Multidimensional Poverty Index (MPI) in Agricultural Household in Indonesia

Poverty is one of the central issues in the development program of Indonesia. In 2014, more than 27 million people in Indonesia live in poverty and over than 60 per cent of them lived in rural areas which heavily rely on the agriculture sector as their livelihood (BPS-Statistics Indonesia, 2014). This fact confirms that poverty eradication in agriculture is the key factor in reducing poverty in Indonesia. Data and information about poverty are really needed in the fight against poverty. However, the formal poverty data that available counts only direct monetary income and neglects other qualitative dimensions of poverty like health and education. Therefore, researchers are interested in measuring the Multidimensional Poverty Index (MPI) in an agricultural household in Indonesia. This research used secondary data from the latest 2014 National Social Economic Survey of Indonesia (SUSENAS 2014). The total number of sample in this research was 285,400 household. The measurement of MPI was conducted exploratory by factor analysis. Data was entered and analyzed by using the Statistical Package for Social Science (SPSS) computer program. The analysis was performed on the 33 provinces in Indonesia. Based on the result of the analysis, we found that, in term of multidimensional poverty, poverty in Indonesia is also an agricultural phenomenon. Multidimensional Poverty Index (MPI) in an agricultural household in Indonesia was 0.30 and much higher than MPI in a non-agriculture sector that was only 0.11. More than 60 per cent of people in the agricultural household were considered as poor multidimensionality. The intensity of poverty in agriculture household was 0.50. It is also much higher than the intensity of poverty in non-agricultural sector and intensity of poverty in total that was 0.45 and 0.48, respectively. Therefore, we conclude that any effort to address poverty must consider the central place of agriculture in Indonesia. Besides, poverty reduction must not only focus on improving the income of farmers but also on boosting the capability (level of health and education) of poor people.