Other Agriculture Study

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Addressing the Aggregation and Coordination Problems in Smallholder-based Value Chains

(World Bank, Washington, DC, 2018) Shepherd, Andrew W.

Smallholder production predominates in many areas of primary food production in Indonesia. Yet, outside of oil palm and poultry, contract farming is rare as are other forms of collective action or vertical coordination. Fragmented production and market interfaces give rise to high transaction costs and problems in matching supply with downstream or consumer requirements. Yet, there is a growing body of international experience promoting multiple models to help realize some economies of scale within smallholder-based production systems and effectively addressing the aggregation and market-matching problems. These include different forms of joint farming operations, shared services, farmer organizations, contracting arrangements or partnerships with agro-enterprises, and other models. Their suitability and need for public enabling support varies depending upon the underlying circumstances. This note synthesizes experiences, lessons learned, and success factors with potential relevance for Indonesian staple food crop and horticultural production.
Sustainable Management of Agricultural Research and Technology Dissemination (SMARTD) : A Strategic Framework

(Washington, DC, 2008-06) World Bank

Revitalizing agriculture is critical for rural Indonesia's economic prosperity. Historically, Indonesia's dramatic poverty reduction was driven by progress in agriculture and agriculture continues to be a potent driver of growth and poverty alleviation. Agricultural sector growth strongly induces non-agricultural sector growth in rural areas, particularly through demand for locally produced and services. Agricultural sector productivity growth (along with price changes) has remained the most important way out of poverty. To shift agriculture along these dimensions, Indonesia needs to transition from its current and ineffective public stance, growing subsidies and selective output protection, to a more aggressive provision of public goods and services that build support systems for farmers to achieve continuous productivity gains. This will require an enabling agriculture policy environment, significant improvement in the delivery of services, agricultural research and extension in particular, and supporting enabling investments, which will encourage small farmers to move to high value agricultural activities. This will boost employment and raise incomes in rural areas while creating a bigger rural market with greater trade and investment opportunities.
Sustainable Management of Agricultural Research and Technology Dissemination (SMARTD) : A Strategic Framework

(World Bank, Washington, DC, 2008-06) World Bank

Revitalizing agriculture is critical for rural Indonesia's economic prosperity. Historically, Indonesia's dramatic poverty reduction was driven by progress in agriculture and agriculture continues to be a potent driver of growth and poverty alleviation. Agricultural sector growth strongly induces non-agricultural sector growth in rural areas, particularly through demand for locally produced and services. Agricultural sector productivity growth (along with price changes) has remained the most important way out of poverty. To shift agriculture along these dimensions, Indonesia needs to transition from its current and ineffective public stance, growing subsidies and selective output protection, to a more aggressive provision of public goods and services that build support systems for farmers to achieve continuous productivity gains. This will require an enabling agriculture policy environment, significant improvement in the delivery of services, agricultural research and extension in particular, and supporting enabling investments, which will encourage small farmers to move to high value agricultural activities. This will boost employment and raise incomes in rural areas while creating a bigger rural market with greater trade and investment opportunities.