Rural Agri-Food Industry Resilience in Indonesia

Abstract

The agri-food industry faces shocks to global and local socio-economic conditions. They are micro, small, and medium-sized enterprises (MSMEs) that absorbed a lot of labor during the Indonesian economic crisis and stood for decades. This industry may provide safety nets, especially for low-income communities carrying out productive economic activities in rural. Therefore, this study examines the extent of the agri-food industry’s resilience in rural areas by focusing on industrial and business structures and labor market conditions factors. This study used a case study approach through in-depth interviews with business owners. The rural agri-food industry made adaptations and innovations in production and financial management to resilience. This strategy raises the difference in its market segment. The difference in company size reduces local competition also. On the one hand, the management and control capabilities of family firms and the kinship or historical relationship between company owners and workers tend to increase this industry’s resilience. On the other hand, this industry has attached to local values and culture, making the demand for this agrifood-industrial product stable. The labor profile does not require high qualifications and is also dominated by housewives, and the flexibility of time and wages of the agri-food industry may suit rural conditions so that it can survive. In this regard, the proximity of locations between companies and between companies and workers is important for this industry’s resilience. Although the MSMEs scale agri-food industry is vulnerable, it could survive and recover as a driving force for the household economy in rural. Lessons and strategies are also presented for entrepreneurs and policymakers to increase the resilience of the agri-food industry.