Analysis of Contract Farming Partnership for Sustainable Supply of Tobacco (a Case Study on the Integrated Production System Program of PT. HM Sampoerna Tbk. - Indonesia)

Susilowati, Kartika Ds; Rachmi, Asminah; Riwajanti, Nur Indah

doi:10.14419/ijet.v7i4.15.22993

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“…The imbalance of power between farmers and companies is seen as not benefiting farmers. This can be seen from the dominance of buyers in determining the price, quantity and quality of commodities produced, planting and harvesting schedules, technology used and so on without involving the participation of farmers [7].…”

Section: Introductionmentioning

confidence: 99%

Critical Analysis of Contract Farming Practice in East Java - Indonesia

Susilowati¹,

Riwajanti²,

Rachmi³

2020

Proceedings of the 1st Annual Management, Business and Economic Conference (AMBEC 2019)

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This study explored the technical implementation of the contract farming partnership which had been done by farmers and their partner companies in East Java, and identifying issues and benefits of partnership for both parties This study employed an interpretive research design, following a post-positivist paradigm. The data were collected by means of indepth interviews, observation and document study and were analyzed using the key tenet of Martin Heidegger's interpretive phenomenology. The interpretive process was achieved through hermeneutic circle to understand how individuals involved in the program interpreted the program including their own experiences as well as their interactions with other parties. The results of the study show that the created contract farming partnership generally has positive effect on farmers in the form of increased income, access to market, access to credit and technology, increased ability to manage risk, employment opportunities for indirect family members, empowerment of women and development successful business culture. Nevertheless, it was also evidence that contractual farming has negative consequences for farmers, such as high dependency, under-age employment and cooptation of land use. The results from the study have direct relevance to policy makers in Indonesia, especially those that have been implemented contract farming and to agribusiness companies seeking contractual relationships for commodity production.

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Section: Introductionmentioning

confidence: 99%