Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan
Vol 24, No 1 (2023): JEP 2023

The Sustainability of Contract Farming Model: A Case Study of an Agribusiness Company

Eka Nurjati (Research Center for Behaviour and Circular Economic, National Research and Innovation Agency)
Fransisca Susanti Wiryawan (School of Business, IPB University)



Article Info

Publish Date
30 Jun 2023

Abstract

The benefits of the agricultural partnership for companies are achieving supply continuity and quality. Meanwhile, partner farmers get price guarantees and marketing certainty. However, several aspects threaten sustainability. As a case study of PT SSS, this research used qualitative descriptive analysis. The results of the situational analysis show that the performance of PT SSS in 2021 is positive as reflected in the sales, profits, market share, and additional workforce, while the performance of partner farmers also is positive during the partnership with the company. There are two partnership patterns adopted by PT SSS, i.e. the plasma core and the trading partnership. In the plasma core partnership, the partner company is obliged to accommodate the partner farmers’ harvests according to the agreed quantity and price and the company provides agricultural input credit. Trade partnerships are carried out if the supply of plasma core partnerships is not met. Problem analysis based on the fishbone method includes four dimensions, i.e. economic, social, environmental, and governmental. The policy implications needed are: 1) Strengthening the commitment to continue mutually beneficial partnerships, 2) Written partnership contracts containing rights and obligations, rewards, and punishments, 3) Establishment of farmer insurance, activation of farmer groups, and mentoring and counseling programs, 4) Adoption of more environmentally friendly technology and improvement of farm’s and company’s efficiency, 5) The adoption of innovation in marketing, products, and methods/processes/production techniques for PT SSS, 6) Government’s commitment to reconsider land conversion, 7) Coordination with the government regarding the accessibility and affordability of subsidized fertilizers. Both the partner farmers and the company are committed to continuing contract farming, but there are technical aspects that need to be followed up and require the commitment of various stakeholders.

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Journal Info

Abbrev

JEP

Publisher

Subject

Economics, Econometrics & Finance

Description

Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi dan Pembangunan is a scientific journal that contains the results of theoretical research and studies on economic and development issues. Managed by Department of Development Economics, Faculty of Economics and Business Universitas Muhammadiyah ...