Chilli production and adoption of chilli-based agribusiness in Indonesia

Purpose - – Chilli plays an important role in the Indonesian economy through its multiplier effect. The recent rapid growth of chilli production in Indonesia can be explained by the development of agricultural and communication technologies and improved market infrastructure. The purpose of this paper is to analyse factors that affect farmers’ decisions to adopt chilli-based agribusinesses. Intensive chilli farming, as a part of agricultural commercialisation, is considered a technological package that is more profitable but also more input- and labour-intensive than the production of rice or other cereal crops. Design/methodology/approach - – This study used a logit model to estimate the farmers’ decision function. Personal characteristics, technical factors and business environment were hypothesised to influence farmers’ decisions to adopt intensive chilli farming. Data for this study were compiled from surveys conducted during 2009-2011. The surveys interviewed 300 farmer households in three main chilli producing regions of Java, Indonesia. Findings - – The results indicate that younger farmers, and also farmers with more experience, were more likely to adopt chilli farming. Availability of chilli production technology and the use of mobile phones prompted farmers to adopt chilli farming. Access to vegetable markets, credit, and market information were other factors driving farmers’ decisions to take up chilli production. Most farmers were motivated to grow chilli to increase their incomes. Ecological factors were also the reasons. Research limitations/implications - – The sample for this research is quite low. However, the sample was drawn from representative potential chilli production areas in Indonesia. Originality/value - – There is room to increase the number of chilli-based agribusinesses in Indonesia. Intensive chilli farming should be introduced to young farmers and those with experience in vegetable production. Farm credit, market information, and agronomic technologies should be made more available and accessible to farmers. Strengthening communication networks among farmers through the use of mobile phones is the best way to encourage farmers to adopt intensive chilli farming. Vegetable markets should be established in potential chilli producing regions.