Stepping up to market participation of smallholder agriculture in rural areas of Indonesia

Purpose - The purpose of this paper is to analyse factors that determine farmers’ intention to commercialise vegetable-based agribusiness ventures in rural areas and assess the effect of commercialisation on farmers’ income. Design/methodology/approach - The study used a regression approach. Market participation and farmers’ income were hypothesised to be dependent on other external factors. This study employed data compiled from a quantitative survey of 357 farm households located in four major vegetable producing regions of rural East Java and Bali, Indonesia. Findings - Results indicate that household attributes, business environment, supporting facilities and farm characteristics determined farmers to commercialise vegetable farming. Access to credit, seed technology and farm site played high contribution to the market participation. Ultimately, commercial vegetable farming provides an economic advantage regarding increased income. Land fragmentation and status of landholding were identified to influence the net revenue of vegetable farming. Research limitations/implications - This study has a limitation concerning the number of samples and the availability of data and information. The number of samples is 357 which is about 4 per cent of the total population. Practical implications - Establishment of vegetable agribusiness terminals with all market infrastructures, adequate access to market information, credit and human capital investment through training and extension services are also required, will boost market participation. Re-structuring land ownership might be the best step to augment farmers’ income, through consolidation of fragmented fertile lands devoted to intensive vegetable farming. Originality/value - This study was purposely conducted in rural areas where there were subsistence farmers, as this is to improve farmers’ income by commercialising vegetable crops. A novel feature of this finding is the role of access to credit in the commercialisation of vegetable farming and the impact of landholding status on the profitability of intensive farming of high-valued vegetables.