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Farmer-Trader Relationships In The Indonesian Chilli Markets: The Role Of Relationship Quality In Modern And Traditional Supply Chains

Listed author(s):
  • Sahara
  • Gyau, Amos
  • Stringer, Randy
  • Umberger, Wendy J.

A decade of strong economic growth, rapid urbanization and liberalization of foreign direct investment (FDI) are transforming Indonesia’s food retail sector. Modern retail markets are reorganizing how food chains operate: requiring product homogeneity, grading, sorting, packaging, and supply consistency. Current literature suggests that improving relationship quality among food chain actors enhances efficiency. In Indonesia, chillies are a priority crop commonly produced by small holders and like many other cash crops several farmer-trader issues emerging in chilli supply chains. This paper attempts to segment chilli farmers according to their perception of the relationship quality with their buyers. Data was collected through a survey of 602 chilli farmers selling to the traditional market channel or supermarket channel in West Java, Indonesia. The segments/clusters are developed based on the perceptions of chilli farmers to three variables in relationship quality: trust, satisfaction and commitment. Price satisfaction and socioeconomic attributes are analyzed to provide further insights. Four distinct clusters are identified. The largest cluster (45% of respondents) considers they have a high level of relationship quality with their buyers/traders.

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Paper provided by Australian Agricultural and Resource Economics Society in its series 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia with number 100706.

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Date of creation: 2011
Handle: RePEc:ags:aare11:100706
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  1. Ricardo Hernández & Thomas Reardon & Julio Berdegué, 2007. "Supermarkets, wholesalers, and tomato growers in Guatemala," Agricultural Economics, International Association of Agricultural Economists, vol. 36(3), pages 281-290, 05.
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