Identifying production costs of cut roses: An institutional economics perspective

Abstract

In institutional economic theory, transaction costs are one of the main focuses of discussion. Transaction costs create inefficiencies in production. Roses are one of the main commodities produced by Batu City. This research aims to identify transaction costs that are borne by cut rose farmers in Batu City. Transaction costs result in higher production costs, thereby reducing farmers’ profits. This study uses a descriptive qualitative approach. Research data was obtained through interview techniques with cut rose farmers. The research results show that there are six types of transaction costs that are borne by farmers. Based on the calculation results, farmer transaction costs for 1 planting season are around IDR 7,040,433.00. These transaction costs result in decreased farmer’s profit of cut rose selling because the production cost raise.