Abstract

This study aimed to analyze the effect of social capital on investment decision making in the business of smallholder cattle breeding with the same system. The data of this research were gathered through surveys and interviews with farmers and investors in Cow business in the province of West Sumatra. Data collected is in the form of latent constructs analyzed through the Structural Equation Modeling using Partial Least Square (SEM-PLS). The results of the study showed that the Minangkabau people’s investment decisions in the business of cattle through the social capital traditional scheme known as seduaan are influenced by social capital, risk and religion while the return did not affect investment decisions.

Highlights

  • The government's target in achieving beef selfsufficiency is 90% of national consumption needs that must be supplied from domestic production

  • The Minangkabau ethnic group was chosen as research subject due to it long existing agricultural business practice known to the Minangkabau people as seduaan, a social capital originating from religious and cultural norms and values intended for improving the welfare of community members

  • The Minangkabau ethnic group has contributed to the development of livestock in Indonesia, through people's cattle farm effort

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Summary

Introduction

The government's target in achieving beef selfsufficiency is 90% of national consumption needs that must be supplied from domestic production. Maintenance of cattle in Indonesia has not been oriented to large-scale businesses but is still a side business This condition is almost applicable in all regions in Indonesia. Besides rice cultivation Minangkabau farmers in practice gardening, raising fish and livestock. This mix of farming patterns prevents cattle populations from meeting domestic needs. Many programs are carried out by the government to further motivate farmers to develop their livestock business intensively. These programs are funded by the Regional Revenue and Expenditures Budget or Anggaran Pendapatan dan Belanja Daerah (APBD), State Budget or Anggaran Pendapatan dan Belanja Negara (APBN) and Credit Programs by Banks. The funds channeled through these programs have reached trillion Rupiah

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