Encouraging rural economic growth through farmer institutions and transparency for income optimization
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Published:
Jul 21, 2024
Keywords:
Coffee, Farmer Institutions, Information Asymmetry, Profit Optimization
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Articles
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Abstract
This research aims to evaluate the role of farmer institutions in optimizing profits and increasing socio-economic development in rural areas, with a focus on Sumber Candik Hamlet, Jember Regency as one of the coffee producers. This research is based on the importance of access to information, capital, infrastructure and markets to encourage agricultural innovation and sustainability of the coffee plantation sector. The methodology used is an ethnographic approach, where researchers spent seven months observing, interacting and interviewing coffee practitioners in Sumber Candik Hamlet. Research findings show that the information imbalance between farmers and traders, as described in asymmetric information theory by Akerlof (1970), causes farmers to often sell their crops at low prices. Meanwhile, producers in the Jember area sell processed coffee at much higher prices. These results underscore the importance of strengthening farmer institutions and increasing access to information to create more efficient and fair markets and optimize farmer profits. Apart from that, this research also emphasizes the need for policies that encourage more equal relations between economic actors and increase transparency in policy making to reduce the dominance of large capital owners. Strategic steps such as improving infrastructure and better access to information are expected to support more sustainable growth in the agricultural sector and improve the overall welfare of farmers.
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How to Cite
Nurul Setianingrum, & Nurhidayat, N. (2024). Encouraging rural economic growth through farmer institutions and transparency for income optimization. Indonesia Accounting Research Journal, 12(1), 1–10. Retrieved from https://journals.iarn.or.id/index.php/Accounting/article/view/297
References
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Atabani, A. E., Mahmoud, E., Aslam, M., Naqvi, S. R., Juchelková, D., Bhatia, S. K., Badruddin, I. A., Khan, T. M. Y., Hoang, A. T., & Palacky, P. (2022). Emerging potential of spent coffee ground valorization for fuel pellet production in a biorefinery. In Environment, Development and Sustainability (Vol. 25, Issue 8). Springer Netherlands. https://doi.org/10.1007/s10668-022-02361-z
Bager, S. L., & Lambin, E. F. (2020). Sustainability strategies by companies in the global coffee sector. Business Strategy and the Environment, 29(8), 3555–3570. https://doi.org/10.1002/bse.2596
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Effendy, L. (2020). DEVELOPMENT MODEL OF FARMERS' INSTITUTIONS TOWARDS FARMERS' ECONOMIC INSTITUTIONS IN SINDANGKASIH CIAMIS DISTRICT. STIE Muhammadiyah Palopo Development Economics Journal, 6(1), 38–47. https://doi.org/10.35906/jep01.v6i1.492
Ellis, F. (1988). Peasant Economics Farm Household and Agrarian Development (1st ed.). Cambridge University Press.
Ferreira, J., & Ferreira, C. (2018). Challenges and opportunities of new retail horizons in emerging markets: The case of a rising coffee culture in China. Business Horizons, 61(5), 783–796. https://doi.org/10.1016/j.bushor.2018.06.001
Fischer, E., & Qaim, M. (2011). Linking Smallholders to Markets: Determinants and Impacts of Farmer Collective Action in Kenya. World Development, 40(6), 1255–1268.
Freedman, S., & Jin, G. Z. (2017). The information value of online social networks: lessons from peer-to-peer lending. International Journal of Industrial Organization. https://www.sciencedirect.com/science/article/pii/S0167718716302776
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Hewlett, P., & Wadsworth, E. (2012). Tea, coffee and associated lifestyle factors. British Food Journal, 114(3), 416–427. https://doi.org/10.1108/00070701211213500
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Kim, S. H., & Lee, S. A. (2019). The role of marketing communication mix on Korean customers' coffee shop brand evaluations. Journal of Hospitality and Tourism Insights, 3(3), 291–309. https://doi.org/10.1108/JHTI-07-2019-0097
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Luneto, R. (2018). Impact of Government Intervention on Increasing the Competitiveness of Gayo Coffee 2012-2017. Gajah Mada University.
Maclver, R. M. (1944). Society: A Textbook of Sociology (1st ed.). Farrar & Rinehart Inc.
Malik, H. (2015). Building Village Industries to Save the Nation (1st ed.). PT Publisher IPB Press.
Mhlanga, D. (2021). Financial inclusion in emerging economies: The application of machine learning and artificial intelligence in credit risk assessment [Inclusion financiera en economías emergentes: la application de Machine Learning e Inteligencia Artificial en Crédito Eval. International Journal of Financial Studies, 9(39), 1–16.
Pearce, J. A., & Robinson, R. B. (2016). Strategic Management. Salemba Four.
Poortinga, W., & Whitaker, L. (2018). Promoting the use of reusable coffee cups through environmental messaging, the provision of alternatives and financial incentives. Sustainability (Switzerland), 10(3). https://doi.org/10.3390/su10030873
Powell, D., & Goldman, D. (2020). Disentangling moral hazard and adverse selection in private health insurance ✩. Journal of Econometrics, xxxx. https://doi.org/10.1016/j.jeconom.2020.07.030
Soemardjan, S. (1962). Social Changes in Yogyakarta (1st ed.). Cornel University Press, Ithaca.
Son, J. H., Kim, J. H., & Kim, G. J. (2021). Does employee satisfaction influence customer satisfaction? Assessing coffee shops through the service profit chain model. International Journal of Hospitality Management, 94(February), 102866. https://doi.org/10.1016/j.ijhm.2021.102866
Stiglitz, J. E. (1989). American Economic Association Markets, Market Failures, and Development Author(s): Joseph E. Stiglitz Source: The American Economic Review , Vol . 79 , No. 2 , Papers and Proceedings of the Hundred and First Annual Meeting of the American Economics. 79(2), 197–203.
Stiglitz, J. E., & Weiss, A. (1981). Credit Rationing in Markets with Imperfect Information. The American Economic Review, 71(3), 393–410.
Tyler, A. A. (1986). Post-modern ethnography: From document of the occult to occult document (in Writing culture: The poetics and politics of ethnography) (J. Clifford & G. E. Marcus (eds.)). University of California Press.
Wibowo. (2007). Performance Management (1st ed.). PT Raja Grafindo Persada.
Wood, A., Tolera, M., Snell, M., O’Hara, P., & Hailu, A. (2019). Community forest management (CFM) in southwest Ethiopia: Maintaining forests, biodiversity and carbon stocks to support wild coffee conservation✰,✰✰,★,★★. Global Environmental Change, 59(December 2018), 101980. https://doi.org/10.1016/j.gloenvcha.2019.101980
Yu, Y., Kong, X., & Yu, Y. (2020). Robust Contract Designs: Linear Contracts and Moral Robust Contract Designs: Linear Contracts and Moral Hazard. August.
Anantanyu, S. (2011). Farmer Institutions: Their Role and Capacity Development Strategies. Sepa, 7(2), 102–109.
Aprianto, W. (2020). Kele Optimization Institutional Optimization of Pondoh Salak Farmers with Value Chain Analysis Pondoh Salak Farmers' Organization with Value Chain Analysis. TECHNOBIZ: International Journal of Business, 3(1), 19. https://doi.org/10.33365/tb.v3i1.660
Arrow, K. J. (1968). The Economics of Moral Hazard: Further Comments. The American Economic Review, 58(3), 537–539.
Atabani, A. E., Al-Muhtaseb, A. H., Kumar, G., Saratale, G. D., Aslam, M., Khan, H. A., Said, Z., & Mahmoud, E. (2019). Valorization of spent coffee grounds into biofuels and value-added products: Pathway towards integrated bio-refinery. Fuel, 254(February), 115640. https://doi.org/10.1016/j.fuel.2019.115640
Atabani, A. E., Mahmoud, E., Aslam, M., Naqvi, S. R., Juchelková, D., Bhatia, S. K., Badruddin, I. A., Khan, T. M. Y., Hoang, A. T., & Palacky, P. (2022). Emerging potential of spent coffee ground valorization for fuel pellet production in a biorefinery. In Environment, Development and Sustainability (Vol. 25, Issue 8). Springer Netherlands. https://doi.org/10.1007/s10668-022-02361-z
Bager, S. L., & Lambin, E. F. (2020). Sustainability strategies by companies in the global coffee sector. Business Strategy and the Environment, 29(8), 3555–3570. https://doi.org/10.1002/bse.2596
BPS. (2021). East Java Province in Figures. www.bps.co.id
Czarniawska, B. (2007). Shadowing: And Other Techniques for Doing Fieldwork in Modern Societies (O. Hakansson (ed.)). Copenhagen Business School Press.
Effendy, L. (2020). DEVELOPMENT MODEL OF FARMERS' INSTITUTIONS TOWARDS FARMERS' ECONOMIC INSTITUTIONS IN SINDANGKASIH CIAMIS DISTRICT. STIE Muhammadiyah Palopo Development Economics Journal, 6(1), 38–47. https://doi.org/10.35906/jep01.v6i1.492
Ellis, F. (1988). Peasant Economics Farm Household and Agrarian Development (1st ed.). Cambridge University Press.
Ferreira, J., & Ferreira, C. (2018). Challenges and opportunities of new retail horizons in emerging markets: The case of a rising coffee culture in China. Business Horizons, 61(5), 783–796. https://doi.org/10.1016/j.bushor.2018.06.001
Fischer, E., & Qaim, M. (2011). Linking Smallholders to Markets: Determinants and Impacts of Farmer Collective Action in Kenya. World Development, 40(6), 1255–1268.
Freedman, S., & Jin, G. Z. (2017). The information value of online social networks: lessons from peer-to-peer lending. International Journal of Industrial Organization. https://www.sciencedirect.com/science/article/pii/S0167718716302776
Gao, M., Yen, J., & Liu, M. (2021). Determinants of defaults on P2P lending platforms in China. International Review of Economics and Finance, 72, 334–348. https://doi.org/10.1016/j.iref.2020.11.012
Gebreeyessus, G. D. (2022). Towards the sustainable and circular bioeconomy: Insights on spent coffee grounds valorization. Science of the Total Environment, 833(April), 155113. https://doi.org/10.1016/j.scitotenv.2022.155113
Hewlett, P., & Wadsworth, E. (2012). Tea, coffee and associated lifestyle factors. British Food Journal, 114(3), 416–427. https://doi.org/10.1108/00070701211213500
Kaplan, S. (2011). Strategy and PowerPoint: An Inquiry into the Epistemic Culture and Machinery of Strategy Making. Organization Science, 22(2), 320–346. https://doi.org/10.1287/orsc.1100.0531
Kartini. (2018). Motivation of Coffee Traders in Development in Nanggroe Aceh Darussalam Province. Gajah Mada University.
Kim, S. H., & Lee, S. A. (2019). The role of marketing communication mix on Korean customers' coffee shop brand evaluations. Journal of Hospitality and Tourism Insights, 3(3), 291–309. https://doi.org/10.1108/JHTI-07-2019-0097
KPRI. (2017). Coffee SME Business Opportunities.
Lorraine E, G. (1989). Local Organizations and Leadership in Community Development” on Community Development in Perspective (J. A. Christenson & J. W. Robinson, Jr (eds.)). Iowa State University Press.
Luneto, R. (2018). Impact of Government Intervention on Increasing the Competitiveness of Gayo Coffee 2012-2017. Gajah Mada University.
Maclver, R. M. (1944). Society: A Textbook of Sociology (1st ed.). Farrar & Rinehart Inc.
Malik, H. (2015). Building Village Industries to Save the Nation (1st ed.). PT Publisher IPB Press.
Mhlanga, D. (2021). Financial inclusion in emerging economies: The application of machine learning and artificial intelligence in credit risk assessment [Inclusion financiera en economías emergentes: la application de Machine Learning e Inteligencia Artificial en Crédito Eval. International Journal of Financial Studies, 9(39), 1–16.
Pearce, J. A., & Robinson, R. B. (2016). Strategic Management. Salemba Four.
Poortinga, W., & Whitaker, L. (2018). Promoting the use of reusable coffee cups through environmental messaging, the provision of alternatives and financial incentives. Sustainability (Switzerland), 10(3). https://doi.org/10.3390/su10030873
Powell, D., & Goldman, D. (2020). Disentangling moral hazard and adverse selection in private health insurance ✩. Journal of Econometrics, xxxx. https://doi.org/10.1016/j.jeconom.2020.07.030
Soemardjan, S. (1962). Social Changes in Yogyakarta (1st ed.). Cornel University Press, Ithaca.
Son, J. H., Kim, J. H., & Kim, G. J. (2021). Does employee satisfaction influence customer satisfaction? Assessing coffee shops through the service profit chain model. International Journal of Hospitality Management, 94(February), 102866. https://doi.org/10.1016/j.ijhm.2021.102866
Stiglitz, J. E. (1989). American Economic Association Markets, Market Failures, and Development Author(s): Joseph E. Stiglitz Source: The American Economic Review , Vol . 79 , No. 2 , Papers and Proceedings of the Hundred and First Annual Meeting of the American Economics. 79(2), 197–203.
Stiglitz, J. E., & Weiss, A. (1981). Credit Rationing in Markets with Imperfect Information. The American Economic Review, 71(3), 393–410.
Tyler, A. A. (1986). Post-modern ethnography: From document of the occult to occult document (in Writing culture: The poetics and politics of ethnography) (J. Clifford & G. E. Marcus (eds.)). University of California Press.
Wibowo. (2007). Performance Management (1st ed.). PT Raja Grafindo Persada.
Wood, A., Tolera, M., Snell, M., O’Hara, P., & Hailu, A. (2019). Community forest management (CFM) in southwest Ethiopia: Maintaining forests, biodiversity and carbon stocks to support wild coffee conservation✰,✰✰,★,★★. Global Environmental Change, 59(December 2018), 101980. https://doi.org/10.1016/j.gloenvcha.2019.101980
Yu, Y., Kong, X., & Yu, Y. (2020). Robust Contract Designs: Linear Contracts and Moral Robust Contract Designs: Linear Contracts and Moral Hazard. August.
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