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By: Wahyunindyawati
In order to increase the productivity and the efficiency of rice’ agribusiness, the functions of farmers'
group union is crucial. It is realized that productivity and inefficiency of small scale agribusinesses are
caused by dissimilarities of farmers ability as managers to provide production tools, technology
implementation, and product’s marketing. The objectives of conducting the study were; (1) to analyze
the influence of price of production’s factor towards profit of rice agribusinesses managed by famers
who are members of farmers' group union in Bulu village; (2) to analyze economic efficiency relatives
on rice farming managed by farmers' group union in Bulu village, (3) to recognized the added value of
paddy agro-industrial business managed by farmers' group union in order to develop rice agribusiness
in Bulu village. The research has been conducted in 2008 during first dry season on Bulu and
Sumberurip village, Berbek sub-district, Nganjuk, using purposive sample method. The respondents
were selected by using simple random sampling consisting of 155 farmers. Data were analyzed using
Unit Output Price (UOP) profit function with Cobb-Douglas model. This analysis technique used SUR
(Seemingly Unrelated Regression) estimation method, as well as value added. The study shows that:
(1) seed price, urea fertilizer price and the function of farmers' group union significantly influence profit.
The increase of wages will decrease profit, as well as the lack of experience of farmers significantly
influence profit, especially in hybrid variety and spare paralel planting system; farmers' group
coordination on providing seeds, urea fertilizer, hybrid rice variety, and Jajar legowo (modified row
planting system) influence the increase of production; The farmers who are members of farmers'
group union has relative economic effieciency, compared to farmers who do not farmers' group union
members. (3) Paddy agro industry was managed by farmers' group union functions has value added
5,13% from proceeding dry paddy yield to husked dry paddy, and 5,1% from husked dry paddy to
polished rice.

Key words: farmer group coordinations, efficiency, innovation technology