Contract farming refers is to carry out the agreement between the buyer and the farmer to reduce risk for both parties. Red chili is rotten, damaged, and has a large shrinkage, causing production, quality and price risks. The study provide an empirical analysis of the impact of contract farming on chili cultivation and postharvest practice. The field survey was conducted in Magelang District as the one of the production centers of red chillies in West Java. Data collected from 40 farmers for contract and 45 farmers for noncontract. The results of the study indicated that the cultivation and post-harvest practices on contract farmers are better in quality, as well as in quantity compared to non-contract farmers. In contract farming, cultivation and post-harvest practices done by farmers are controlled by growers as representatives of the company. Tight control over the products produced by farmers generates not only for the better quality, but also the increase chili farm productivity. Contract farming is recomended to apply other agricultural commodities, specially for high risk commodity which has wid price fluctuation, high quality variation, and susceptible to climate changes.
Contract farming is a price control through the agreement of sale arrangement between farmer and firm taken before the starting of production process. Red chili price has a great fluctuation due seasonal production. The objective of the study is to analyze the influence factors red chili price on contract farming. The study compares the constraints on participation, and the impact to the price of red chili between contract and non-contract of farmers. The study carried out in Magelang District, Central Java Province on June to August 2019. Survey method was used with purposive sampling method to 45 respondent of non-contract farmers and 40 respondent for contract farmer. The data analysis used were statistical t-test and coefficient of variation. The results of the study indicated that farmer with contract farming has the minimum price of IDR 9000 per kg and increasing following market price, while the selling price of non-contract farming based on the market price which always fluctuated. Factors affect contract farmers are offering fixed price, and market guarantee while the non-contract farmers are least of information about contract farming. Contract farming should be promoted to sustain chili production and farmer income.
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