Exploring Farmer-supplier Relationships in the East Java Seed Potato Market

Abstract

Abstract The use of certified seed potato is believed to substantially improve potato productivity. However, in developing countries including Indonesia, most farmers perceived that the price of certified seed is too expensive for potato cultivation. Farmers, therefore, often produce and use their own seed which is usually derived from the certified seed. In East Java, some farmers usually act as local seed growers and sell their seed to others in their villages. The complexity of the buying situation faced by East Javanese farmers whenever they are willing to purchase seed prompted this study of the extent to which buyer-supplier relationships influence farmers’ decision to purchase seed potato. A total of 209 farmers from the highlands of East Java were interviewed in this study. The data were analyzed using factor analysis and multiple regression analysis. The findings generally suggest that farmer-supplier relationships in the East Java seed potato market were established based on high levels of satisfaction, trust and long-term commitment. A significant positive relationship was observed between supplier's offer quality and farmers’ relationship satisfaction. Such would suggest that the high level of farmers’ relationship satisfaction was derived from the adequate suppliers’ offer quality. However, it was the seed and service quality dimension, rather than delivery and pricing, which significantly improved the farmers’ relationship satisfaction.