. The results of the Shift

Share analysis calculation show that the processing industry sector has the highest regional

growth component (PR) value, which means that the sector is very influential on changes in

regional policy in Cilacap Regency. In addition to the manufacturing sector, the agricultural

sector also has a high regional growth component (PR) value, so that if there is a change in

the Cilacap Regency regional policy, it will have an impact on this sector (Appendix 9).

The results of the analysis of the value of the proportional growth component (PP) in

the agribusiness base sector of Cilacap Regency do not all have positive values, meaning that

there are base sectors that experience slow growth. The agribusiness base sector with fast

proportional growth is the transportation and warehousing sector, while the rest, namely the

agricultural sector and the processing industry sector, experience slow growth. The results of

the analysis of the value of the growth component of the region share (PPW) in the

agribusiness base sector there is no sector that has high competitiveness. The net growth value

(PB) in the base sector of Cilacap Regency, the progressive or advanced sector is the

transportation and warehousing sector. While the other two agribusiness base sectors are less

progressive sectors. The results of the Shift Share analysis calculation on the PP, PPW, and

PB components can be seen in Table 13.

Based on the results of the Shift Share analysis on agricultural subsectors as shown in

Table 14, the largest regional growth value (PR) is the food crop sector, which means that the

sector is very influential on changes in regional policy in Cilacap Regency. After the food

crop sector, the plantation crop sector, fisheries, forestry, and finally agricultural and hunting

services. This shows that the agricultural and hunting services sector does not have a large

influence on changes in regional policy in Cilacap Regency (Appendix 10).

ased on the results of the Shift Share analysis of subsectors in the agricultural sector,

there are no subsectors that have a positive proportional growth component (PP) value or have

rapid growth. Meanwhile, based on the value of the regional share growth component (PPW),

the subsectors that have high competitiveness are the plantation crops, food crops, and

fisheries subsectors. Meanwhile, the forestry subsector has low competitiveness.

In the value of the net growth component (PB), no agribusiness base subsector has a

positive value, i.e. there is no progressive or advanced subsector. The growth of the

agricultural sector based on the results of the Shift Share analysis as well as based on the GDP

growth rate indicator experienced slow growth. The slow growth of the agricultural sector is

the impact of the accelerated growth of the industrial sector.

The results of the Shift Share analysis on industrial subsectors show that the food and

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beverage industry is a fast-growing industrial subsector, as shown in Table 1.

15. This is indicated by the positive PP value. Meanwhile, the chemical, pharmaceutical, and

traditional medicine industry subsectors experienced slow growth. The PPW component

shows that the food and beverage industry subsector and the chemical, pharmaceutical and

medicinal plant industries have low competitiveness. Net Growth (PB) shows that these two

sectors are not progressive sectors. While the results of regional growth (PR), the food and

beverage industry subsector is a subsector that has a great influence on district government

policies. Meanwhile, among the three basic agribusiness and non-agribusiness subsectors, the

chemical, pharmaceutical, and traditional medicine industries have the lowest PR values,

indicating that these subsectors do not have a large influence on regional changes (Appendix

11).

The results of the Shift Share analysis of the agricultural sector and the industrial sector

with its subsectors have some differences. This is due to the accumulation of data in the sector

analysis. For example, the growth of the food industry subsector is fast but the growth of the

industrial sector as a whole is slow. In addition, the competitiveness of several subsectors in

the agricultural sector has high competitiveness but the competitiveness of the agricultural

sector accumulation is slow.

6.1.3 Strategic Agribusiness Sector of Cilacap Regency

Based on the criteria for leading agribusiness sectors that have been explained and from

the distribution of non-oil and gas GRDP ADHK 2010 from 2015 to 2019, LQ analysis, and

Shift Share analysis, it can be determined that the leading sectors of Cilacap Regency based

on agribusiness are the agricultural sector and its industry. Based on practice, the agricultural

sector and the processing industry sector are interrelated sectors, especially the agribusiness-

based processing industry. Due to land utilization factors, the largest employment, the base

sector, and its role in the Cilacap Regency economy, the agricultural sector is a strategic

agribusiness sector to deal with the issues of Cilacap Regency. The agricultural sector and

processing industry sector have an LQ value > 1 or as the base sector of Cilacap Regency.

The results of the Shift Share analysis show that the agricultural sector has slow growth but

high competitiveness, while the results of the Shift Share analysis in the processing industry

sector show that the sector is highly competitive and has rapid growth.

The results of the LQ analysis show that the transportation sector is a basic sector in

Cilacap Regency. When viewed from an agribusiness perspective, this sector can be

associated as an agribusiness support sector, but the GRDP data does not show the

specification of agribusiness products in Cilacap Regency. There is data on the transportation

of agribusiness products in sea transportation, but the subsector is not managed directly by the

Cilacap Regency government but by PT Pelindo III. Thus, the transportation sector is not

directly discussed in this study.

Based on the results of the LQ analysis, the agricultural subsector that has the largest

LQ value or has a comparative advantage is the plantation subsector with slow growth but

competitiveness. In addition, plantation commodities are widely cultivated in all areas of

Cilacap Regency so that they can have an impact on all regions in Cilacap Regency. The

growth of the plantation subsector or agricultural sector is natural, given the policy of

accelerating the growth of the industrial sector. The plantation subsector in this case has high

competitiveness when compared to the wider region, so it becomes a development

opportunity in accelerating the economy of Cilacap Regency through the plantation subsector.

The results of the LQ analysis on the processing industry subsectors show that the food

and beverage industry subsectors and the industry are the most important subsectors in the

manufacturing industry Chemicals, pharmaceuticals, and traditional medicines are the basic

subsectors of agribusiness. Shift Share analysis shows that the food and beverage industry has

rapid growth but low competitiveness. Meanwhile, the chemical, pharmaceutical and

traditional medicine industries have slow growth and lack competitiveness. The low

competitiveness of the processed food and beverage industry is one of the challenges in

accelerating the industrialization of agribusiness plantation products in Cilacap Regency.

6.2 Strategic Agribusiness Role of Cilacap Regency

The agricultural sector and processing industry sector as the base sectors of Cilacap

Regency have a large role in the distribution of GRDP to the economy of Cilacap Regency.

The industrial sector has the largest role in the GDRP of Cilacap Regency, reaching 31.86

percent. The second largest GDRP is the agriculture sector, which accounts for 15.53 percent

(Appendix 4).

The growth of GRDP in the strategic agribusiness sector based on LQ analysis can be

seen in Figure 3. The processing industry sector experienced fluctuating growth, declining in

2017 and 2018, but in 2019 it experienced an increase again. The largest growth rate of the

processing industry in 2015, which reached 5.76 percent and the smallest growth in 2018,

which was 3.99 percent. Meanwhile, the agricultural sector experienced a decline from 2015

to 2019. The growth rate of the agricultural sector in 2019 experienced a negative growth rate,

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reaching -1.17.

The strategic agribusiness subsector, namely the plantation subsector of Cilacap

Regency, has a significant role in the economy of Cilacap Regency. The plantation subsector

is included in the base subsector with the largest LQ value for the agricultural sector in

Cilacap Regency. This shows that the plantation subsector contributes significantly to the

income of Cilacap Regency. The income contribution of the plantation subsector is shown

from the GDRP data of Cilacap Regency, which amounted to 3.53 percent for non-oil and gas

GDRP. Plantation commodities cultivated by farmers in Cilacap Regency include seasonal

and annual plantation crops. Seasonal plantation crops include citronella, sugar cane,

patchouli, and tobacco. Meanwhile, annual plantation crops include coconut for copra or

coconut sugar, aren palm, cloves, coffee, cacao, pepper, rubber, cardamom, nutmeg, jatropha,

and jenitri.

The income of the plantation subsector is mainly plantation products by farmers in

Cilacap Regency. Some of the major commodities include deres coconut, deep coconut,

rubber, coffee, cloves, cocoa, and nutmeg. These commodities are the most widely cultivated

and produced by both small and large industries. In addition, the land used is larger.

Cilacap Regency land use, plantation land regulated in Cilacap Regency Regional

Regulation Number 9 of 2011 concerning the Cilacap Regency Regional Spatial Plan

(RTRW) from 2011 to 2031 that agricultural and plantation allotment areas have been

regulated in the cultural area. Plantation area is an area whose main function is intended for

plantation activities, both plantation business activities and smallholder plantations with the

aim of utilizing the potential of suitable land for plantation activities in increasing plantation

production while still paying attention to environmental sustainability. Plantation areas are

buffer zones for protected forest areas. The plantation allotment area in Cilacap Regency

covers an area of approximately 73,144 hectares, including a smallholder plantation area of

approximately 60,693 hectares with commodity types such as rubber, coconut, cloves, coffee,

nutmeg, and others. While large plantation areas (private or state) cover an area of

approximately 73,144 hectares.

12,451 hectares. Private or state plantations in Cilacap Regency include rubber and cocoa

commodities.

6.2.1 Coconut Commodity

Coconut commodities are the most common commodity in Cilacap Regency, given that

the Cilacap Regency area is close to the coast. Coconuts are divided into two commodities,

namely deep coconuts from which copra is extracted and deres coconuts from which sap is

extracted. The coconut commodity is distributed in all subdistricts in Kabupaten Cilacap. The

coconut commodity is utilized in the form of coconut or copra which is used in fresh form

such as young coconut water and processed food ingredients, to make coconut oil, or utilized

parts of the trunk, sticks, leaves, coir, or even the coconut shell.

Based on data from BPS, the production of coconut from 2017 to 2019 has fluctuated.

In 2019 based on data from BPS Cilacap Regency, the production of coconut copra reached

14,564.39 tons. In 2018 it reached 11,328.78 tons, and in 2017 it reached 13,099.74 tons. The

largest deep coconut production was in Majenang Subdistrict, reaching 1,453.79 tons. The

total land area of coconut reached 23,732.6 hectares in 2019, 23,243.9 hectares in 2018, and

23,985 hectares in 2017. The largest land area of coconut commodities is in Kecamatan

Majenang to reach 1,961 hectares with 1,297.1 hectares of which are producing crops.

Deres coconut is one of the largest plantation commodities in Cilacap Regency. Deres

coconut is spread in almost all sub-districts in Cilacap Regency, only South Cilacap does not

have deres coconut plants. Deres coconut in Cilacap Regency is the third largest production

commodity in Central Java after Purbalingga Regency and Banyumas Regency. The deres

coconut commodity is utilized in the form of coconut sugar or can be in the form of ant sugar.

Coconut sugar production from 2017 to 2019 has fluctuated. Coconut sugar production from

2019 reached 42,696.82 tons, while in 2018 it reached 32,218.67 tons, and in 2017 it reached

44,976.31 tons. The largest coconut sugar production was in Jeruklegi Subdistrict, with a total

production of 5,723.14 tons of coconut sugar. This is supported by the land area used to grow

deres coconut in Jeruklegi Subdistrict reaching 626.6 hectares, which is the largest land area

for deres coconut commodities in Cilacap Regency. The land area planted with deres coconut

in Cilacap District reached 5,096.18 hectares in 2019, 4,881.33 hectares in 2018, and 5,238.30

hectares in 2017.

7.1 Conclusion

Based on Location Quotient (LQ) analysis and Shift Share analysis using GDP without

oil and gas of Cilacap Regency, the leading agribusiness-based sectors or strategic

agribusiness of Cilacap Regency are agriculture, forestry, and fisheries sectors and processing

industry sector with plantation subsector as the focus of development and food and beverage

processed industry subsector. The results of the LQ analysis show that: (1) the agriculture,

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forestry, and fisheries sector; (2) the processing industry sector; (3) the plantation subsector;

and (4) the processed food and beverage industry subsector have LQ values greater than one.

The results of the Shift Share analysis show that the agriculture, forestry, and fisheries sectors

have slow growth but are competitive, while the processing industry sector has fast growth

and is competitive. The plantation subsector has slow growth but is competitive, while the

processed food and beverage industry subsector has fast growth but is less competitive.

The strategic agribusiness sector has a large role in the Cilacap Regency economy as

seen from GRDP. The agricultural sector experienced declining growth, while the processing

industry sector experienced fluctuating growth. Plantation commodities as a strategic

agribusiness subsector are widely cultivated by farmers in Cilacap Regency, namely the

commodities of deres coconut, deep coconut, rubber, coffee, cocoa, cloves, and nutmeg. The

plantation subsector plays a significant role in the economy of Cilacap Regency, namely in

GRDP and providing employment. Many plantation commodities are utilized as industrial

materials, thus opening up jobs both in the cultivation and processing industries.

Based on the SWOT analysis, there are several strategies to develop the strategic

agribusiness sector as a step to develop the economy of Cilacap Regency. Some of the

resulting strategies are: (1) providing assistance and training in order to accelerate the

development of the agricultural industry, (2) conducting institutional strengthening trainings,

(3) intensify expo programs and promotions to investors and abroad and capture potential

products from the community, (4) the government cooperates with private parties, such as

funding institutions or investors, (5) the use of information technology to assist farmers and

industry players in the plantation sector, (6) guidance on conducting partnership cooperation

between farmers or business actors with industry, (7) conduct market research to determine

market orientation, (8) programs to grow and support millennial farmers or agricultural

entrepreneurs (young generation farmers), (9) training programs for experts (training for

trainers), and (10) development of infrastructure supporting the economy in general that

encourages the progress of the plantation sector.

AGB 100_ASU_ASSIGNMENT_2024_ANALYSIS OF STRATEGIC AGRIBUSINESS DEVELOPMENT IN CILACAP DISTRICT

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