Smallholder producers^ options to participate and capture value from agri-food value chain
Shaf Rijal Ahmad

Indonesian Agricultural Engineering Polytechnic,
Jl. Sinarmas Boulevard Nomor 01, Situ Gadung, Kec. Pagedangan, Tangerang, Banten 15338. Indonesia

Abstract

As an important sector in Indonesia, agriculture is facing serious challenges in the middle of agri-food value chain transformation. This sector is dominated by smallholder farmers who occupied less than 0,2 hectares of farm area, have poor education and skills, and are in the middle aged-old group. Thus, it may hamper the development of agriculture as it is difficult for these farmers to improve their business capability. It can be seen from the Gross Domestic Product (GDP) that tend to decrease annually. Meanwhile, scholars argued that the agri-food value chain transformation led to a better opportunity for farmers to capture more benefit from the emerging value chain. On the other hand, the emerging value chain also present more barriers that may not be addressed by smallholder farmers. This situation led to a question, what are the options for smallholder farmers to capture value from the emerging value chain system and how? This paper presents and discuss findings from studies in the area of agri-food value chain, includes options for smallholder farmers to participate within the value chain system and how, so that they can capture more value from it. A combination of market upgrading, process upgrading, and upgrading value governance can be options for smallholder farmers to participate within the transformation. However, these strategies cannot be achieved by smallholder alone. It required intervention from the external environment such as infrastructures, financial access and legislation as well as external agents from government, Non-Government Organisation, research agency, and private sectors.

Keywords: Agriculture, value chain, value upgrading, smallholder farmers

Topic: Food Supply Chain and Agribusiness