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Identification of Obstacles and Drivers of Smallholder Rubber Farmers to Become Members of A Processing and Marketing Unit in Indonesia

Mirza Antoni and Hiromi Tokuda

Applied Economics and Finance, 2019, vol. 6, issue 2, 79-85

Abstract: The low quality of Indonesian smallholders¡¯ rubber material has encouraged the government to make a policy to establish Processing and Marketing Units (PMUs). However, after 10 years of running the policy, the number of smallholder rubber farmers who are members of a PMU is still very small, even though by becoming a member of a PMU, farmers¡¯ income increases as a result of rising prices. There have been no studies of the reasons why smallholders have not joined as members of a PMU. Therefore this study tries to discern these reasons and PMUs¡¯ performance. The study population comprised 240 smallholders, half of whom represented PMU members and the other half non-members. These were interviewed to record the smallholders¡¯ reasons to join or not join a PMU in South Sumatera Province, the largest rubber production area in Indonesia. Constraints for smallholders to join a PMU include already having a customer middleman, debt with the middleman, and the distance from the farmer¡¯s house to the middleman¡¯s house. Major supports for smallholders to join a PMU include the rubber material price, easily procured support from the government, and the distance of the farmer¡¯s house. PMUs¡¯ performance did not significantly affect the participation of farmers in becoming or not becoming members. Even though PMUs¡¯ performance was good, the interest of smallholders in becoming PMU members did not increase.

Keywords: smallholders; customer; rubber material; middleman; PMU; PMU performance (search for similar items in EconPapers)
Date: 2019
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Handle: RePEc:rfa:aefjnl:v:6:y:2019:i:2:p:79-85