Supply chain and quality management of Arabica coffee: A case of smallholders’ agribusiness in Bondowoso Indonesia

Abstract

Bondowoso District is an area that has a high potential for the cultivation of plantation commodities especially coffee. One of its Arabica coffee production areas is located at Andungsari village, where coffee agribusinesses are managed by smallholder farmers, members of the Andung Tani I farmer group. This research aims to seek to identify the Arabica coffee supply chain management, the added value of processing products from the Arabica coffee agroindustry and the quality management in the supply chain. The agribusiness supply chains, value creation and quality management are important to be investigated since they are managed inclusively by a smallholder farmer group. The research method is descriptive analysis to explain supply chain and integrated quality management and Hayami method analysis for the added value of Arabica coffee. The results of the analysis show that (1) Based on the supply chain conditions including five aspects regarding the local-international target market, marketing institutions, contract and trust systems, as well as cash and transfer payment systems, the Andung Tani I Farmer Group supply chain has fulfilled aspects that can be used in tackling market conditions and meet consumer demand; (2) All Arabica coffee products of Andung Tani I agroindustry show positive and fairly high added value ratio. Among the three products, ground coffee has the highest added value, far greater than the added value of the coffee green beans (HS and Ose). These results confirm that further processing and advanced technology increases the added value earned by the firm; and (3) The smallholders’ Arabica coffee supply chain in Bondowoso has fairly implemented integrated quality management consisting of 10 aspects of the national quality standard SNI 01-3542-2004 in response to the market.