Participation in High-Value Agricultural Markets

Markets for High-Value Commodities in Indonesia

Rapid economic growth in Indonesia has led to a rising demand for food quality and food safety, as well as the growth of supermarkets. It is not clear how these shifts in food demand will affect small-scale farmers. Will they benefit from supplying these growing markets for quality food, or will they be marginalized by their inability to meet the quality and quantity requirements of large-scale retailers? The Australian Centre for International Agricultural Research (ACIAR) is funding a study on the transformation of markets for high-value agricultural commodities in Indonesia. The project is being led by the International Food Policy Research Institute, in collaboration with the University of Adelaide (UA), Michigan State University (MSU), the Centre for Agricultural Policy and Agribusiness Studies (CAPAS) at Padjadjaran University, and the Indonesian Centre for Agriculture, Socio-Economic and Policy Studies (ICASEPS).

The project is implementing farmer surveys in selected high-value commodities, including chillies, mango, mangosteen, and shrimp. In addition, rapid reconnaissance appraisals and formal surveys of traders are being used to study the marketing channel. Finally, the project is implementing an urban consumer survey to study the factors influencing the choice of retail outlets and the share of different types of food purchased at modern retail outlets.

In addition to the research output, the project has a strong capacity development component. Several Indonesian students at the University of Adelaide are involved in the project and will use the data collected for their dissertation research. In addition, the project has offered short training courses and informal training in sampling, data entry software, and analytical methods.

The project has five specific objectives:

  • Identify the determinants of the changes in demand that drives the transformation of food supply chains.
  • Examine and quantify the trends in the restructuring of food supply chains for high-value commodities.
  • Improve understanding of the determinants and outcomes of the participation of farmers in modern market channels for high-value commodities compared to traditional market channels.
  • Identify policies and programs that would promote the competitiveness and inclusiveness of the transformation of high-value supply chains.
  • Build research capacity in Indonesian institutions.