WHEN MINING EXPANDS AND FARMING WEAKENS: LOCAL SOCIAL CAPITAL, COCONUT PRODUCTIVITY, AND FARMER WELFARE IN AN INDONESIAN ISLAND ECONOMY

Abstract

 This study examines how extractive industry expansion indirectly affects agricultural productivity and farmer welfare in a non-mining rural area, and whether community-based social capital can buffer these pressures. Drawing on survey data from 284 coconut farmers in Oba District, Tidore Kepulauan City, Eastern Indonesia, this study compares farmer conditions before and after the expansion of nickel mining activities in the wider regional economy. The analysis combines descriptive statistics, Wilcoxon Signed Rank tests, and multiple linear regression. The findings show a significant decline in coconut productivity and farmer welfare after the expansion of nickel mining activities. Coconut productivity decreased from 3.8858 to 3.4842, while farmer welfare declined from 3.2283 to 2.7125. Regression results indicate that farmer interaction and cooperation, as manifestations of the local Babari tradition, positively influence both productivity and welfare. However, the negative post-mining effect suggests that local social capital, while protective, is insufficient to fully offset structural pressures created by mining-led economic transformation. The study contributes to debates on extractive development, rural resilience, and informal institutions by demonstrating that local traditions can sustain agricultural communities but require institutional and policy support to remain effective under rapid industrial change.