The Effect of Agglomeration on Profits and Price Efficiency in Laying Chicken Farming Enterprises in Payakumbuh Production Central Area of Lima Puluh Kota Regency, West Sumatera, Indonesia

Abstract

This study analyzed the agglomeration economies, the effect of agglomeration economies, business location on price efficiency, and policy implications of the results of the study. The method used was quantitative descriptive. Data consists of primary and secondary data. The analysis technique was multiple linear regression processed with SPSS Ver 22 software. Data analysis was carried out quantitatively and qualitatively. The results showed that there were two agglomeration economies in production central area (PCA) of Payakumbuh; large scale economies (SEi) and localization economies (LEi). Urbanization economies (UEi) were not found. The agglomeration economies have a significant effect on price efficiency. The difference in business location between PCA of Payakumbuh and outside PCA had no significant effect. The policy of the results was the establishment of a PCA, which should take into account the agglomeration economies, thus the PCA can survive and be profitable for entrepreneurs with lower production and transportation costs due to the use of shared facilities. Equipping the PCA with supporting infrastructure as a facility to develop livestock business with the aim to reduce production costs, hence output can be competitive.