The Third International Conference on Agriculture, Environment, and Food Security

(AEFS), October 10, 2019, Arya Duta Hotel, Medan, Indonesia

Analysis of pork marketing in Tapanuli Utara Regency, Sumatera Utara

Province, Indonesia
Anderias T Sitompul, Nurzainah Ginting, Iskandar Sembiring, and Yusuf L Henuk *
Department of Animal Science, Faculty. of Agriculture, University of Sumatera Utara, Medan
20155 Indonesia
*
Corresponding/Presenting author: profesorhenuk@gmail.com

Abstract. A survey was conducted to analyse characteristics of pork : (1) marketing

agencies, (2) marketing channels, (3) marketing margins, (4) farmer shares, (5) profit
and cost ratios, and (6) marketing efficiency in the three traditional market in
Tapanuli Utara Regency, namely Tarutung, Siborongborong and Sipahutar. The data
used in this study consisted of two sources, i.e. (1) primary data obtained through
observation in the field and interviewed all respondents and (2) secondary data is
written data obtained from literature, statistic agencies from Tapanuli Utara Regency
and other agencies related to research interests. Data collection were analysed
including marketing costs, marketing margins, farmer shares and cost benefit ratios of
each channel of pork marketing. The results of this study indicated that There are two
marketing channels in Tapanuli Utara Regency, namely Marketing Channels I
(Farmers – Retailers – Consumers) and Marketing Channels II (Farmers – Traders –
Retailers – Consumers). Margin marketing, farmer’s share, profit to cost ratio on
both marketing channels showed Rp.24.615/kg and Rp.24.900/kg, 50.77% and 50%,
Rp. 7.39/kg and 7.12, respectively. It was concluded that both channels for pork
marketing in the three traditional markets, namely Tarutung, Siborongborong and
Sipahutar in Tapanuli Utara Regency is efficient.

Keywords: pork, marketing channels, marketing efficiency, Tapanuli Utara Regency

1. INTORUCTION
Although about 80% of Indonesian population is predominantly Muslim, pigs are also
considered important livestock species, especially in top 6 provinces with largest pig population
(> 500.000 heads), i.e. East Nusa Tenggara, North Sumatera, Bali, South Sulawesi, Papua, and
West Kalimantan (Map 1). The majority of pig producers in Indonesia are smallholders. The pig
industry is still dominated by small-scale-raisers, whose households raise about 2-5 pigs
(38,56%) followed by 48,84% own 5-20 heads and 12.6% own more than 20 pigs. ±1000 heads
life pig/day exported to Singapore (biggest exporter). Pig production ranked third after broiler
chickens and beef cattle [1,2].

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 The Third International Conference on Agriculture, Environment, and Food Security
(AEFS), October 10, 2019, Arya Duta Hotel, Medan, Indonesia

Map 1. Top 6 provinces with largest pig production in Indonesia [1].

Agriculture sector played an important role in Tapanuli Regency which consisted of

food crops, plantation, livestock, forestry and fishery sub sector. For livestock
particularly, there are three main types of livestocks played important role in providing
protein source from animal for people and indeed need to develop. They are: (1) big
livestock (cattle, buffaloes, horses), (2) small livestock (panorusan goat, sheep and pigs)
and (3) poultry (native chickens and porsea ducks). Among them, buffallo, pigs, goat,
chickens and porsea ducts have good prospects to develop in Tapanuli Utara Regency, and
mainly buffaloes and pig are very popular due to their culture in making traditional party (Table
1). Pig farming is one of the potential livestock business developed in Tapanuli Utara Regency of
Sumatera Utara. The highest number of pig population ranked 2 after native chickens is
indicated by many pigs kept by people in Tapanuli Utara (Table 1). Communities in Tapanuli
Regency of Sumatera Utara were potential as consumer of pork indicated by Christian
population of more than 60% [3] .
Table 1. Livestock population in Tapanuli Utara (2014 – 2016) [3].
Species of Livestock Years
2014 2015 2016
Big Livestock: -- Cattle 437 438 444
-- Bufffaloes 9.246 9.339 9.527
-- Horses 126 126 115
Small Livestock: -- Goat 1.869 1.877 1.919
-- Sheep 75 75 70
-- Pigs 57.681 60.311 61.679
Poultry : -- Native chickens 422.140 425.305 427.822
-- Ducks 31.875 32.114 32.700

Pigs could be raised with three period categories: 1) farrow-to-finish); 2) feeder-to-finish; 3)

farrow-to-feeder. There was also a combination of these three categories of swine production. Pig
farms at rural areas of Tapanuli Utara Regency, were handling with two model categories based
on output sales orientation. There were farmers who sold weaning piglets, and also farmers that
sold adult pigs. Both categories of business were included in the category of pig business [4].
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 The Third International Conference on Agriculture, Environment, and Food Security
(AEFS), October 10, 2019, Arya Duta Hotel, Medan, Indonesia

The purpose of this study is to analyse characteristics of pork in Tapanuli Utara: (1) marketing
agencies, (2) marketing channels, (3) marketing margins, (4) farmer shares, (5) profit and cost
ratios, and (6) marketing efficiency in the three traditional market in Tapanuli Utara Regency,
namely Tarutung, Siborongborong and Sipahutar.

2. MATERIALS AND METHODS

2.1. Time and Place of Research
This research was conducted in February - March 2019 at North Tapanuli Regency. The study
area was conducted in three Traditional Markets in North Tapanuli Regency namely Tarutung
Market, Siborongborong Market and Sipahutar Market.

2.2. Research methods

The research location is determined purposively in several markets traditional in Tapanuli Utara
Regency. Selected traditional markets as the research location is Tarutung Traditional Market
located at Tarutung District, Siborongborong Traditional Market located at Siborongborong
District, and Sipahutar Traditional Market in the District Sipahutar (Map 2). The sample used in
this study is all components involved in the pork marketing chain in the Tapanuli Utara Regency
consisted of collecting traders, cutting traders, and retailer. Sampling starts from the meat
retailer of pork that are in traditional markets for interests in determining the chain pork
marketing. Sampling method at retailer level and cutting traders use the accidental sampling
method, whereas at the merchant level, the traders follow the marketing chain of the trader
retailer and cutter traders.

Map 2. Location of the three pork traditional markets in Tapanuli Utara Regency.

3. RESULTS AND DISCUSSION

3.1. Marketing channels of pork in Tapanuli Utara Regency
There are marketing institutions which are intermediaries in marketing activities that connected
from producers to consumers in delivering production. There are two marketing channels of
pork in Tapanuli Utara Regency which are presented in Figure 1 and Table 2.

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 The Third International Conference on Agriculture, Environment, and Food Security
(AEFS), October 10, 2019, Arya Duta Hotel, Medan, Indonesia

Figure 1. Two marketing channels of pork in Tapanuli Utara Regency.

Table 2. Pork marketing costs (Rp) are incurred by each marketing agency in Tapanuli Utara
Regency.
Institutions Marketing Monthly Marketing Monthly Average
Channels I Marketing costs Channels II Marketing costs costs
Farmers 5100
3132kg
Traders
a. Gasoline 5.250.000
b. Consumption 2.000.000
Total 7.250.000 2935,10
Retailers 2.564kg 5100
a. Labour costs 3.555.000 4.008.000
b. Store rental fees 554.000 400.000
c. Cleaning fees 20.000 20.000
d. Plastic costs 277.500 345.000
e. Gasoline costs 320.000 348.800
f. Feed costs 231.00 312.000
g. Transportation costs 2.4850.00 --
Total 7.525.576 5.518.400 1642.58

Based on data in Figure 1 and Table 2, marketing channel I consisted of farmers and retailers
who are distributed in the three traditional markets in Tapanuli Utara Regency. Retailer merchant
marketing costs monthly incurred in the amount of Rp. 7,552,576, each consisting of labor costs
of Rp. 3,555,000, store rental fees of Rp. 554,000, cleaning fees of Rp. 20,000, plastic costs Rp.
277,500, gasoline costs of Rp. 320,000, feed costs of Rp.231,000, and transportation costs of Rp.
2,485,000 and the amount of pork obtained is 2,564kg so that the average cost is Rp. 2935.10/kg.
While, marketing channel II costs monthly incurred by collecting traders consisted of gasoline
costs of Rp. 5,250,000 and consumption costs of Rp. 2,000,000. The total cost is Rp. 7,250,000
and with the amount of pork marketed at 5100kg with the cost of pork is Rp. 1422,7/kg. The
retailer's marketing fee monthly is Rp. 5.518.000 with total sales of 3360 kg, the average cost is
Rp. 1642.58/kg. Marketing costs monthly for retailers include labor costs of Rp. 4,008,000, store
rental fees of Rp. 400.000, a cleaning fee of Rp. 20.000, plastic costs Rp. 345.000, gasoline costs
Rp. 348.000, and feed guard costs of Rp. 312.000. The total marketing cost monthly for
marketing channel II is Rp. 12.768.400 and the cost of pork is Rp. 3.064.95/kg.

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 The Third International Conference on Agriculture, Environment, and Food Security
(AEFS), October 10, 2019, Arya Duta Hotel, Medan, Indonesia

3.2. Marketing margin of pork in Tapanuli Utara Regency

Marketing margin is the difference in price received by a pig farmer with the price incurred by
consumers who buy pork. The marketing margin of a commodity consists of the marketing costs
incurred by each marketing institution as well as the profits received by pig farmers and
marketing institutions. To be able to know the magnitude of the profits obtained by marketing
actors and marketing costs incurred by marketing institutions, it is necessary to analyze the
marketing margins on each marketing channel. The first channel, which involves a marketing
agency, this marketing channel included farmers, retailers. The second marketing channel
involved two marketing institutions covering farmers, traders,retailers and consumers.

Retailers monthly merchant marketing costs incurred in marketing channels I in the amount of
Rp. 7.552.576,each consisted of labor costs of Rp. 3.555.000, store rental fees of Rp. 554.000,
cleaning fee of Rp. 20.000, plastic costs Rp. 277,500, gasoline costs of Rp. 320.000, feed costs
of Rp. 231,000, and transportation costs of Rp. 2,485,000 and the amount of pork obtained is
2,564/kg so that the average actual cost is Rp. 2935.10/kg. While, marketing channel II monthly
costs incurred by collecting traders consisted of gasoline costs of Rp. 5,250,000 and consumption
costs of Rp. 2.000.000. The total cost is Rp. 7,250,000 and with the amount of pork marketed at
5100/kg with the cost of pork is Rp. 1422.7/kg. The retailer's monthly marketing fee is Rp.
5.518.400 with total sales of 3360/kg, the average actual cost is Rp. 1642.58/kg. Marketing
monthly costs for retailers included labor costs of Rp. 4.008.000, store rental fees of Rp.
400.000, a cleaning fee of Rp. 20.000, plastic costs Rp. 345.000, gasoline costs of Rp. 348,000
and feed guard costs of Rp. 312,000. The total marketing cost for Marketing Channels II is Rp.
12,768,400 and the actual cost is Rp. 3,064.95/kg. The biggest marketing margin is in the
Marketing Channels II, which is Rp. 24,900 because Marketing Channels II is the longest chain
of marketing channels, this is because in Marketing Channels II there are higher selling price
differences starting from collecting traders to retailers. The smallest marketing margin is in
Marketing Channels I, which is Rp. 24,615 where in this route farmers directly sell pigs to
retailers. In addition, retailers sell pork in only a small amount.

In both marketing channels, the marketing margin is determined by the distribution distance and
the short length of the marketing chain. This is consistent with [5], who work with broiler
chickens and reported that the more intermediary traders involved in marketing channels, the
greater the marketing margins that are formed. Large margins for intermediary traders benefit
them more or economically means more efficient marketing. In both pork marketing channels,
the biggest cost is borne by Marketing II, which is Rp. 3069.95. This is because the marketing
chain through two marketing institutions and the number of traded very much. While the smallest
costs are in Marketing Channels I. This is because the marketing chain is short and the amount
traded is only small. The biggest marketing advantage is in Marketing II, which is Rp. 21.835.05
because it is the longest marketing chain and pork is traded in greater quantities. The smallest is
in Marketing Channels I which is Rp. 21.679.9, this is because the amount of pork distributed in
this route is only small, although the selling price given to consumers is quite high. Farmer's
share is a comparison between the price received by farmers and the price paid by consumers,
and is generally expressed as a percentage. The size of the farmer's share is determined by the
length of the marketing channel and the size of the selling price paid by the consumers. Farmer’s

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 The Third International Conference on Agriculture, Environment, and Food Security
(AEFS), October 10, 2019, Arya Duta Hotel, Medan, Indonesia

share calculation technique is to calculate the price received by farmers divided by the price paid
by consumers and then multiplied by 100 percent. Farmer's highest share in the Marketing
Channel I is equal to 50.77% means that farmers received a price of 50.77% of the price paid by
consumers. While, Marketing Channels II obtained the lowest farmer share value of 50%.

3.3. Profit and Cost Ratio of pork in Tapanuli Utara Regency

Marketing costs are costs incurred by marketing institutions in distributing pork from farmers to
stated end consumers in rupiah/kg. While the profit of marketing institutions is the difference
between marketing margins and costs incurred during the marketing process. Benefit per cost
ratio analysis can be used to find out whether the marketing activities carried out provide
benefits to marketers. In Marketing Channels I, the total costs incurred by retailers are Rp.
2.935.10/kg while the profit is Rp. 21.679.9/kg. Then the cost benefit ratio is Rp. 7.39/kg.While,
in Marketing Channels II, the total cost spent of pork is Rp. 3.064.95/kg. The biggest costs are
borne by the retailer, which is Rp. 1.642.38/kg, the lowest marketing costs borne by the traders
are Rp. 1.422.57/kg. The biggest profit is obtained by retailers that is Rp. 16.757.62/kg, while the
lowest profit is obtained by collecting traders, namely Rp. 5077.43/kg. According to [6], the
marketing system can be said to be efficient if the marketing efficiency value is <1, by looking at
the analysis results in the current study, that the efficiency value of all marketing institutions
involved in the installation of pork in the traditional markets of Tapanuli Utara Regency is <1
which means efficient. So out of the 2 marketing institutions, the most efficient marketing
institution compared to the other institutions are retailers. This is indicated by the small
marketing costs, while the value of the products being marketed is greatest.

4. CONCLUSIONS
There are two marketing channels in Tapanuli Utara Regency, namely Marketing Channels I (Farmers –
Retailers – Consumers) and Marketing Channels II (Farmers – Traders – Retailers – Consumers).
Margin marketing, farmer’s share, profit to cost ratio on both marketing channels showed Rp.24.615/kg
and Rp.24.900/kg, 50.77% and 50%, Rp. 7.39/kg and 7.12, respectively. It was concluded that both
channels for pork marketing in the three traditional markets, namely Tarutung, Siborongborong and
Sipahutar in Tapanuli Utara Regency is efficient.
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