IDEAS home Printed from https://ideas.repec.org/a/ags/areint/364307.html

Driving forces for sustainable development of smallholder sugarcane agribusiness: a system dynamics approach to circular economy strategies

Author

Listed:
  • Wirjodirdjo, Budisantoso
  • Fudhla, Ahmad Fatih
  • Singgih, Moses Laksono
  • Ridho, Hafidz

Abstract

Purpose. This study aims to develop a dynamic model based on Circular Economy (CE) principles to evaluate the sustainability of smallholder sugarcane agribusiness. The model addresses socioeconomic and environmental challenges in developing countries, improving income stability, product diversification, job creation across all skills, and solid waste reduction. Methodology / approach. Smallholder agribusinesses are pivotal for rural economies but face sustainability challenges. This study addresses these challenges through CE principles. A System Dynamics approach was used to evaluate the impacts of two CE strategies (R4-Repair and R7-Repurpose). A 10-year simulation evaluates key indicators, including farmers’ income savings, product diversification, job creation, and solid waste reduction. Data was obtained from government reports, industry statistics, and stakeholder interviews. Results. The findings reveal that the R4 strategy reduces unexpected costs, stabilises income, and increases farmers’ savings by 37.5 %. Meanwhile, the R7 strategy generates the most significant impact, with a 17.4 % reduction in solid waste and the creation of new employment opportunities at various skill levels. Together, these strategies support socioeconomic and environmental sustainability. The model also demonstrates the feasibility of implementing early-stage circular strategies in smallholder systems with limited capital and infrastructure, offering a replicable framework for similar contexts. Originality / scientific novelty. This research offers a novel application of System Dynamics modelling in smallholder agribusiness, integrating CE principles to address the interplay between socioeconomic and environmental factors. The study fills a critical gap by focusing on small-scale farming systems in developing countries, providing a holistic evaluation of circular strategies. Practical value / implications. The proposed model provides actionable insights for policymakers and agribusiness stakeholders to design adaptive strategies, optimise resource use, and promote sustainable development. It is particularly relevant for agrarian economies facing similar socioeconomic challenges, fostering economic resilience and sustainability.

Suggested Citation

  • Wirjodirdjo, Budisantoso & Fudhla, Ahmad Fatih & Singgih, Moses Laksono & Ridho, Hafidz, . "Driving forces for sustainable development of smallholder sugarcane agribusiness: a system dynamics approach to circular economy strategies," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 11(2).
    • Handle: RePEc:ags:areint:364307
    DOI: 10.22004/ag.econ.364307
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/364307/files/2_Wirjodirdjo_article.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.364307?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Barlas, Yaman, 1989. "Multiple tests for validation of system dynamics type of simulation models," European Journal of Operational Research, Elsevier, vol. 42(1), pages 59-87, September.
    2. Mutanga, Shingirirai Savious & de Vries, Marne & Mbohwa, Charles & Kumar, Dillip Das & Rogner, Holger, 2016. "An integrated approach for modeling the electricity value of a sugarcane production system," Applied Energy, Elsevier, vol. 177(C), pages 823-838.
    3. Marandure, Tawanda & Dzama, Kennedy & Bennett, James & Makombe, Godswill & Mapiye, Cletos, 2020. "Application of system dynamics modelling in evaluating sustainability of low-input ruminant farming systems in Eastern Cape Province, South Africa," Ecological Modelling, Elsevier, vol. 438(C).
    4. Arman Hakim Nasution & Mucharromatul Aula & Dewie Saktia Ardiantono, 2020. "Circular economy business model design," International Journal of Integrated Supply Management, Inderscience Enterprises Ltd, vol. 13(2/3), pages 159-177.
    5. Amjad Khalili & Md Yusof Ismail & Muhammad Arif Ruzman, 2023. "Planned preventive maintenance effects on overall equipment effectiveness: a case study in Malaysian industry," International Journal of Productivity and Quality Management, Inderscience Enterprises Ltd, vol. 38(3), pages 332-360.
    6. Ahmad Fatih Fudhla & Budisantoso Wirjodirdjo & Moses Laksono Singgih, 2024. "Integrating Reverse Cycle Strategy in Circular Business Model Innovation: A Case Study," Foresight and STI Governance, National Research University Higher School of Economics, vol. 18(3), pages 84-103.
    7. Jazmin Campos Zeballos & Zita Sebesvari & Jakob Rhyner & Markus Metz & Vinicius Bof Bufon, 2022. "Drought Risk Assessment of Sugarcane-Based Electricity Generation in the Rio dos Patos Basin, Brazil," Sustainability, MDPI, vol. 14(10), pages 1-24, May.
    8. Walter R. Stahel, 2016. "The circular economy," Nature, Nature, vol. 531(7595), pages 435-438, March.
    9. Kirchherr, Julian & Reike, Denise & Hekkert, Marko, 2017. "Conceptualizing the circular economy: An analysis of 114 definitions," Resources, Conservation & Recycling, Elsevier, vol. 127(C), pages 221-232.
    10. Thapat Silalertruksa & Chanipa Wirodcharuskul & Shabbir H. Gheewala, 2022. "Environmental Sustainability of Waste Circulation Models for Sugarcane Biorefinery System in Thailand," Energies, MDPI, vol. 15(24), pages 1-21, December.
    11. Charlene Harripersadth & Paul Musonge, 2022. "The Dynamic Behaviour of a Binary Adsorbent in a Fixed Bed Column for the Removal of Pb 2+ Ions from Contaminated Water Bodies," Sustainability, MDPI, vol. 14(13), pages 1-15, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Govindan, Kannan, 2023. "How digitalization transforms the traditional circular economy to a smart circular economy for achieving SDGs and net zero," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 177(C).
    2. Chowdhury, Soumyadeb & Ren, Shuang & Richey, Robert Glenn, 2025. "Leveraging artificial intelligence to facilitate green servitization: Resource orchestration and Re-institutionalization perspectives," International Journal of Production Economics, Elsevier, vol. 281(C).
    3. Marianne Kuhlmann & Catharina R. Bening & Volker H. Hoffmann, 2023. "How incumbents realize disruptive circular innovation ‐ Overcoming the innovator's dilemma for a circular economy," Business Strategy and the Environment, Wiley Blackwell, vol. 32(3), pages 1106-1121, March.
    4. Filippo Corsini & Natalia Marzia Gusmerotti & Marco Frey, 2023. "Fostering the Circular Economy with Blockchain Technology: Insights from a Bibliometric Approach," Circular Economy and Sustainability, Springer, vol. 3(4), pages 1819-1839, December.
    5. P. J. Stephenson & Anca Damerell, 2022. "Bioeconomy and Circular Economy Approaches Need to Enhance the Focus on Biodiversity to Achieve Sustainability," Sustainability, MDPI, vol. 14(17), pages 1-20, August.
    6. Ka Yin Chau & Tian Huang & Massoud Moslehpour & Waqas Khan & Qasim Ali Nisar & Muhammad Haris, 2024. "Opening a new horizon in green HRM practices with big data analytics and its analogy to circular economy performance: an empirical evidence," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 26(5), pages 12133-12162, May.
    7. Manera, Maria & Quatraro, Francesco, 2025. "Mapping European Circular Economy Patents Using Advanced Natural Language Processing Models," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 202501, University of Turin.
    8. Risa Arai & Martin Calisto Friant & Walter J. V. Vermeulen, 2024. "The Japanese Circular Economy and Sound Material-Cycle Society Policies: Discourse and Policy Analysis," Circular Economy and Sustainability, Springer, vol. 4(1), pages 619-650, March.
    9. Sven Kevin van Langen & Renato Passaro, 2021. "The Dutch Green Deals Policy and Its Applicability to Circular Economy Policies," Sustainability, MDPI, vol. 13(21), pages 1-17, October.
    10. Peterson K. Ozili, 2022. "Circular Economy and Central Bank Digital Currency," Circular Economy and Sustainability, Springer, vol. 2(4), pages 1501-1516, December.
    11. Ozili, Peterson K & Opene, Francis, 2022. "The role of banks in the circular economy," MPRA Paper 113466, University Library of Munich, Germany.
    12. Gheorghe Sorin-Daniel, 2024. "A Review of the Information Technology and Operational Technology Convergence Using Internet of Things within the Circular Economy," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 18(1), pages 829-845.
    13. Carlos F. A. Arranz & Caleb Kwong & Vania Sena, 2023. "The effect of consumption and production policies on circular economy business models: A machine learning approach," Journal of Industrial Ecology, Yale University, vol. 27(4), pages 1089-1104, August.
    14. Abdulaziz I. Almulhim, 2024. "Toward a Greener Future: Applying Circular Economy Principles to Saudi Arabia’s Food Sector for Environmental Sustainability," Sustainability, MDPI, vol. 16(2), pages 1-22, January.
    15. Van Phuc Phan, 2024. "Is a Circular Economy Model for a Developing Country Feasible? A Discussion from the Perspective of Mekong Delta of Vietnam," Circular Economy and Sustainability, Springer, vol. 4(1), pages 63-74, March.
    16. Germán López Pérez & Isabel María García Sánchez & José Luis Zafra Gómez, 2024. "A systematic literature review and bibliometric analysis of eco‐innovation on financial performance: Identifying barriers and drivers," Business Strategy and the Environment, Wiley Blackwell, vol. 33(2), pages 1321-1340, February.
    17. Graziela Darla Araujo Galvão & Steve Evans & Paulo Sergio Scoleze Ferrer & Marly Monteiro de Carvalho, 2022. "Circular business model: Breaking down barriers towards sustainable development," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1504-1524, May.
    18. Sabina Scarpellini, 2022. "Social impacts of a circular business model: An approach from a sustainability accounting and reporting perspective," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(3), pages 646-656, May.
    19. Peterson K. Ozili, 2021. "Circular Economy, Banks, and Other Financial Institutions: What’s in It for Them?," Circular Economy and Sustainability, Springer, vol. 1(3), pages 787-798, November.
    20. Ilaha Abasli & Farhad Mukhtarov, 2025. "Old Habits Die Hard: How Narratives on Social Aspects of Circular Economy (Re)Produce Global Inequalities," Circular Economy and Sustainability, Springer, vol. 5(2), pages 1219-1244, April.

    More about this item

    Keywords

    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:areint:364307. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: http://are-journal.com/are .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.