Identifying production costs of Rosa sp: a transaction costs economics perspective

Transaction costs are costs that appear in almost every economic transaction. The existence of transaction costs creates production cost inefficiencies. This research aims to identify the production costs borne by rose farmers as one of the leading commodities in East Java, especially Batu City. Apart from that, this research also identifies transaction costs that make production costs inefficient. The method used in this study is qualitative. The data collection tool used was unstructured interviews with rose farmer group administrators in Gunungsari Village, Batu City. Based on the research results, without transaction costs, the average total costs incurred by rose farmers in cutting rose farming is IDR 43,565,085.78 per planting season. The research results also show that there are six types of transaction costs that we have identified. These costs consist of explicit and implicit costs. Explicit costs refer to costs that are clear in amount and farmers know the exact data. Meanwhile, implicit costs refer to costs that farmers do not know the exact amount of.


Introduction
Roses (Rosa sp) are ornamental flower plants that are most sought after by the public because of their beauty and fragrant and distinctive aroma, making them nicknamed "Queen of Flowers" [1, 2, 3].Based on the Indonesian Central Bureau of Statistics [4], Rose plants are in second place with a production of 173,077,811 stalks or around 23.36 percent of the total national cut flower production in Indonesia.This high production of roses is in line with the increasing consumption of cut roses in Indonesia.It is because this commodity is widely used in various large events such as traditional, religious events, weddings, and even used as a necessity to celebrate certain moments [5,6,7,8].The largest rose production center is East Java Province with a total of 122,610,373 stems or around 70.84 percent of the total national rose production followed by Central Java and West Java [9].One of the areas located in East Java Province and the largest rose production center is Gunungsari Village, Batu City, East Java.
Gunungsari Village, which is located in Bumiaji District, is well known for producing cut roses, this is because Gunungsari Village is a village based on the cut rose farming sector.The geographical conditions of the region have an average temperature of 18 -25°C, which makes this village very suitable for planting roses [10].The majority of people living in the village are farmers who farm horticultural crops, but the main crop there is the rose plant.Slaughtering and post-harvest and packaging activities are carried out almost every day by farmers in Gunungsari Village.Delivery activities are also carried out almost every day by rose farmers, while deliveries of cut roses are sent to the cities of Bali, Jakarta, Solo, Jogja, and Bandung.
IOP Publishing doi:10.1088/1755-1315/1302/1/012126 2 Farmers in Gunungsari Village have many major challenges while growing cut roses.The problem lies in the fairly high production costs incurred by rose farmers, especially the costs of caring for roses.These costs may increase at any time.This problem illustrates that rose farmers in Gunungsari Village are not efficient in using existing resources in farming cut roses.This will of course have an impact on the income of rose farmers.In line with these problems, this will also have an impact on the net profit that will be obtained by rose farmers in Gunungsari Village in the future.One thing that can create inefficiencies in cut rose production is transaction costs [11,12,13].Identifying transaction costs that are borne by farmers and then developing an institutional design that can reduce them are essential to understand.The problem faced in farming cut roses is the high production costs of roses that farmers have to pay, especially transaction costs.On the other hand, the selling price of cut roses from farmers to the market is quite stable, not experiencing a drastic decline or vice versa, namely around IDR 800.00 up to IDR 3,000.00 per stem.This can certainly affect the income received by rose farmers if the production costs incurred by the farmers are quite high.

Methods
The research approach used in this study is a qualitative approach.This research was conducted in Gunungsari Village, Bumiaji District, Batu City.Gunungsari Village, Bumiaji District, was chosen as the research location because Gunungsari Village is one of the villages in the Bumiaji District that has quite extensive potential for developing cut roses.Apart from that, Gunungsari Village is one of the largest producing areas for cut roses on Java Island, which regularly delivers to several areas inside and outside Java Island.The informants in this research were all rose farmers who are members of the Margirahayu I Farmer Group in Gunungsari Village, Bumiaji District, Batu City.The population of rose farmers who are members of the Margirahayu I Farmer Group is 26 people.Based on this population, the determination of respondents in this study was carried out using purposive sampling.There are several considerations for the author to determine the Margirahayu I Farmer Group in Gunungsari Village as respondents because according to the head of the Margirahayu I Farmer Group, the members of the farmer group who are members of the Margirahayu I Farmer Group are one of the farmer groups that are active in cultivating cut roses and are active in the activity of sending cut roses and also has more group members when compared to other farmer groups.

Natural conditions and land use of gunungsari village
Gunungsari Village is mostly surrounded by forests and fields or agricultural fields which are used as a source of livelihood for some of the residents there.Apart from that, land use in Gunungari Village is also used for semi-technical irrigation, also used for settlements or yards, roads and so on.The following is a description of the area in Gunungsari Village based on land use distribution.1 shows that Gunungsari Village has a total area based on land use distribution, was 318,833 hectares.Of the total area, it is divided based on the distribution of land use in Gunungsari Village, including 3,244 hectares used for production forest, 134,385 hectares used for dry land or agricultural fields, then 106,898.3 hectares used as technical irrigation fields, 6 hectares used for semi-technical irrigated rice fields.Residential areas cover an area of 65,433 hectares, for offices or government land in Gunungsari Village covering an area of 0.70 hectares, 6,916 hectares of land used as village treasury land from the government, and the rest used as roads, namely an area of 5 hectares and for other purposes amounting to 1,945 hectares.

Identify cut rose production costs
3.2.1.Fixed costs.Fixed costs are costs incurred by rose farmers whose amounts are fixed or do not change and are not affected by the size of sales or production of cut roses within a certain time period.These costs are not immediately used up in just one production process.What is included in the fixed costs of cutting rose farming includes, among other things, depreciation of tools and machines during the production process, land tax, land rental value, and loan interest.The following is a breakdown of the average fixed costs in cutting rose farming in the conversion of one hectare per planting season.Based on Table 2, it shows details of the fixed costs incurred by rose farmers in running a cut rose farming business.The agricultural tools and machines used by farmers include hoes, sickles, leaf shears, water diesel, hoses and spray diesel.The average depreciation cost of the hoe used by farmers in cutting rose farming in one hectare per planting season is IDR 19,833.33 with the average total hoe used by rose farmers being 4 units/ha.Hoes are used by farmers in cultivating the land before planting cut rose seedlings.The sickle is used by rose farmers to weed the land so that the farmer's rose land is protected from weeds which can inhibit the growth of roses.The average hoe used by farmers in cutting rose farming is 4 units/ha and the average cost of cultivating sickles in one hectare per planting season is IDR 7,846.15.
Leaf scissors are generally a very important tool for the continuity of cut flower farming, especially roses.This is because leaf scissors are used by rose farmers in pruning and harvesting roses.The average number of leaf scissors used by farmers in cutting rose farming is 4 units/ha with an average depreciation cost of leaf scissors of IDR 30,866.99 per growing season.Water diesel is no less important than leaf scissors in cut rose farming activities, because this water diesel is used by rose farmers in watering roses which are routinely carried out by farmers in order to maintain the availability of nutrients for the roses they plant.The average water diesel used by rose farmers is 2 units/ha with an average depreciation cost of water diesel of IDR 44,102.56 per planting season.
Hoses are used by rose farmers as a tool to help farmers water cut roses, so that hoses and water diesel are used by farmers simultaneously during watering activities.The average hose used by rose farmers is 3 units/ha with an average hose depreciation cost of IDR 33,128.21per planting season.Apart from that, rose farmers spray pesticides using diesel spray.Rose farmers also routinely spray pesticides every week, so that the roses they plant are protected from pests and disease.The average spray diesel used by rose farmers is 2 units/ha with the average depreciation cost of spray diesel being IDR 63,051.28 per planting season.In carrying out cut rose farming, of course farmers are not spared by using land to plant their roses.The land used by rose farmers in Gunungsari Village, Bumiaji District, Batu City is generally their own land and rented land.The average land area owned by rose farmers used by the author as respondents is 0.45 ha with an average land tax cost of IDR 127,576.92 per planting season.Meanwhile, the average area of land that is leased is 0.42 ha with an average land rental cost of IDR 2,067,948.72per planting season.
In general, farmers need quite a lot of capital to run a cut rose farming business, this is because there are many costs that farmers have to incur from land processing to post-harvest handling.The sources of capital used by rose farmers are divided into two, namely capital owned by the farmers themselves and farmer loan capital borrowed by farmers from banks.However, in general the rose farmers used by the author as respondents are dominated by farmers who use their own capital to carry out rose farming.Only three out of 26 farmers use loan capital from the bank to carry out rose farming activities.Therefore, farmers who use loan capital must pay the loan capital along with the applicable interest, which is 4%.The average loan interest that must be paid by rose farmers is IDR 23,076.92per planting season.

Variable costs.
Variable costs are costs incurred by rose farmers, the amount of which can change or not remain fixed within a certain period of time.What is included in the variable costs of cutting rose farming include the cost of rose seeds according to the land area, the cost of using fertilizer, the cost of pesticides, the cost of water, the cost of packaging cut roses, the cost of petrol, transportation costs and labor costs.The following are details of the average variable costs in cutting rose farming for rose farmers in Gunungsari Village, Bumiaji District, Batu City in the conversion of one hectare per planting season.What is included in the average fertilizer cost is the costs incurred by rose farmers in using fertilizer for rose farming.Fertilizers used by farmers in Gunungsari Village, Bumiaji District, Batu City include manure, urea, ZA fertilizer, TSP fertilizer, NPK and phonska.These fertilizers are generally obtained by rose farmers by buying them from several shops that sell fertilizer.The average cost incurred by farmers to purchase all fertilizers for cutting rose farming is IDR 9,103,971.04per ha per planting season.
Pesticides are very important for the continuity of cut rose farming for rose farmers, especially in caring for cut roses.This is because if the roses planted are attacked by pests or disease, it can reduce the production of cut roses.There are five types of pesticides that are generally used by rose farmers in Gunungsari Village, Bumiaji District, Batu City.The average cost of pesticides used by farmers per planting season is IDR 5,351,255.77per ha.The water used by rose farmers comes from the Brantas river which is located close to the village, so farmers do not pay for water according to how much water the rose farmers have used.Instead, farmers only pay money to people who clean the river and maintain the river's flow so that its flow does not become obstructed.The average cost incurred by farmers to pay water fees per planting season is IDR 100,000.00.
Farmers in Gunungsari Village, Bumiaji District, Batu City generally do not directly sell their crops to middlemen, but farmers there are also active in carrying out post-harvest activities and sending cut roses to several cities in Indonesia.In carrying out post-harvest activities, especially in packaging cut roses that have been harvested, rose farmers need several requirements, so that the quality and freshness of cut roses is well maintained.What rose farmers need to package cut roses include cardboard, newspaper, rubber, raffia, clear duct tape, white paper, and gabions or woven bamboo.Rose farmers use cardboard to package roses which are ready to be sent to several cities in Indonesia.The average cardboard used by rose farmers is 33 pieces per planting season with the average cost incurred by farmers in using cardboard is IDR 283,038.46 per planting season.
Newspaper sheet is used by farmers to wrap cut rose flowers before they are repackaged in cardboard.Usually, one roll of newspaper contains 70 to 100 stems of cut roses.The average newspaper used by rose farmers is 35 kg per growing season.With an average cost of using newspapers of IDR 131,461.54 per planting season.Rubber is used by farmers to tie several stems of cut roses that have been packed in newspaper.The average rubber used by rose farmers is 2.92 kg per planting season with an average cost of IDR 68,346.15.
Raffia rope is used by rose farmers to tie boxes containing cut roses ready to be sent.The average raffia rope used by farmers is 22.67 kg with the average cost incurred in using raffia rope being IDR 152,261.54 per planting season.Clear duct tape is also used by rose farmers to ensure that the packaged boxes do not open easily, thereby minimizing damage to cut rose flowers when shipped.The average use of clear duct tape for rose farmers is 32 rolls with the average cost incurred by farmers in using clear duct tape is IDR 237,265.38 per planting season.
Apart from newspapers, farmers also use white paper to package cut roses.Usually cut roses packaged using white paper are white roses.The average use of white paper by rose farmers is 10.83 kg with the average costs incurred by farmers in using white paper amounting to IDR 85,769.23 per planting season.Gabions or what is usually called woven bamboo are a unique accessory for packaging cut roses used by rose farmers in Gunungsari Village, Bumiaji District, Batu City.However, only a handful of rose farmers use gabions as packaging for cut roses.Of the 26 rose farmer respondents, only 2 respondents were found to use gabions as packaging for cut rose flowers.The average use of gabions as packaging for cut roses is 1 fruit with an average cost of IDR 13,461.54per planting season.
Gasoline is used by farmers as fuel to use water diesel and spray diesel for pesticides.Gasoline is one of the elements that is often used by farmers in cutting rose farming.The average cost incurred by rose farmers in using petrol is IDR 200,453.85 with an average petrol usage of 38.92 liters per ha per growing season.The final variable cost, which is no less important in running a cut rose farming business, is labor.Farmers need workers to help carry out the activities involved in cutting rose farming.In general, rose farmers in Gunungsari Village, Bumiaji District, Batu City use both male and female workers.The difference between the two is in the activities carried out and also the wages paid, where the wages of female workers are smaller than the wages of male workers.So, the average cost incurred by farmers in using labor is IDR 4,896,754.81per planting season.

Institutional analysis: transaction costs.
Transaction cost theory originates from the institutional approach of new economics and focuses on institutional governance.According to Williamson [15], transaction cost economics is different from neoclassical economics.Neoclassical economics assumes that economic activity does not experience significant obstacles because it has perfect information.The actual situation is that in every economic exchange process, such as buying and selling (economic exchange), there are obstacles which can be called transaction costs.
The relationship between transaction costs and institutions has strategic meaning as an indicator of the level of institutional efficiency.Indicators of institutional efficiency are observed from the high and low transaction costs that arise from economic transaction activities.The lower transaction costs indicate an efficient institution, and vice versa.These transaction costs can be defined as the costs incurred in seeking information, coordinating, making contracts and enforcing them (law enforcement).Transaction costs appear to take various forms, almost always caused by uncertainty and/or asymmetric information.The results of our identification regarding transaction costs incurred by rose farmers are as follows.[16].Farmers receive lowprofit margins due to high production costs.All parties involved in rose farming should be able to create efficient game rules and lower transaction costs by detecting transaction costs.Agribusinesses of this kind will have more opportunities for sustainability if their institutions are effective in reducing production costs.Rose farmers in Batu City should be able to get more profits if they can reduce transaction costs.However, this is not only the responsibility of the farmers themselves but also requires synergy from all stakeholders.If the profits they get are higher, then they will not change to another profession.That means rose farming can be sustainable.

Conclusions
In institutional economics theory, the most important factor affecting the economic performance of a country is its institutional design.Ineffective institutions cause high transaction costs.High transaction cost creates inefficient production.This also happens in the production of cut roses produced by farmers in Gunungsari, Batu City.The results show that besides fixed and variable costs, farmers are also burdened with transaction costs.This makes farmers' profit margins lower because they cannot raise prices carelessly.Further research that can be carried out looking at the results of this research is to calculate the exact transaction costs incurred by farmers.

References
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Table 2 .
Fixed costs of cut rose production.

Table 3 .
Variable costs of cut rose production.Table 3 shows details of the variable costs incurred by rose farmers in running a cut rose farming business.The seeds used by rose farmers in Gunungsari Village, Bumiaji District, Batu City are local rose seeds and Dutch rose seeds.However, what is dominantly used by rose farmers is Holland rose seeds.The average number of seeds used by rose farmers is 17,884.62stems/ha.The seed stem has 4 to 5 buds.The average cost incurred by rose farmers in using rose seeds is IDR 15,623,076.92 per hectare per planting season.

Table 4 .
Identification of transaction cost.

Table 4
shows that there are 6 transaction costs that we have identified.The explicit cost type shows that farmers have exact data on costs.Meanwhile, implicit costs indicate that the nominal costs cannot be ascertained.The sustainability of cut roses production.The sustainability of cut-rose agribusiness is undoubtedly threatened by inefficiencies brought on by transaction costs