Value of Used Coffee Beans for Green Fertilizer in Banda Aceh
Aliasuddin1*, Mirza Tabrani1, Nanda Rahmi1
1 Department of Economics, Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia
*Corresponding Author: aliasuddin@unsyiah.ac.id Accepted: 15 September 2022 | Published: 1 October 2022
DOI:https://doi.org/10.55057/ijaref.2022.4.3.21
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Abstract: This study is to value the used coffee beans as green fertilizer in Banda Aceh as part of community development services because Banda Aceh produces a massive number of used coffee beans every day. The willingness to pay method is applied to determine the value of used coffee beans, and total samples of 150 respondents are utilized in this analysis. The result shows that the respondents give high value for the used coffee been as green fertilizer because they believe that green fertilizer will produce a green product and environmental sustainability for the next generations. It is recommended that the government and society should encourage the use of green products in their daily activities.
Keywords: used coffee beans, green fertilizer, sustainability, the future generation
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1. Introduction
Aceh Province is located on the western tip of Sumatra Island, and this province is one of the coffee producers in Indonesia. There are two types of coffee produced in Aceh, and primary production is Arabica coffee, and another one is Robusta coffee. Two districts provide Arabica coffee, i.e., Bener Meriah, with total production is 31,358 tons, and Aceh Tengah produces a total of 28,358 tons (BPS, 2019). Because of the availability of coffee in this province, the number of café sells coffee is around the corner, and Banda Aceh, as the capital of Aceh Province, has 241 restaurants that provide coffee, even some of the cafés are open 24 hours (BPS, 2019). These cafés provide two types of coffee in terms of processing, i.e., traditional and modern. Tradition method of coffee production in Banda Aceh produces a lot of wastes of used coffee beans. These wastes cause the unhealthy and unartistic environment. To decrease these environmental problems, some of the pupils in the Islamic Senior High School Banda Aceh (MAN Model Banda Aceh) utilizes the used coffee beans as green fertilizer.
However, the production package of the green fertilizer produced by this school is a very simple product that has limited possibility to be marketed in Banda Aceh because the packaging of the green fertilizer and the brand are not marketable.
For marketing reasons, it is needed to upgrade the package and to change the brand because the brand has a significant role in marketing. Based on these considerations, it is required a brand-new product approach method, so the product becomes more attractive and marketable.
Another essential aspect is green fertilizer and sustainability for the future generation. Based on these considerations, it is imperative to analyze the value of the used coffee beans as green fertilizer because the demand for green products increases from time to time. For example, the study of Vittersø and Tangeland (2015) finds that the demand for organic foods increases in
Norway. Furthermore, Agovino et al. (2017) find that participation in cultural activities has a positive impact on an inclination to purchase organic products. Consumers' attitudes toward green products vary depending on price-related functional values and ethical consumption internation (Kushwah et al., 2019).
Because more people concerned about environmental aspects, the value of green fertilizer is more on an environmental problem where this problem has no market to be used as an analysis basis, and it is crucial to emphasize that the analysis of the environmental issue is the hypothetical market approach. This approach is used to analyze the value of used coffee beans as green fertilizer in Banda Aceh, where willingness to pay method is more appropriate in this analysis. The method of willingness to pay is commonly used as an analysis tool in environmental valuation, including related environmental products such as green fertilizer.
2. Literature Review
Organic products are essential in recent years because most of the people in advanced economies believe that organic products are healthier and environmentally friendly, and the demand for these products increasing nowadays (Adámek et al., 2019). They also find that government supports are very important to encourage the production of organic products not only in terms of financial supports but also technical ones. If the demand for organic products increases means that the welfare of farmers also increases (Gambelli et al., xxxx; Martey, 2018;
Wang et al., 2018; Vittersø and Tangeland, 2015). Furthermore, the study of Unay-Gailhard and Bojnec (2019) shows that organic products create more job opportunities for unemployment.
Some factors are affecting the demand for organic products such as environmental concerns, health and lifestyle, product quality, support towards local farmers, convenience and price, safety and trust, and subjective norms (Basha and Lal, 2019). Furthermore, Polimeni et al.
(2018) find that consumers learn about how the agricultural products they purchase at the market are produced and the connection between the environment, community building, and their health. Besides, they also find that economic value, wealth, and educational level are important factors for consumers to choose sustainable products at the market. These findings are necessary to develop and maintain sustainable agricultural production. Meanwhile, the study of Kushwah et al. (2019) shows that some other factors are determining the demand for organic products, i.e., social, emotional, and epistemic factors.
The increase in demand for organic products will increase the willingness to pay for these products. For example, the work of de-Magistris and Gracia (2016) shows that educated consumers are willing to pay a higher price of green products. Meanwhile, Chen et al. (2018) document that consumers have a higher willingness to pay for green food products due to the perceived environmental benefits. Furthermore, in terms of the institutional aspect, Dendler and Dewick (2016) find that the institutional legitimacy aspect is very important to increase the willingness to pay for organic products. Also, Lombardi et al. (2017) state that communication could play a significant role in changing consumer attitudes toward carbon- free products.
The communication has a significant role in increasing the willingness to pay for organic products to deliver labeling for the green product as confirmed by the work of Feucht and Zander (2018) where the presence of a carbon label increases the purchase probability and that consumers are willing to pay a price premium. Regarding the design of a carbon label, a
combination of a horizontal scale in traffic light like colors with an absolute number of CO2- equivalents is preferred. But consumers are willing to pay higher price premiums for local products than for carbon labeled products in most study countries.
Ha et al. (2019) confirm the results of previous studies, they find that perception about organic vegetables, truth to labels and income are very significant factors in determining the willingness to pay for organic products. The study of Singh and Verma (2017) finds that five factors also influence the actual buying behavior, but attitude and purchase intention mediate the relationship. Meanwhile, Sun et al. (2019) find more comprehensive results about factors affecting the demand for organic products both at the individual level, population factors, and the external environment.
The previous studies show that organic products have important role in increasing the willingness to pay; however, to produce organic products, it is needed organic or green inputs, and one of the green inputs is organic or green fertilizer. The used coffee beans are a perfect green fertilizer because it contains a higher C/N ratio, phenol, and acid that are very good for plants as fertilizer (McNutt and He, 2019). The role of organic fertilizer is crucial, and one of them is to achieve green products and the environment. There are some approaches for environmental valuation in terms of monetary terms, and one of them is the willingness to pay approach.
3. Research Method
The value of used products is usually are very low because they have limited functions.
However, the value of used coffee beans as organic fertilizer is very important, and based on this point of view activity of new product development is conducted as parts of social/community development services from Universitas Syiah Kuala to Islamic Senior High School Banda Aceh (MAN Model Banda Aceh). This activity is hoped to help the school to produce organic fertilizer from the used coffee beans, and it is also expected that the school generates money from organic fertilizer. After having the organic fertilizer, the next step is to determine the value of the used coffee beans as organic or green fertilizer by using the willingness to pay approach.
3.1. Data
Data in this analysis are collected from the respondents in Banda Aceh by using simple random sampling. Total samples of the analysis are 150 respondents, where the respondents may not utilize the used coffee beans fertilizer because the analysis is based on the hypothetical market method. The sample sizes are determined by the formula (Tejada & Punzola, 2012):
𝑛 = 𝑁
1+𝑁𝑒2 (1)
Where n is sample size, N is population, e is error term, in this study is set 10 percent. The number of households in Banda Aceh Municipality is 64,008 and based on the equation (1), the number of samples:
𝑛 = 64,008
1+64,008(0.12)= 100
To obtain the representativeness of the population, the number of samples is 150, where every household has the same probability of being chosen as the respondent in this analysis.
3.2. Method
The willingness to pay method is one of the methods in determining the value of environmental services because the environmental problems do not have the market to facilitate the equilibrium. Hence the price of the environmental issues could be determined by using a hypothetical market approach, and willingness to pay is one of the methods in the hypothetical market. The willingness to pay method could be estimated by using a multiple regression model, and the model is:
𝑊𝑇𝑃 = 𝛽1+ 𝛽2𝐸𝑑𝑢 + 𝛽3𝑌 + 𝛽4𝐸𝑛𝑣 + 𝛽5𝐹𝑆 + 𝜇 (2)
Where WTP is the willingness to pay, and this variable is measured in money term.
Furthermore, Edu is educational level, 1 for higher educational level and 0 otherwise. The other variable is Y represents monthly income (Indonesian Rupiahs – IDR), and Env is respondents concerned on environmental issues where this variable is dummy, 1 for concerned and 0 otherwise. The last variable is FS family size is measured in terms of people in the household.
4. Findings and Discussion
This section explains about statistics of respondents, estimated results of willingness to pay, and discussion. The statistics of respondents are very important to show some related information concerning the economic and demographic aspects of respondents. The relationship among variables configures the correlations of the variables in this analysis.
4.1. Statistics of Respondents
The statistics of the respondents are presented in this section, where averages of the variables are displayed in this section. Table 1 shows statistics of selected variables in this analysis, where the average age of the respondents is 36 years old. This means that most of the respondents are productive age stage, and this will have an effect on the willingness to pay for organic or green fertilizer. There is reasonable hope for environmental protection for the next generations. Meanwhile, the income of respondents is around Indonesia Rupiahs (IDR) 4,794,000. It is equivalent to USD 337.61 per month (USD rate to IDR is about 14,200). This amount is relatively higher for respondents who live in Banda Aceh with siblings around four persons, as an average of the family size of the respondents.
Furthermore, the years of schooling of the respondents are 13.6 years, and it is higher than the national mandatory education program of nine years. The last variable is the average willingness to pay of respondents is IDR 6,500 per kg of organic used coffee bean fertilizer, or it is equal to USD 0.46 per kg. This amount is higher than the regular price of organic fertilizer in the market in Banda Aceh is around IDR 4,000 or USD 0.28 per kg. This amount is indicating that the respondents appreciate the organic fertilizer of the used coffee beans. This result is very good because it is an indication that more people are concerned about green and sustainable environment.
Table 1: Statistics of Selected Variables
No Variable Unit Average
1 Age of Respondents Year 36
2 Income IDR 4,794,000
3 Years of Schooling Year 13.6
4 Family Size Person 4
5 Willingness to Pay IDR 6,500 Source: Field Analysis, 2019.
Table 2 shows that most of the respondents in this analysis are male account to 131 respondents, and female is 19 respondents. Furthermore, in term of educational level, most of the male has a higher educational level than female. These statistics confirm the educational level of Banda Aceh Municipality is higher than in other districts in Aceh because there are some universities located here. Hence, the educational standards of the people are higher compared to other districts in Aceh Province.
Table 2: Educational Level and Sex of Respondents
Sex Educational Level
Total
Lower Higher
Male 39 92 131
Female 11 8 19
Total 50 100 150
Source: Field Analysis, 2019.
Furthermore, income and educational levels are presented in Table 3, and the data show that most of the respondents at lower-income and lower educational levels and only seven percent of the respondents at the higher education and income levels. These data confirm that respondents that have a higher educational level are better off than the lower ones in term of welfare.
Table 3: Educational Level and Sex of Respondents
Income Level Educational Level
Total
Lower Higher
Lower 74 32 106
Higher 37 7 44
Total 111 39 150
Source: Field Analysis, 2019.
4.2. Findings and Discussion
The model of willingness to pay is a standard model in the analysis of environmental economics, and this model is estimated by using a multiple regression model, as stated in equation (2). The estimated results of the willingness to pay for organic fertilizer of used coffee beans are presented in Table 4. The table shows that the estimated results are perfect in terms of goodness of fit because all of the estimated coefficients are statistically and theoretically significant. Hence, the model is useable in the analysis of the value of used coffee beans as organic fertilizer in Banda Aceh.
Table 4: Estimated Results of Willingness to Pay for Organic Fertilizer in Banda Aceh
Variable Coefficient Standard Error t–ratio
Constant 7,324.32 2,173.64 3.37
Education 0.1573 0.0067 23.48
Income 12.573 4.037 3.11
Environment 0.1319 0.017 7.76
Family Size –0.9728 0.043 –22.62
R2 = 0.3147 Adj-R2 = 0.2934 DW = 1.9322 F = 126.42 Source: Field Analysis, 2019.
Table 4 shows that the constant is 7,324.32 represents the average willingness to pay of respondents for organic or green fertilizer of used coffee beans, where this amount is higher than the average willingness to pay in Table 1. This coefficient confirms that the respondents have a high appreciation for green fertilizer. In addition, the coefficient of education is 0.1573 means that educated respondents have a higher appreciation of green fertilizer than the lower educational level. This result is consistent with the findings of de-Magistris & Gracia (2016), Polimeni et al. (2018), and Kushwah et al. (2019), where education has a positive and significant effect on the willingness to pay for the green product including green fertilizer.
Meanwhile, the coefficient of income is 12.573 indicates that the increase in income about IDR 100, the willingness to pay of respondents for green fertilizer will increase by IDR 1,257.3 by assumption other variables remain unchanged. This result is in line with the studies of Ha et al.
(2019), Sun et al. (2019), and Singh and Verma (2017). In addition, the respondents those concerned about environment aspects have a positive and significant coefficient with magnitude is 0.1319, indicating that the respondents who have involvement in the environment or they are affiliated to the environmental organization have a higher willingness to pay for green fertilizer. This result confirms the previous studies of Basha and Lal (2019), Sun et al.
(2019), Chen et al. (2018), and Polimeni et al. (2018).
The last coefficient is family size, where this coefficient has a negative and significant effect on the willingness to pay, and the magnitude of the coefficient is -0.9728. This means that an increase in family size by one person, then the willingness to pay for green fertilizer will decrease by 0.9728 by the assumption that the other variables are constant. This result is consistent with the economic theory, where a more prominent family size, then the burden of the family, will also increase. This result is consistent with the results of Kushwah et al. (2019) and Singh and Verma (2017).
5. Conclusion
Based on the statistics, estimated results, and discussions, there are some conclusions of the analysis. First, the willingness to pay for the used coffee bean green fertilizer is higher in Banda Aceh because most of the population in Banda Aceh are educated persons. Second, the respondents of this analysis are at a productive age because they have an average age of about 36 years. Third, the educational level of male respondents is higher than female respondents.
Forth, higher educational level earns more income than lower ones. Lastly, four variables determine the willingness to pay in this analysis. The variables are educational level, income, environment, and family size. The education, income, and environment variables have positive and significant effects on the willingness to pay for green fertilizer in Banda Aceh. In contrast, the family size variable has a negative and significant effect on the willingness to pay for green fertilizer.
To promote a green product and a safe environment for the next generation, the government encourages every school to produce green fertilizer. It is very important because young people have the easiest way to conduct environmental support to achieve a better life for the future than older people.
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