Smallholder Farmers In Indonesia Research Articles

Rationality of soybean farmers: the findings from rainfed field agroecosystems

Purpose. This research aims to examine the factors that influence the rationality and income of soybean farmers, especially in rain fed field agroecosystems. Methodology / approach. The research was designed quantitatively with a type of survey on 263 soybean farmers from a total population of 768 farmers spread across Jatiwaras and Pancatengah subdistricts, Tasikmalaya Regency, which is one of the centres for soybean development in West Java, Indonesia. The determination of the farmer sample was carried out proportionally randomly using the Slovin formula with an error rate of 5 %. The data analysed is primary data obtained directly from farmers using a questionnaire with a Likert scale consisting of 5 answer choices. The analytical tool used is Structural Equation Model (SEM) with AMOS to determine the influence between variables. Results. The research results show that: (1) Farmer characteristics have a significant positive relationship with farmer motivation. These characteristics are a strong driving force to increase their motivation in soybean farming to be even better in an effort to increase their income; (2) Farmer characteristics have a significant positive effect on farmer rationality. The older the age, the higher the education, and the greater the burden of responsibility borne by the farmers’ family, the more rational they consider soybean cultivation to be, which means that they will be more cautious in growing soybeans to minimise the risk of losses they may incur; (3) Farmer motivation has a significant positive effect on farmer rationality. The stronger farmers’ motivation in soybeans farming, the more rational it makes them in thinking about farming as well as possible; (4) Farmer rationality has a significant positive effect on income. The more rational the thinking of farmers in soybean farming, in the sense that they can effectively use social networks, efficiently grow soybeans and adopt technology, the more they can increase production, which ultimately increases income. Originality / scientific novelty. This study focuses more on the rationality of smallholder farmers in Indonesia, who have many structural disadvantages, such as limited land ownership, average age of farmers, low education level and many family responsibilities, which are constraints to soybean farming; how smallholder farmers are related to motivation in soybean farming and whether this farmers’ rationality can increase their income, while several previous studies only discussed farmers’ rationality without considering socioeconomic factors, especially smallholder farmers. Practical value / implications. This research provides evidence that there is a relationship between farmer characteristics and motivation which has a significant effect on farmer rationality so that in the end it can increase income. The results of this research have implications for government policies in efforts to increase farmers’ income by increasing their capacity through intensive and sustainable agricultural extension activities. The existence of more intensive and sustainable agricultural extension activities can increase the knowledge and insight of small farmers in soybean farming, which in turn can motivate farmers to think and act more rationally so that they can better optimise all the resources they have.

The productivity and income effects of adopting improved rice varieties by smallholder farmers in Indonesia

PurposeThis study identified the determinants of improved rice variety adoption and measured their impact on farm productivity and the income of smallholder farmers in Indonesia.Design/methodology/approachWe used a multistage sampling procedure and data from household surveys in four districts in the Banten region of Indonesia. An endogenous switching regression (ESR) model was used to estimate the impact of adoption, and the propensity score matching (PSM) non-parametric method tested the strength of the ESR findings.FindingsThe farm productivity of adoption increased by 11.45% and the income of smallholder farmers increased by 12.10% when compared to that of traditional methods.Research limitations/implicationsThe positive and significant effects of improved rice variety adoption indicated that research programs that develop improved rice varieties can optimize the productivity and income of smallholder farmers.Originality/valueAdopting improved rice varieties increases the productivity and income of smallholder farmers, and the level of education, rice farming experience, access to extension workers, off-farm work, and mobile phone ownership have positive and significant effects on the adoption of improved rice varieties.

Rubber plantation size and global rubber price are linked to forest loss and degradation in Jambi, Sumatra

AbstractNatural rubber cultivation is one of the main drivers of tropical deforestation and biodiversity loss. This study examines regulatory and socio‐economic conditions that increase the susceptibility of rubber plantations to deforestation and degradation, aiming to support zero‐deforestation pledges and sustainability commitments made by the natural rubber industry. By combining bottom‐up socio‐economic survey data from rubber smallholder farmers in Indonesia with top‐down spatial datasets on forest loss and degradation, this study identifies factors associated with deforestation, tree cover loss, and degradation of high‐risk plantations. In Jambi Province, Indonesia, from 1991 to 2018, the overall tree cover loss in areas adjacent to rubber plantations was positively correlated to plantation size, remoteness (travel time to cities), and distance to the nearest protected areas, indicating that larger, remotely located plantations likely expanded more into forests between 2000 and 2018. Similarly, tropical forest degradation was positively associated with plantation size, travel time to cities, and distance to protected areas. A higher rubber price in the preceding year correlated with increased annual deforestation and forest degradation, whereas lower prices had the opposite effect. These results suggest that monitoring price changes and identifying plantations that are near non‐protected forest frontiers could enable early detection and potential mitigation of deforestation threats.

Family resilience of smallholder farmers in Indonesia’s oil palm plantation

Problems about family are still analyzed in general and do not specifically look at the livelihood aspect. Whereas from the social sciences lensed, livelihood is the main factor that significantly contributes to the resilience of family. One of the family issues which became a major problem in Indonesia is family resilience in the oil palm plantation context. Families in the plantation sector always have tremendous challenges either from internal, external, or structural layers. At the internal level, families have to bear with psychological and physical issues which may trigger them to become more vulnerable. From an external level, the work ambiance in palm plantations, as well as price fluctuation and access to financial capital, may threaten the families who work and live surrounding palm plantations. Furthermore, from a structural level, families have to deal with biased and unfair regulations which undeniably make them much poorer and more suffered. This study aimed to analyze the vivid condition of smallholder families in the oil palm plantation context and how they deal with those challenges. Besides, this study also aimed to formulate some strategies to make them become a resilient family. This study used qualitative methods, by conducting FGDs and in-depth interviews with smallholder farmers of oil palm plantations as key informants in two different plantation areas in Indonesia; Lampung and Kalimantan.

Just Transition in Biofuel Development towards Low-Carbon Economy: Multi-Actor Perspectives on Policies and Practices in Indonesia

Justice and sustainability are the foundation of fair and equitable biofuel development. Policies and practices are consequently necessary to support a just transition towards a low-carbon economy. Therefore, this study aimed to understand multi-actor perspectives on policies and practices relevant to the just transition in biofuel development. Applying a socio-legal approach based on the JUST framework, this study focused on the Indonesian biofuel industry, which is primarily driven by crude palm oil (CPO) production. This study also added comparative perspectives from Thailand’s biofuel industry. The primary data were gathered from in-depth interviews and focus group discussions (FGDs), while the secondary data were from research, policy, and other government archives. Based on the results, oil palm plantations in Indonesia and Thailand are crucial for macroeconomic development. However, smallholder farmers in Indonesia, especially independent ones that do not join farmer groups, remain marginalised by the current regulations. In fact, many benefits from biofuel practices and policies accumulate disproportionately towards large corporations, while marginalised groups bear the costs. The Indonesian Sustainable Palm Oil (ISPO) certification that should induce market accessibility and competitiveness has not fully reached most rural farmers. Furthermore, various overlapping regulations and perplexing data differences exist from multiple ministries and administrative levels. Thus, palm oil stakeholders in Indonesia demand a dedicated institution for integrated regulation and monitoring of the industry, similar to the National Palm Oil Policy Committee in Thailand. The myriad of legal, political, socio-economic, and justice issues thus necessitates all hands on deck to ensure a just transition for all stakeholders of the Indonesian biofuel industry.

English

Livestock-oil palm plantations integration system is intended to improve farming efficiency, where agriculture not only plays a role as the primary producer of food but also as a producer of feed, fertilizer, energy, and other bioproducts, leading to a sustainable agricultural system. Smallholder farmers in Indonesia integrated Bali cattle and oil palm with extensive, semiintensive, and intensive management systems. This study evaluated the integrated system of oil palm and Bali cattle under different management systems regarding the characteristics of smallholder farmers, nutritional status, and weight gain of Bali cattle on smallholder farms. The study was conducted in the Regency of Central Bangka, Bangka Islands, Indonesia. The study included 108 Bali cattle grouped as calves, young, and adults. The observed variables included smallholder farmer characteristics, feed nutrients, feed nutrient consumption (Dry Matter (DM), protein, Ca, and P), feed digestibility, and body weight gain. A Randomized Block Design and analysis of variance for the obtained data were used in this experiment. Smallholder farmers implementing the integration of livestock-oil palm in Central Bangka Regency were dominated by inexperienced novice farmers. The majority of the farmer choose semi-intensive rearing management as this system produces compost as a by-product. The semi-intensive system also provides better feed quality for Bali cattle. Therefore, DM consumption in the semi-intensive system was higher than in other systems, especially in young bulls, heifers, and male and female calves (P<0.05). Thus, Bali cattle in the semi-intensive system had higher average daily gain than those in the intensive or extensive system. Therefore, it can be concluded that the semi-intensive management system is the best model in the Bali cattle-oil palm integration system in the rural dryland area, in accordance with nutritional status and the characteristics of smallholder farmers in Indonesia

Regulating Sustainable Coffee: An Analysis of Smallholder Farmers’ Participation in Certifications

Purpose: This paper presents the findings of a study conducted to identify the preference of smallholders to join coffee certifications for the purpose of sustainability performance. Our focus is to examine the smallholder coffee farmers’ participation in sustainability goals through voluntary certification. The study includes insights from different parts of the smallholder farmers in Indonesia, with a special focus on the coffee sector. Design/methodology/approach: In order to gain more clarity on the farmers’ preference on certification schemes, this paper comprises a qualitative method aimed to draw out of certification on the coffee sector. Findings: This study finds that the certification programmes are still in a vulnerable position to regulate sustainability, to protect the environment, and protect human rights beyond the state’s regulations. Research limitations/implications: This research does not aim to identify the benefits of certification schemes, but the conditions that have hindered the uptake of certification by smallholders and what might encourage them to participate in certification for sustainability purposes. Originality/value: This paper presents new information on smallholders’ preferences on certification participation in the coffee sector, and proposes significant factors that might encourage certification of the coffee sector in Indonesia.

Can Coffee Certification Reduce Poverty? Results from a Household Study of Smallholder Farmers in Indonesia

Sustainability certification are increasingly demanded in the global coffee trade, but its economic and poverty alleviation effects for smallholder farmers are still poorly understood. We study these effects using cross-sectional household data obtained from a survey of 320 farm households from four districts in the coffee-producing provinces of Lampung and Aceh in Indonesia. We combine a monetary expenditure approach with a non-monetary approach. Both approaches reveal information on the number of respondents that can be considered poor, as well as on the intensity of poverty experienced by them. In terms of non-monetary approach, we refer to multidimensional poverty index (MPI) that identifies deprivations in education, health and standards of living. In terms of monetary approach, we examine poverty gap index that measure coffee farmers’ expenditure lies below the poverty line. We compare between certified and conventional (non-certified) coffee farmers. The results show that economic benefits contributing to poverty alleviation can be gained from coffee certification. The differences in the value of poverty measurements between certified and conventional farmers are small but statistically significant. Certified farmers are found to be less frequently poor compared to conventional farmers. There is no significant difference on the intensity of poverty for both groups of smallholder farmers. Given these results, certification is not a highly recommended strategy for poverty alleviation among smallholder coffee farmers in Indonesia.

The Legality Of Cultivated Palm Oil, Research On The Readiness Of Small Holder Farmers In Indonesia To Produce Sustainable Palm Oil (ISPO) Is Reviewed

The Indonesian government is working to ensure the sustainability of the country's palm oil industry through the establishment of a sustainability standard called Indonesian Sustainable Palm Oil (ISPO) in presidential regulation no. 44 of 2020. The purpose of this study is to determine the value of smallholders' ability to comply with Indonesia Sustainable Palm Oil (ISPO) standards based on the legality of farmers' land in Indragiri Hilir. By comparing the legality of cultivated land applied by independent farmers, the audit method is used to conduct a quantitative descriptive analysis of conformity with ispo principles, criteria, and indicators. The legal status of smallholder farmers' land is incomplete, as the majority of oil palm plantations are located in KBK and the majority of land lacks a certificate but does have a letter of compensation.

Selection of high-yield maize hybrid under different cropping systems based on stability and adaptability parameters

Abstract The intercropping of maize with other food crops is a current solution to problems in food crop production and crop failures. The objectives of the study were to (i) select adaptive maize hybrids in intercropping as well as sole-cropping systems, and (ii) test the ideal cropping system to evaluate best hybrids for intercropping. This study used 12 maize hybrids with different genetic backgrounds. Planting was carried out for two seasons using four cropping systems. Hybrids were selected according to their adaptability and stability based on parametric, nonparametric, and multivariate analyses. The results showed that G10 had high yield for all cropping systems. G10 was also selected as an adaptive hybrid for sole-cropping, whereas G9 was selected as an adaptive hybrid for intercropping. The L5 and L4 were ideal environments for evaluating hybrids under different cropping systems. The selected hybrids should be evaluated and disseminated for small-holder farmers in Indonesia.

Flower Visitation Time and Number of Visitor Species Are Reduced by the Use of Agrochemicals in Coffee Home Gardens

Pollination services, from both wild and managed populations of insect pollinators, have degraded as a result of agricultural intensification. Whilst 75% of economically important crops depend on insect pollinators for cultivation, 40% of insect pollinator species are threatened with extinction. Pollination services must be preserved if there is to be enough food for a global population whose demand is expected to double, if not triple, by 2050. Pollinator diversity and pollinator efficiency have been found to increase as a result of wildlife-friendly farming practices (i.e., natural chemicals and fertilizers and agroforestry). We evaluated the presence of insect pollinators in 42 coffee home gardens in West Java, Indonesia. Via generalized linear mixed models, we found that number of visitor species (β = 0.418 ± SE 0.194, p = 0.031) and visitation time (β = 0.845 ± SE 0.308, p = 0.006) decreased as farms were more intensely managed, (i.e., used chemical pesticides), compared to fields using organic practices. As knowledge of pollination services is widespread amongst smallholder farmers in Indonesia and beyond due to the long-held tradition of beekeeping, these results will add to their existing knowledge and empower farmers to enhance resources for pollinator species through agroforestry and natural pest management. Although we found significant differences in pollination services provided in intensely managed and wildlife-friendly farms, chemical use can affect farms far beyond a particular area of production. Therefore, pollinator conservation must be applied at a landscape level and involve all stakeholders, including farmers, when making effective policies.

What Drives Climate Change Adaptation Practices in Smallholder Farmers? Evidence from Potato Farmers in Indonesia

The potato is the third most consumed crop globally after rice and wheat, but climate change has often disrupted its production. Therefore, adaptation practices are needed to maintain potato productivity. This study investigates the determinants of on- and off-farm climate change adaptation practices among smallholder farmers in Indonesia, considering adaptation intensity, which has not discussed in previous literature. The cross-sectional data were collected from 302 smallholder potato farmers in East Java, Indonesia, analyzed by a multivariate probit model to estimate the determinants. An ordered probit model was subsequently employed to understand the intensity factors. The findings indicated that the significant factors that affect farmers’ choice of on-farm adaptations were the farmers’ education, their participation in farmers’ groups, agricultural-related infrastructure, and agriculture output prices. Meanwhile, the off-farm adaptations were significantly affected by the farmers’ education, employed family members, agriculture-related infrastructure, and livestock ownership. The ordered probit model also suggested that participation in farmers groups and agricultural-related infrastructure were the most significant factors that encouraged adaptation. Therefore, adaptation planning should consider these factors to optimally improve farmers’ adaptation capacity.

The age and quality of pond bottom soil affect water quality and production of Pangasius hypophthalmus in the tropical environment

Pangasius hypophthalmus is the most cultured freshwater fish by smallholder farmers in Indonesia. One of the main challenges in the production is the highly weathered and infertile soils on the bottom of a pond that influences aquaculture productivity. This work investigated the effects of pond age on soil quality, water quality, benthic algae population, and P. hypophthalmus production. We carried out a field experiment in a randomized design with pond age of 4 levels: Ponds aged 0–5 years (P1), 6–10 years (P2), 11–15 years (P3), and 16–20 years (P4). The soil is a Typic Palaeudult (Ultisol), and fish were grown for three months. The results showed that the chemical soil quality parameters and soil organic matter content increased linearly with pond age, resulting in the enhancement of water quality parameters. The increase in nitrate and phosphate directly affected benthic algae richness. These, in turn, in the highest fish production in P3, 6.4 kg/m2, specific growth rate was 3.76 %/d, survival rate of 66.7%, and feed conversion ratio of 1.8%. Linear correlation coefficients indicated that the contents of total N, total P, and organic carbon in the bottom soil of the pond were related to the increase in phosphate, nitrate, and organic matter content in pond water. Total N content, total P, carbon organic matter, C/N ratio, and CEC value in pond bottom soil significantly correlated to Pangus fish production. C/N ratio, CEC value in pond bottom soil, and CO2 concentration in pond water significantly correlated to fish survival rate. Multiple linear regression indicated that fish production was significantly related to the pond age, water NH3, total alkalinity, and soil total P and C/N ratio (R2 = 0.99, P < 0.001). Increased soil C/N ratio caused a negative effect on fish production. The results suggested that old-aged ponds, with proper management, act as a nutrient sink, resulting in increased aquaculture production. The implementation of the best practices will benefit the Pangus culture in the tropical environment.

Problems identification of Arabica coffee commodities on traditional farming in Indonesia: A review

Arabica coffee is one of the plantation commodities that has an important role in Indonesia’s economic activities. Arabica coffee as one of the leading export commodities that contributes to the country’s foreign exchange. However, in reality the rate of growth in the value and volume of imports is greater than the growth of exports. This study aims to identify the problems of traditional Arabica coffee farmers in Indonesia. The results of a journal review show that some of the problems of smallholder farmers in Indonesia are low productivity, low farmer skills and knowledge, inadequate land use and climate, inadequate transportation facilities and infrastructure, coffee farming capital, market uncertainty and unstable selling prices, so that a strategy is needed to reduce and overcome these problems in order to improve the welfare of coffee farmers. The active role of the government is expected to be able to issue consistent policies to increase the competitiveness of Arabica coffee.

Climate change mitigation on tropical peatlands: A triple burden for smallholder farmers in Indonesia

The agricultural use and conversion of tropical peatlands is considered a major source of land-based greenhouse gas emissions. Thus, the protection and restoration of tropical peatlands has recently turned into an important strategy to mitigate global climate change. Little research exists that has investigated the impacts and dynamics that such climate mitigation efforts evoke in local communities living in and around peatlands. We present insights on this from Sumatra, Indonesia and use a climate justice lens to evaluate local outcomes. We show how an increasingly transnational network of state and non-state actors has become involved in developing new laws, policy programs and land-use agreements on Sumatra’s coastal peatlands, aiming at supposedly win–win low-carbon development pathways. We argue that such efforts are open to much of the same criticism that has been raised regarding previous policies and projects aimed at reducing GHGE from deforestation and forest degradation. These projects disregard local perspectives on development, fail to deliver the promised benefits and, through a reconfiguration of local land-use rights, reduce the capabilities of smallholder farmers to benefit from their land. In sum, our analysis suggests that recent policies and projects aimed at mitigating GHGE from tropical peatlands contribute to a redistribution of the global climate mitigation burden onto smallholder farmers in Indonesia. This occurs through their threefold assignment to protect forests, prevent fires and help restore degraded peatlands.

Oil palm cultivation, household welfare, and exposure to economic risk in the Indonesian small farm sector

AbstractThe massive expansion of oil palm in tropical regions has substantial implications for socioeconomic development. Several studies show that smallholder farmers benefit economically from cultivating oil palm. However, most existing studies examine short‐term impacts with cross‐sectional data, which has two disadvantages. First, issues of endogeneity are difficult to address with cross‐sectional data. Second, dynamic and risk effects cannot be analysed. We address both issues by using three waves of panel data from smallholder farmers in Indonesia and pseudo fixed effects panel estimators. We show that oil palm cultivation increases household living standards, measured in terms of annual consumption expenditures, by 13% on average. Moreover, we demonstrate that oil palm cultivation tends to reduce households' economic risk, measured in terms of potential decreases in living standard due to income variability. The risk‐reduction effect is evident despite fluctuating international palm oil prices and consequences for oil palm revenues and profits. Oil palm requires less labour than alternative crops, thus freeing family labour for other economic activities. We find that oil palm farmers are more involved in off‐farm activities, which helps to smooth income and consumption. Policy support may be required to address oil palm adoption constraints that some smallholders face. In addition, fostering the non‐farm economy and improving household access to lucrative off‐farm jobs are important for equitable rural development.

Fostering a Wildlife-Friendly Program for Sustainable Coffee Farming: The Case of Small-Holder Farmers in Indonesia

There is an urgent need for a global transition to sustainable and wildlife-friendly farming systems that provide social and economic equity and protect ecosystem services on which agriculture depends. Java is home to 60% of Indonesia’s population and harbors many endemic species; thus, managing agriculture alongside human well-being and biodiversity is vital. Within a community of ~400 coffee farmers in the province of West Java, we assessed the steps to develop a wildlife-friendly program until reaching certification between February 2019 and October 2020. We adopted an adaptive management approach that included developing common objectives through a process of stakeholder consultation and co-learning. We firstly investigated via interviews the expectations and the issues encountered by 25 farmers who converted to organic production in 2016. Their main expectations were an increase in income and an increase in coffee quality, while they had issues mainly in finding high quality fertilizers, reducing pests, and increasing productivity. We used this information to establish a problem-solving plan for the transition to community-wide wildlife-friendly practices. As part of the adaptive evaluation, we assessed the quality of coffee plantations before and after the implementation of coproduced actions. The quality of coffee significantly improved after our interventions to reduce the coffee berry borer, especially in the fields that started as inorganic and converted to organic. We uncovered additional issues to meet the standards for certification, including banning hunting and trapping activities and increasing coffee quality for international export. We describe the coproduced actions (agroforestry, conservation education, local law, organic alternatives) and phases of the program and discuss the potential barriers. We provide novel evidence of adaptive management framework successfully used to implement management actions and reach shared goals.

Formulating diets based on whole cassava tuber (

Context Formulating rations with high energy and protein feeds such as cassava tuber and gliricidia, is an important strategy to increase liveweight gain (LWG) of bulls and improve profitability of smallholder farmers in Indonesia. Aims Two on-farm experiments were conducted to evaluate the effect of increasing the supplementation level of a mixture of cassava (Manihot esculenta) whole root tuber powder and fresh gliricidia (Gliricidia sepium) on feed intake and LWG of Ongole and Bali bulls given fresh corn stover and elephant grass, respectively. Methods Two experiments were conducted, each with five treatments: a basal diet of fresh corn stover (Experiment 1 for Ongole bulls) or elephant grass (Experiment 2 for Bali bulls) fed ad libitum or this diet supplemented with a combination of cassava tuber (whole root tuber including peel, sun-dried and ground) and fresh, chopped gliricidia (1:1) on estimated dry matter (DM) basis, at DM levels of 0.4, 0.8, 1,2 and 1.6% liveweight (LW)/day. Each experiment was run for 18 weeks, consisting of a two week adaptation and 16 week experimental period. Parameters measured included basal DM intake, supplement DM intake, total DM intake, total water intake, faecal pH, daily LWG, feed conversion ratio (FCR) and income over feed cost (IOFC). Key results Increasing supplement level linearly (P &lt; 0.05) decreased basal diet intake, but linearly increased total DM intake and LWG (P &lt; 0.05) in both breeds. Basal diet DM intake was reduced at the rate of 0.43 kg/kg of supplement DM consumed for both Ongole and Bali bulls. Water intake and faecal pH were not affected (P &gt; 0.05) by increasing supplement intake. Inclusion of cassava tuber and gliricidia supplement up to 1.6% LW/day, increased total feed DM intake (up to 3.28 and 3.18% LW/day, for Ongole and Bali bulls, respectively) and LWG (maximum Ongole bulls 0.69 kg/day and Bali bulls 0.46 kg/day). Daily income over feed cost (IOFC) increased significantly (P &lt; 0.05) in association with increased supplement intake in both Experiments 1 and 2. Using the derived model without supplementation, the value of IOFC was only IDR 7802/day and IDR 7687/day, for Experiments 1 and 2, respectively. The highest IOFC was achieved at a supplement intake of 1.6% LW/day with values of IDR 13 949/day and IDR 12 543/day for Experiments 1 and 2 respectively. Conclusions The addition of a cassava tuber and gliricidia mixture up to 1.6% LW/day increased LWG and profit for smallholders fattening bulls. Implications Formulating a ration with cassava tuber and gliricidia can be economically beneficial in cattle fattening systems in Indonesia.

Biological assets as mudharabah-based loan collateral for smallholder farmers in Indonesia: a feasibility study

Lack source of fund is one of the critical issues being faced by smallholder farmers. Despite having teak trees in their yards, such trees as biological assets are not accepted as loan collateral for bank's loan. In average, smallholder farmers fulfil their daily needs by cutting down their teak trees of five years old for sale. This research explored the feasibility of postponing teak harvesting time and analyzed the financial impact. By postponing the harvesting time, it is expected that the growth of the diameter and height of the tree, thus increasing the volume, and the price increases will increase the value of the asset. The method being employed was enterprise budget in which the costs of maintenance, the growth of the trees, and the sales of the harvested trees over time were considered. For the valuation, a profit-sharing as a result of value increases due to harvesting delay is shared between the owner of the asset and the investor through mudharabah financing arrangement. The result suggests that the annual return for the investor (such as a bank) is well above the current interest on a loan, and, therefore, biological assets should be justified as collateral for a bank loan.

Farmer preferences in contracting with modern retail in Indonesia: A choice experiment

AbstractUnderstanding the preferences of smallholder farmers for contracting can help in making contracts more sustainable. This paper presents the results of a choice experiment (CE) among smallholder farmers in Indonesia to assess their preferences for accepting contracts with modern retail. The CE was based on attributes of actual sales transactions in modern retail and traditional retail channels. A total of 301 vegetable smallholder farmers participated, consisting of 173 farmers participating in traditional markets and 128 in modern retail markets. A random parameter logit model estimates that, in general, smallholders do not prefer contracting with modern retail over spot market selling in traditional retail channels. Most contract attributes are perceived as negative by smallholders. A willingness‐to‐accept analysis shows that farmers are critical of most contract attributes, particularly those related to quality requirements. Producer organizations (POs) reduce transaction costs and increase smallholders' preference toward contracts. Contract designs that reduce transaction cost, mitigate risks for farmers, provide fair prices, and involve POs are more likely to attract smallholders to modern retail channels. [EconLit Citations: D23, O13, Q13].