3.2.2. The Influence of Agricultural Development on Poverty Alleviation

Agricultural development positively alleviates rural poverty, with a path coefficient of 0.76. Figure 7 shows the influence of agricultural development on rural poverty alleviation.

**Figure 7.** The Influence of Agricultural Development on Rural Poverty Alleviation.

From Figure 7, the agricultural development variable significantly affected rural poverty alleviation in the North Buton Regency, with a path coefficient of 0.76. The fit index in Table 4 shows that all fit indices were good, meaning that the dimensions of the development of agricultural infrastructure facilities and farmers' human resource development alleviate poverty.


**Table 4.** Goodness-of-Fit of the Influence of Agricultural Development on Poverty Alleviation.

Source: Analysis results.

The findings show that enhancing the quality of human resources highly determines poverty reduction. A positive extension to farmers using modern farming reduces poverty levels (Cervantes-Godoy and Dewbre 2010). Moreover, studies suggested that increasing investment in rural agricultural infrastructure reduces rural poverty (Clark and Alkire 2008). The construction of village roads and agricultural production facilities significantly impact farm business productivity and the selling price of farm goods.

#### 3.2.3. The Influence of Improved Farm Business Performance on Poverty Alleviation

Improving infrastructure facilities in rural areas lowers the transportation cost of agricultural produce to marketing hubs. Agricultural production facilities obtained at low prices and the increasingly effective agricultural extension raise the production and quality of agricultural production. They also increase the selling price of rural farm business production, this improves agricultural business performance and increases the per capita income of rural farmers, reducing poverty. The structural model of the relationship between the latent variables: farm business performance (Y1) and poverty elevation (Y2) with the manifest variable is shown in Figure 8.

**Figure 8.** Structural Model for the Influence of Improved Farm Business Performance on Rural Poverty Alleviation. Source: Processed data.

Figure 5 shows the influence of improved farm business performance on rural poverty alleviation in the North Buton Regency, with a path coefficient value of 0.81. The fit index in Table 5 shows that all fit indices were good, meaning that improving the farm business performance alleviates rural poverty.


**Table 5.** Goodness-of-fit of Farm Business Performance and Poverty Alleviation.

Source: Processed data.

Increasing productivity through agricultural intensification and extensification supported by infrastructure development facilitates farmers' accessibility, fertilizer and medicine marketing, and reasonable prices. Additionally, increasing farmer resources to improve farming skills and work ethic increases agricultural production and the farmers' income and alleviates poverty.

Alkire (2007) stated that poverty is likened to a dead knot and tangled thread with no end. For instance, poverty caused by low agricultural productivity has implications for the low farmers' income. It causes a lack of consumption costs, malnutrition, vulnerability to diseases, low education level, labor productivity, and capital investment. This circle would continue to rotate and last until the poverty chain is removed. One factor determining breaking the rural poverty chain is the government's intervention through agricultural infrastructure development policies. The policies could help increase agricultural productivity and the farmers' incomes and eradicate poverty.

#### *3.3. Final Structural Model Formation*

The structural model of agricultural development against poverty alleviation by improving farm business performance consisted of two exogenous, two endogenous, and 16 observed variables. Exogenous variables were the construction of agricultural infrastructure facilities and farmers' human resources development. Rural farmers' human resources impact farm business performance, affecting poverty alleviation. The structural relationship between the three latent variables: farm business performance (Y1), agricultural development (X) and poverty elevation (Y2) with their manifest variables is shown in Figure 9.

The goodness-of-fit indices for the structural model showed a GFI value of 0.87 and an AGFI value of 0.83. The RMSEA value was 0.09, higher than the recommended limit value of 0.08, and the SRMR value of 0.03 showed a good fit. Agricultural development through infrastructure and farmer resource development significantly and positively influences farm business performance. This was indicated by increased agricultural production, farmers' income, and reduced rural poverty in the North Buton Regency. Table 6 shows the goodness-of-fit index of structural models.

**Figure 9.** The Final Structural Model for how Agricultural Development Influences Rural Poverty Alleviation through Improved Farm Business Performance.

**Table 6.** Final goodness-of-fit for the agricultural development's influence on poverty alleviation through improved farm business performance.

