Abstract
Contract farming is one of the ways in a production relationship that is carried out by at least two parties who work together for a certain unit of time arranged in a written or oral agreement. Contracts in agriculture are carried out to reduce the risks faced by both parties. There are several agriculture commodities developed under the contract farming system, one of which is broiler. Broiler are important for fulfilling animal protein. High consumption in Indonesia at 2012-2016, not supported by production and the price of broiler has large fluctuations. Large fluctuations in Jember at 2012-2016 illustrate the magnitude of the risk in broiler farming both the risk of production and price. The amount of risk borne by farmerss causes easy contract farming to be applied in broiler chicken farming. This study purpose to see: (1) The pattern of contract farmIng carried out on broiler farming; and (2) The effect of contract farming on the price risks faced by farmerss. Method of determining the research area is purposive method. The research method is carried out by descriptive and analytical. The method of data collection is by interview, observation and secondary data with the use of recapitulation of the results of farmers maintenance. Determination of respondents was conducted randomly at farmerss in Jember Regency. The results of the study show: 1) The pattern of contract farming carried out on broiler farming is a contract farming with the type of production contract; and (2) The effect of contract farming causes the risk faced by farmerss to be reduced by 39% than independently farmerss.
Highlights
Contract farming occurred between a small farmers and a big company will give benefit for both of them, without sacrificing other sides
Contract farming gives a closer relationship between the farmers and the buyer than the relationship of the farmers with the buyer on the spot market and allows the company to do a bigger control on the decision of production and agricultural processes
Where contract farming is divided into 2 types that are production contract and marketing contract
Summary
Contract farming occurred between a small farmers and a big company will give benefit for both of them, without sacrificing other sides. Contract farming gives a closer relationship between the farmers and the buyer than the relationship of the farmers with the buyer on the spot market and allows the company to do a bigger control on the decision of production and agricultural processes. Rustiani (1997) and Zhang (2012) stated that contract farming is one of the ways in the production relationship which is done at least by two parties which do cooperation to one certain time controlled in one agreement in writing as well as oral. In this relationship, each party uses the resource they are expert. The production contract is used widely in livestock production and marketing contract is important for plant production (Mac Donald and Korb, 2011)
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