Red Chili Agribusiness and the Risks Faced by the Farmers

Abstract

Red chili is a commodity with high economic value, yet it has high risks. It can be observed from the price fluctuation as a result of the unstable supply, while it has a high demand from the consumers. In red chili agribusiness, farmers are one of the actors who play a role in the on-farm sub-systems, but their performance is affected by other sub-systems. Therefore, it is important to study the level of the risks, the sources of the risks, and the weakest sub-system in the red chili agribusiness. This research was conducted in Sukalaksana Village, Banyuresmi District, Garut Regency, which is one of the red chili production centers in Indonesia. The research was performed using a survey method with a descriptive analysis technique and a risk analysis. The results showed that the red chili farming possesses high risks, shown by the coefficient of variation (CV) of production risk (CV = 0.69), cost risk (CV = 1.25), and income risk (CV = 2.11). The main source of risks in the red chili farming is weather changes, which make the chilies very prone to pests and diseases. Meanwhile, the weakest sub-system in the red chili agribusiness is marketing sub-system because the farmers have to face a monopsonistic market, namely a middleman, which creates an income risk. Therefore, the farmers need assistances to perform risk mitigation, and there have to be institutional supports to increase their bargaining position.

Disruption to Supply Chain of Red Chili

“…Even though farmer knew the higher price of chili in the market, they confessed their reluctant to sell the product to the market besides the commitment to sell chili to middleman. This finding related to Karyani et al [3] stated in their study of large red chili. They said that the farmers find it troublesome to transport and bear transportation costs if the chili is sold directly to the market.…”

“…In the meantime, the puniest subsystem in the red chili business has been marketing sub-system. [3], This is happened since the farmers ought to deal with a monopsonistic market, namely the middlemen, which generates a revenue risk. For that reason, it is necessary to support farmers to enact risk mitigation, and there should be institutional supports to buildup farmers' trading standpoint.…”

Strategic Food Risks – Chili’s Agrosystem Perspective

“…The supply chain operators involved in the distribution play an imperative practice in the chilli agrosystem's effectiveness (Novitasari and Setyawan, 2019;Indriani et al 2020). Chili is at high risk differentiated by a drastic price increase if there is a chilli shortage (Hidayat, 2017;Sitthisuntikul et al 2018;Mariyono, 2018;Karyani et al 2020). Furthermore, chili producers must operate quality management to produce a quality product and gain market security (Kumashiro et al 2015;Yin and Wang, 2017).…”

Development of Fuzzy-Based Smart Drip Irrigation System for Chili Cultivation

“…Chili plants planted and harvested at the proper season will produce plants of good quality, which will affect their selling price [7]. The chili selling price is also determined by various factors such as market demand [8], weather conditions [9], and planting costs [10][11] . Weather factors such as rainfall [12], humidity [13], temperature [14], and intensity of sunlight [15] also significantly affect the growth of chilies.…”