1
ENTREPRENEURSHIP CAPACITY AND SMALLHOLDER COFFEE
AGRIBUSINESS TOWARD FARMER INDEPENDENCE
Introduction:
Indonesia is the world's fourth coffee producer after Brazil, Vietnam and Colombia
(MOA, 2019, ICO 2020) and coffee is one of the leading commodities in trade and plays an
important role in the national economy (Wahyudi et al. 2016). Most (95 percent) of the
coffee plantation sector in Indonesia is managed by smallholder farmers who are still
traditional, small-scale and classified as low-income (Aklimawati et al. 2015; Andriani et al.
2012). This coffee agribusiness still faces many obstacles both at the upstream and
downstream le v e l s . These constraints can be seen from the level of productivity and
quality of production is still low, the use of processing technology is still minimal, post-
harvest and access to marketing institutions is also still limited (Santoso et al. 2013;
Aklimawati et al. 2014; Hafif et al. 2014).
Mulato and Widyotomo (2002) revealed that 80 percent of national coffee production
is sold primary (bean/cerry form) and only 20 percent is processed further (sold in secondary
forms including roasted coffee, ground coffee, instant coffee and several other derivative
products). One of the efforts to increase added value and income with secondary and tertiary
processing efficiently and creatively with an entrepreneurial approach and integration of
upstream-downstream agribusiness systems (such as roasted coffee, powder, instant, liquid
and even processed with diversified spices and other forms of products) (Aklimawati et al.
2015, Ruben, Fort, 2012).
Coffee agribusiness management still faces many challenges such as cultivation
techniques that are not in accordance with good agricultural practices (GAP), low
productivity and value added, weak farmer institutions, and limited capital (Titisari, 2016).
According to Wahyudi et al. (2016) the smallholder plantation sector still faces considerable
problems and challenges. Problems such as weak access to capital, less productive plants,
weak agribusiness capacity of farmers, underdeveloped processing (less farmer
independence, low added value) and institutions are still not optimal. Environmental and
food safety issues are also obstacles in obtaining international standardization and
certification of plantation products (MOA, 2019). Coffee farmers' production needs to obtain
certain certification labels, so that it can be exported and compete in international markets
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such as specialty and organic coffee labels to get premium prices, so as to increase farmers'
income (Bolwig et al. 2009, Sick, 2008; Mendez et el. 2010; Tellman, 2011).
Indonesia's coffee plantation area is 1,252,826 or 1.25 million hectares with
Indonesian coffee production reaching 756,051 thousand tons. As much as 73.06 percent is
robusta coffee while the remaining 26.94 percent is arabica type coffee. As much as 95.40
percent is cultivated by community-owned plantations (PR) while the rest is cultivated by
large private plantations (PBS) of 2.47 percent and large state-owned plantations (PBN) of
2.24 percent. (Director General of Plantations, 2019). Generally, coffee farmers still sell
their products in the form of primary processing (dry bean coffee) (Wahyudi et al. 2016,
Mulato and Widyotomo, 2002). This condition occurs because coffee farmers are still weak
in innovation and diversification of processed coffee products according to domestic and
international market demands, so that farmers' market access is still limited (Ministry of
Industry, 2009). Even according to the results of Aklimawati's research (2017), the coffee
market structure is close to monopsony and oligopsony competition, so that farmers lack
bargaining power in marketing production.
Coffee productivity and quality are still not optimal because the capacity of farmers
and their families to implement Good Agriculture Practice (GAP) is still low (MOA, 2019).
This condition has an impact on the low quality and price level received by farmers. This
indicates that the entrepreneurial and agribusiness capacity of coffee farmers is still low and
not fully independent (Prawiranegara, 2016; Wibowo et al. 2012; Managanta et al. 2018;
Effendi, 2012). Strengthening coffee farmers' agribusiness entrepreneurship capacity
through plantation extension activities towards independent farmers is important and should
be prioritized to increase their income and welfare (Aklimawati et al. 2015; Sick, 2008;
Ruben and Fort, 2012; Hafif et al. 2014).
The contribution of the plantation subsector in GDP is around 35 percent or first in the
Agriculture, Livestock, Hunting and Agricultural Services sector. This subsector is a
provider of raw materials for the industrial sector, absorbs labor and earns foreign exchange.
1,860,488 family heads and a workforce of 50,680 people (Directorate General of
Agriculture, 2019). The large number of coffee farmers is a potential and strength if it can be
managed properly. In general, the scale of business is still inefficient because the national
average management area is less than 1 hectare per farmer family head (ideally around 2.7
ha), thus becoming a fundamental problem in the development of coffee agribusiness in
Indonesia (Wahyudi et al. 2016).
The potential for the development of the processed and specialty coffee industry in the
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country and for export orientation is still very good, considering that the average coffee
consumption of Indonesian people is still 1.1 kg per capita / year. This amount is far below
coffee importing countries such as the USA 4.3 kg, Japan 3.4 kg, Austria 7.6 kg, Belgium
8.0 kg, Norway 10.6 Kg and Finland 11.4 kg per capita/year (Ministry of Agriculture, 2019).
The development of arabica coffee productivity tends to be higher than robusta coffee
productivity, which averaged 785.28 kg/ha while robusta coffee only amounted to 693.32
kg/ha. In terms of growth, Arabica coffee productivity experienced a higher average increase
of 3.24 percent per year while Robusta coffee productivity only increased by an average of
0.65 percent per year. The productivity of Indonesian coffee commodities in general is still
quite low at 799 kg/ha. Large State Plantations amounted to 849 Kg/Ha/year followed by
Large Private Plantations of 810 Kg/Ha/year and People's Plantations of 798 Kg/Ha/year.
The productivity of smallholder plantations is 0.74 tons/ha (27 percent of its potential of 3
tons/ha), (No. 7 in ASEAN) far from other countries such as Vietnam with an average of
2.36 tons/ha. Total coffee production is 639,305 tons (24 percent of its potential of
2,716,964 tons) (Director General of Plantations, 2019).
Robusta coffee production centers in Indonesia, based on the average data of the last
five years, are the provinces of South Sumatra, Lampung, Bengkulu, East Java, and Java.
Central. East Java is the center of coffee development in Indonesia. The total area of coffee
plantations in East Java is 109,758 ha with a production of 64,529 tons. The number of
coffee farmers in East Java is 338,776 households and the employment of 47,249 people.
Productivity level is 0.793 tons/ha. Approximately 66 percent of coffee plantations in East
Java are managed by the people, 16.30 percent by state plantations and 17.70 percent by
private plantations.
Coffee plantations in East Java are located in 22 districts/cities. The main centers are
in three areas, namely Malang Regency, Bondowoso Regency and Jember Regency. The
total coffee area of Malang Regency is 15,085 ha, coffee production is 10,284 tons and
productivity is 805 kg/ha. Bondowoso Regency has a coffee area of 5,526 ha, production of
3,452 tons and productivity of 689 kg/ha. Furthermore, Jember Regency has 4 ,942 ha of
coffee area, production
3,015 tons and a productivity of 812 kg/ha (Directorate General of Plantation, MOA, 2019).
Robusta coffee in East Java covers 51,321 ha, production is 31,950 tons and
productivity is 778 kg/ha. The number of Robusta coffee farmers is 143,299.
However, Arabica coffee in East Java covers 21,289 ha, produces 8,105 tons and has a
productivity of 739 kg/ha. The number of Arabica coffee farmers is 194,024 households
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(Ditjenbun Kementan, 2019). Furthermore, in these coffee development centers there are
several differences in characteristics both ecologically and socio-culturally. Bondowoso
Regency is a highland area that is the center of Arabica coffee development, the majority of
farmers are Madurese, and has received Geographical Indication (GI) and Rainforest
Alliance certificates. Malang Regency is the center of robusta coffee development in
lowland and mediumland areas, with Javanese farmers as the majority, and has also received
national organic and 4C (Common Code for the Coffee Community) certifications.
Coffee productivity needs to be increased to meet the needs of domestic coffee
consumption (an average of 500-800 grams/capita/year). National consumption has
continued to increase quite significantly over the past ten years, namely 10 percent
compared to world coffee consumption of only about 2.5 percent per year (Wahyudi et al.
2016). The Indonesian Coffee Exporters Association (AEKI) (2007) stated that most coffee
production, nearly 67-75 percent, is for export and the rest is for the domestic market.
Coffee farmers in facing the global era need to strengthen their entrepreneurial and
agribusiness capabilities. Farmer capacity is a condition that shows the ability of individual
farmers to carry out their roles in accordance with their status so as to develop personal
potential, manage agricultural resources, and interact with others in an agricultural
community (Anantanyu, 2009). Wahyuni et al. (2017) concluded that the capacity of
farmers in agribusiness is influenced by the dynamics of the group. The capacity of farmers
in farming in the category is still low to moderate (Listiana, 2017; Siti Aminah, 2015;
Fatchiya, 2010). Furthermore, the results of research by Susilo (2013) that agribusiness
institutions are important to strengthen food security and the welfare of small-scale farmers.
Furthermore, Kutter et al. (2011) also found that agribusiness capacity can be improved
through extension activities and synergistic with all stakeholders and economic and social
institutions.
According to Pambudy et al. (2017) that the structure of the Indonesian economy still
faces efficiency problems and 98 percent is still in the category of small and medium
industries so that strengthening entrepreneurial capacity still needs to be improved. The
behavior of small-scale entrepreneurs is influenced by their level of knowledge and mental
attitude. Wibowo et al. (2012) stated that entrepreneurial capacity is influenced by farmer
characteristics such as education and experience, besides that the entrepreneurial capacity of
farmers is also greatly influenced by communication facilities and the availability of
technology in agribusiness. Saragih (2017) states that entrepreneurship will be able to
overcome many social problems with a strong commitment and use entrepreneurial
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principles. According to the results of research by Pratita et al. (2018) also stated that the
entrepreneurial competence of farmers both technical, management and personal
competencies still need to be improved.
Farmers' independence in agribusiness can also be said to be still low (Effendi, 2012;
Malta, 2016; Managanta et al. 2018; Asmoro, 2018). Improving farmers' welfare can be
done by increasing farmers' independence through management and self-coaching in
sustainable agribusiness management (Sulistiawati et al. 2018). According to Tjitropranoto
(2005), an agricultural development approach that focuses on strengthening the capacity of
both farmers and other resources will ensure the sustainability of a technological innovation.
According to Suvedi and Kaplowitz (2016), extension approaches in order to increase
productivity and food sovereignty should be encouraged based on participatory and
pluralistic extension approaches.
Chantarasombat et al. (2010) stated that the more independent a community is, the
more job satisfaction increases. Managanta et al. (2018) also found that the more
independent farmers are, the more productive they are in managing plantations. In
accordance with the opinion of Sumardjo (1999, 2014 and 2015) that if farmers are
independent then farmers can certainly be empowered to produce high competitive
performance. Furthermore, according to Sumardjo (1999) the independence of an individual
farmer is the ability to organize itself so that it strives to continue to advance in behavior,
efficient and highly competitive. In addition, independent farmers are able to quickly and
precisely make decisions and act, always build networks and partnerships with the principle
of mutual strengthening and mutual benefit.
In accordance with the opinion of Aklimawati et al. (2014), although most farming
communities have been cultivating coffee for generations, the application of technology
ranging from technical cultivation to efficient processing and marketing of farmers' coffee
products still needs to be improved. The market competitiveness of coffee farmers is also
determined by the joining of farmers in economic and social institutions such as Product
Processing Units (UPH) and Cooperatives (Aklimawati et al. 2017). Increased coffee prices
greatly affect the spirit and success of an empowerment or self-reliance program (Sari &
Nugraha, 2016). According to Khoirunnisak and Satria (2016), farmers' participation and
institutional networks are still low and the sustainability of plantations in general is also still
low, especially in the environmental dimension.
Organic farming systems and certification are a form of effort towards the
sustainability of coffee plantations (Mendez et al. 2010; Beth et al. 2011; Chiputwa
et al. 2015). Farmers who apply the concept of sustainable agriculture have an impact on
improving production, income, environment and social (Takhashi & Todo, 2017; Neilson,
2008; Bolwig & Gibbon, 2009). In line with the results of research by Asrul et al. (2006)
that organic arabica coffee compared to non-organic arabica coffee, the quality of organic
arabica coffee tends to be better but the productivity is lower. In addition, the economic and
financial feasibility of organic and non-organic arabica coffee is also different. Furthermore,
Ruben and Fort (2012) stated that the existence of a coffee certification program in free
trade will encourage the strengthening of farmers' capacity to be more efficient, advanced
and entrepreneurial. Small-scale coffee farmers must receive protection from the
government and related institutions in order to compete in the global economy (Swason,
2006).
Several problems of coffee farmers need immediate and serious attention from various
parties. According to Wahyudi et al. (2016) coffee development policies are directed
towards specialty coffee and certification. Arabica coffee has been categorized as specialty
coffee and rubusta coffee is directed to obtain certification so that it can be categorized as
premium/fine robusta coffee. Coffee productivity is encouraged by rehabilitation and
intensification programs for existing plant areas. In addition, the government seeks to
increase added value by spreading technological innovations, especially wet processing,
converting organic coffee plantations and gradually implementing GAP and Good
Manufacturing Practice (GMP). All these policies aim to increase the income, welfare of
coffee farmers and the sustainability of the coffee commodity. Related to the description of
the problems of coffee farmers, this research will examine entrepreneurship and agribusiness
capacity towards farmer independence and the sustainability of smallholder coffee
plantations. This research is important in order t o find alternative solutions to the problem
of low productivity, quality and added value as well as the helplessness of coffee farmers in
facing international trade competition.
1.1 Problem Formulation
The main challenge of Indonesia's agricultural development now and in the future is
how to create empowerment, independence and welfare of farmers (Nasution, 2005).
According to Hervinaldy (2017), Indonesia is one of the fourth largest coffee exporting
countries, however, Indonesia still faces problems in the international coffee trade, namely
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poor coffee quality and lack of cooperation between countries. Indonesia can increase
international cooperation by becoming a member of the ICO (International Coffee
Organization) and a member of the ASEAN National Focal Point Working Group
(ANFPWG) on Coffee. The existence of ICO resolution 407 (prohibition of low-quality
coffee trade as of Oct. 1, 2002), the improvement of Indonesian coffee quality needs to be
encouraged through the implementation of quality standards. Furthermore, Widhyapuri et al.
(2018) stated that the Ministerial Conference (MC) in the World Trade Organization (WTO)
in Bali in 2013 produced recommendations to improve the living standards of small farmers
in rural areas and agricultural products such as coffee commodities from developing
countries can enter and compete with domestic products in developed countries. According
to Akliwati et al. (2015) in the development of coffee commodities, there are still many
problems in the coffee agribusiness system that occur in the field. The fundamental problem
that is often encountered is the low production, quality and lack of efficiency of the coffee
marketing system and coffee farmers have not been able to fully cultivate coffee in an
integrated manner from upstream to downstream so that most of the production enters low
quality, low productivity and only reaches primary processing. It is time for efforts to
improve the quality of coffee beans to be carried out in an integrated manner with the
development of the secondary industry. Coffee farmers need to be encouraged to manage
their farming business with an agribusiness system approach that integrates all aspects
starting from upstream and downstream aspects based on Good Agriculture Practice (GAP)
for Coffee so that the productivity and quality of their farming business results increase.
In the East Java region, coffee commodities are a leading plantation product but also
face problems (on-farm -off-farm) that are almost the same as national coffee conditions. On
farm problems start from the provision of certified superior seeds, production advice,
cultivation management, increasing production and harvesting. Meanwhile, off-farm
problems are also still faced by smallholder coffee farmers, ranging from difficulties in
providing machinery, equipment, supplies for primary, secondary and tertiary processing to
improve quality and added value. Low productivity and quality will result in low prices at
the farm level and difficult access to marketing by farmers at the national, regional and
global levels. The forms of coffee traded in the world market include green coffee, roasted
coffee and soluble coffee. However, most coffee farmers in Indonesia and East Java in
particular sell their coffee mostly in the form of dry green bean coffee (dry oce) from
primary processing. This practice results in very little added value and tends to result in
rapidly fluctuating prices. The Indonesian government also imposes regulations on
Indonesian coffee exports, namely: (1) Exports are carried out by companies that have been
recognized as Registered Coffee Exporters (ETK) or Temporary Coffee Exporters (EKS)
and must be equipped with a Coffee Export Approval Letter (SPEK); (2) Coffee must
comply with the quality standards set by the Minister of Trade and must be accompanied by
a Certificate of Origin ( SKA) Form ICO. Provisions on coffee exports are regulated by
Minister of Trade Regulation No. 10/2011 on coffee export provisions. To be able to
compete at the global level, Indonesian coffee commodities. All problems in the coffee
commodity, the most rational solution is the approach of developing human resources who
are the main actors by strengthening their capabilities. Given that coffee commodities are
international trade commodities, coffee farmers as the main actors need to continue to
improve their agribusiness and entrepreneurial capacity towards independence (Hervinaldy,
2017). Knowing what factors can affect the capacity of agribusiness and entrepreneurship
towards independence is urgent and has high benefits.
Strengthening the agribusiness capacity of entrepreneurial capacity is very important
in an effort to improve quality and added value (Listiana, 2017; Prawiranegara, 2006;
Fatchiya; 2010; Aminah 2016). According to Wahyuni et al. (2017) the group dynamics
factor is very influential on the capacity of farmers, while the results of Listiana's research
(2017) the capacity of farmers is influenced by the role of entrepreneurship extension
workers, the role of farmer contacts and the nature of innovation. According to Aminah
(2015) farmers' capacity is still low in the aspects of cultivation techniques, managerial and
business improvement. Garcia et al. (2015) also found that agribusiness capacity is
influenced by farmer characteristics and business models. According to the results of
research by Wibowo et al. (2012) the improvement of entrepreneurial and agribusiness
capacity of farmers still needs to be improved. Factors that influence the entrepreneurial
capacity of farmers are the level of education, experience, and physical environment (means
of communication and technology). Kutter et al. (2011) also stated that the combination of
agribusiness and entrepreneurial capacity will determine the progress of farmers in facing
global competitiveness. Furthermore, Pambudy (1999) states that the factors that influence
the entrepreneurial behavior of farmers are the scale of business, level of knowledge, mental
attitude and skills in managing their farming business. In line with the statement of
Chantarasombat et al. (2010) that independence is the key to satisfaction and productivity
achievement. Farmers' independence in agribusiness is still categorized as low (Effendi,
2012; Malta, 2016; Managanta et al. 2018; Asmoro, 2018). According to Managanta et al.
(2018), the factor that influences farmers' independence is institutional support. According
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to Anantanyu (2011), farmers' capacity can be improved through increased participation in
institutions. Furthermore, farmer independence can be improved by increasing the capacity
of advanced farmers/self-help extension workers through learning, altruism, and social
capital (Haryanto et al.2018). Arabica coffee commodities are more widely traded
internationally (75 percent) and the rest are robusta types. Characteristically, there are
differences between arabica and robusta coffee types in terms of ecological requirements,
taste image, productivity and price. Arabica coffee is suitable for growing in the highlands
while Robusta coffee is suitable for low and medium altitudes. The price of arabica coffee is
more expensive than robusta coffee (Wahyudi et al.2016).
Sustainability in coffee agribusiness has become a global issue. In line with the
opinion of Santoso et al. (2013) that the strategy in coffee development is to expand the
market, develop biotechnology, and strengthen international cooperation networks. The
results of research by Khoirunnisak and Satria (2016) to improve the sustainability of
plantations in the environmental dimension need more attention because it is still in the low
category. The urgency of coffee plantation sustainability was also stated by Chiputwa et al.
(2015) that coffee farmers need to be supported towards obtaining certificates of sustainable
agricultural standards such as Fairtrade, 4C, UTZ, and Organic in order to have a better life
(social, economic and environmental aspects). Organic coffee products have quality, price
and demand that tend to increase and become a global trade issue (Asrul et al. 2006; Bolwig
2009; Mendez et al. 2010; Langen, 2012). In the development of agricultural human
resources, changes in the behavior of farmers and their families towards improving farming,
improving the economy, improving social life, and improving the environment require
integrated extension activities so that a strategic design is needed to select the right input,
process, out put and out come according to the needs of smallholder coffee farmers. In
accordance with the previous description, the existence of counseling in accordance with the
needs of farmers in improving the quality and competitiveness of coffee is a strategic action
step towards independence and welfare. This fact is in accordance with the research results
Bolwig and Gibbon (2009) stated that coffee farmers who implement a sustainable
agricultural system get a global guarantee and can increase 75 percent of their income so
that it is in accordance with the objectives of plantation development. In addition,
sustainable agriculture can improve the quality and high added value of coffee commodities
both in primary, secondary and tertiary processing based on farmers so that empowerment
and independence in coffee agribusiness will be easily realized towards a sustainable
agricultural system (Jurjonas et al. 2012; Hafif et al. 2014).
1.2 Novelty and state of the art research
Based on the results of previous research (state of the art) and research results, the
research will generally provide some novelty to the scope and results of the research: as
follows:
a) Many studies related to coffee agribusiness focus on the case of food crop farmers,
livestock and horticulture and economic aspects of marketing, this study (1) examines
many social and behavioral aspects of organic and non-organic smallholder coffee
farmers in terms of t h e integration of agribusiness capacity on farm to off farm.
b) Many existing studies have examined the entrepreneurial capacity of food crop farmers
with their management and technical aspects. This study (2) examines the
entrepreneurial capacity of organic and non-organic smallholder coffee farmers from the
personal aspect as individuality or entrepreneurial character of smallholder coffee
farmers.
c) In previous studies, many used a self-reliance approach that was not comprehensive in
the case of food crops, fisheries and horticulture farmers. This study (3) reveals the
independence of coffee farmers in East Java for the topic of coffee farmers'
independence measuring with three typical indicators of filterability, competitiveness
and comparability. Not many existing studies have examined the behavioral aspects of
organic coffee farming.
d) This research (4) also revealed a picture of smallholder coffee plantations, both in non-
organic and organic coffee development.
e) Existing research has examined the sustainability of plantations in the economic
dimension only and few have also social and ecological aspects. This study (5) uses four
dimensions simultaneously: economic, social, ecological and health dimensions.
A summary of the novelty of the research results in general, a general statement is
obtained as a summary, namely as follows:
(1) The sustainability of smallholder coffee plantations (economic, social, and health
dimensions) of both organic and non-organic coffee is determined by the level of
farmer independence with typical indicators of f i l t e ra b i l it y, competitiveness and
comparability.
(2) Farmers' entrepreneurial capacity as an aspect of personal individuality and
partnership with stakeholders has an influence on farmers' agribusiness capacity in the
on farm to off farm aspects of smallholder coffee.
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(3) Coffee farmers' self-reliance is largely determined by their entrepreneurial capacity,
self-help extension workers and government, community and private institutions.
(4) The role of government and private extension agents is needed to improve the
entrepreneurial capacity of smallholder coffee farmers (Robusta and Arabica Coffee).
(5) The development of plantation conversion to organic coffee systems requires the
intensity of counseling, mentoring, access and marketing assurance.
(6) Strengthening the independence of coffee farmers towards sustainability requires a
new approach to extension strategies, namely based on the synergy of government,
independent and private extension workers through partnerships of all upstream-
downstream stakeholders in a unified agribusiness supply chain system.
Coffee commodity is one of the main tropical commodities traded worldwide with a
contribution of half of the total tropical commodity exports. The strategic step to develop the
coffee commodity is to develop the capacity of human resources who manage the coffee
farming business from upstream to downstream. Andriani et al. (2012) argue that robusta
coffee production and production trends are decreasing due to the influence of land changes
that are not managed properly. Factors that affect the quality of production are harvesting,
peeling, washing, and drying, while those that significantly affect the quantity of production
include land, inferior raw materials, and fertilizers. The decline in robusta coffee production
resulted in a decline in income. The amount of income from robusta coffee commodities is
relatively small because the area cultivated is large and the price of robusta coffee in the
international market has decreased. In the research of Andriani et al. (2012) examines more
aspects of production and income, so it has not discussed the aspect of farmers as managers
of coffee farming.
Jurjonas et al. (2012) also said that coffee farmers who implement an organic
farming system approach have an impact on improving education, public health,
empowerment and equality in free trade. Organic coffee systems will be able to improve the
environment (soil health, controlled erosion, availability of quality springs). A successful
model in organic coffee development is one that involves a balance of social benefits,
income, climate mitigation, forest protection towards agricultural sustainability. This study
has examined the sustainability aspects of coffee plantations, but is limited to assessing
sustainability only from the environmental aspect because of the organic system, social
aspects and extension are not in the study.
Individual characteristics are personal traits that a person has that are manifested in his
mindset, attitude and actions towards the environment (Rogers & Schoemaker 1995).
According to Garcia et al. (2015), the capacity of farmers to adopt a technology is
influenced by the characteristics of their farms and the characteristics of the farmers
themselves. Agribusiness includes all companies related to activities ranging from
procurement of production facilities to trade (Downey & Ericson, 1992).According to the
results of research by Prawiranegara (2016), the level of capability of farmers to manage
farming innovations is low. Improving the capability of farmers to manage innovations can
be done through improving the role of farmer institutions, improving the capability of
farmers to manage innovations, improving the quality of information and increasing external
institutional support. Prawiranegara's research (2016) emphasizes the institutional aspects of
farmers in groups, not yet the individual aspects. Listiana (2017) also reported that the level
of capacity of farmers is in the medium category. Factors that have a significant influence on
the capacity of farmers are the role of extension agents, the role of farmer contacts and the
nature of innovation. Factors that have an insignificant influence on the capacity of farmers
are age, formal education, experience and land area. In this study, the capacity aspect is still
approached with a general concept, not specific to the particular capacity of farmers. The
same thing was also said by Chiputwa et al. (2015) the role of sustainability standards is
growing in the global coffee market, although it is still a small amount. Farmers who have
Fairtrade, UTZ, and Organic certificates have a better life.
Certificate standards need to be revamped from a social perspective.Tellman et al.
(2011) reported that the organic coffee certification program expanded smallholder adoption
of cooperative arrangements. Small-scale coffee farmers' barriers to free trade are the high
cost of certification for farmers, economies of scale, lack of government assistance, and low
quality. Farmers need to establish and build networks of cooperation with consumers,
buyers, government and other parties in building a trading system. In the research that has
been done, many approach sustainability in economic and environmental aspects, it is still
rare to approach the individual social aspects and even the health aspects of farm business
managers. Wibowo et al. (2012) found that farmer characteristics that have a very real effect
on the entrepreneurial capacity of vegetable farmers are the level of education and business
experience. The physical environment that has a significant direct effect on the
entrepreneurial capacity of vegetable farmers, is the means of communication and
technological characteristics. This research has brought entrepreneurial capacity but on the
implementation of horticultural farmers instead of smallholder plantation farmers.
Entrepreneurship is an entrepreneurial activity, which is a person's action in pursuing
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and generating value, through the creation or expansion of economic activities, by
identifying and utilizing new products, processes and markets (Pambudy et al. 2017).
Kaplan (Morgan 2008) defines capacity as the ability to organize according to activities, so
that it is resilient, strategic, and independent. The independence of an individual farmer is
the ability or competence in managing itself so that it strives to continue to advance in
behavior, efficient and highly competitive (Sumardjo, 1999). By increasing the synergy
between stakeholders, the capacity of agribusiness and entrepreneurship, coffee farmers can
also increase the independence of farmers (filterability, competitiveness and sanding).
Andriani et al. (2012) argue that robusta coffee production and production trends are
decreasing due to the influence of land changes that are not managed properly. Coffee
quality is strongly influenced by harvesting and post-harvest processes. The quantity of
coffee production is strongly influenced by the availability of land, fertilizers and planting
materials.
Anantanyu (2011) says that increasing the capacity of farmers' institutions is done in
line with agricultural extension activities by motivating farmers to participate in farmers'
institutions. Extension activities to increase the capacity of farmers need to establish
synergistic cooperation with professionals, namely; (1) formal networks such as village
heads, sub-district heads and other formal leaders who can help in terms of access and
provision of facilities, (2) self-help extension groups, groups that voluntarily introduce
innovations to the target, (3) mass organizations, such as farmer associations, traders and
others, (4) farmer groups, (4) private parties, such as fertilizer traders and home industry
agricultural equipment, (5) professional farmers, farmers who can be used as examples and
models in the development of farming capacity (Friederichsen, 2013). Group and
institutional approaches are still dominant in previous research, not yet to the approach of
farmers as important individuals who manage farming businesses.
In line with the opinion of Haryanto et al. (2018) that government and independent
extension workers play a greater role in improving farmers' capacity than research and
education institutions. Developing advanced farmers can increase the capacity of farmers
and their independence. The capacity of advanced farmers can increase the independence of
farmers through the learning process, alturism, social capital. This study focuses on food
crop farmers and self-help extension workers, so it is quite different from research studies
that discuss smallholder plantation farmers.
Prawiranegara (2016) reported that the level of capability of farmers to manage
farming innovations was low. Listiana (2017) also reported that the level of farmer capacity
was in the medium category. The barriers of small-scale coffee farmers in free trade are
expensive certification costs for farmers, economies of scale, lack of government assistance,
and low quality (Tellman et al. 2011). Wibowo et al. (2012) found that farmer
characteristics that influence the entrepreneurial capacity of farmers are the level of
education and business experience. Anantanyu (2011) said that increasing the institutional
capacity of farmers is done in line with agricultural extension activities by motivating
farmers to participate in farmer institutions. Effendi (2012) classified the independence of
farmer groups as moderate (independence is built based on the psychological ability of the
community). Managanta et al. (2018) that farmers' capacity is weak in organizing and
adapting to the environment. The independence of cocoa farmers is categorized as low;
influenced by low institutional capacity and support. Increasing self-reliance is a
determining factor in increasing the productivity of plantation farming.
According to the research results of Widiyanti et al. (2012) Farmers' performance in
hybrid and non-hybrid maize farming had significant differences, where productivity and
income of hybrid farmers were higher than those of non-hybrid farmers. There is no
difference between t h e two categories of farmers because all prices given to farmers are
determined by intermediary traders. There is a difference between the level of motivation.
There is a correlation between the intensity of extension workers on the motivation of early
majority and late majority farmers. The level of motivation of early majority is smaller than
that of late majority. Factors affecting motivation are corn farming experience, number of
family dependents, size of cultivated land, cosmopolitan nature, and availability of capital.
Factors that do not affect farmer motivation are age, education, availability of facilities and
infrastructure, and extension intensity.
The results of Susilo's research (2013) state that agribusiness cooperative institutions
are very beneficial for the success of food security and farmers' welfare. Farmers' capacity
can be improved by extension activities that involve many parties such as formal leadership,
self-help extension groups, social organizations, private and professional parties
(Friederichsen et al. 2013). Kutter et al. (2011) found that farmers' capacity will increase if
supported by stakeholders and innovation-providing institutions such as research
institutions, facility providers, non-governmental organizations and government agencies.
The results of research by Setiawan et al. (2015) illustrates that the independence of farmers
in agribusiness is still low, especially in the aspects of quality and competitiveness. The role
of innovative leadership and Effendi (2012) states that the independence of farmer groups is
15
classified as moderate (independence is built based on the psychological ability of the
community). In line with the results of research by Managanta et al. (2018) that farmers'
capacity is weak in organizing and adapting to the environment. The independence of cocoa
farmers is categorized as low; filterability is 47.7 percent, competitiveness is 31.3 percent
and competitiveness is 38.8 percent. Low cocoa farmer self-reliance is influenced by low
institutional capacity and support. Increasing self-reliance is a determining factor in
increasing the productivity of cocoa farming. This study both examined plantation farmers,
but not coffee plantations and also did not reach the aspects of economic, social,
environmental and health sustainability.
Aklimawati et al. (2015, 2016) stated that the coffee industry cluster will grow if it is
supported by product specialization, research development, increased knowledge and skills
of farmers, availability of raw materials, social capital, leadership and entrepreneurial
ability. Farmers who carry out further processing of coffee beans are based on financial
incentives. Farmers' processing income is influenced by the availability of raw materials,
experience, technology and markets. Chiputwa et al. (2015) state that the role of
sustainability standards is growing in the global coffee market although still a small number.
Farmers who have Fairtrade, UTZ, and Organic certificates have a better life. Certificate
standards need to be revamped from a social perspective.
Regarding certification, Neilson (2008) also stated that coffee commodities are
governed by global regulations, so at the local farm level, it is necessary to make
adjustments by cooperating with the private sector in expanding and strengthening
competitiveness. Bolwig and Gibbson (2009) and Mendez et al. (2010) pointed out that
obtaining certification for smallholder farmers resulted in increased product prices,
expanded cooperation and improved quality assurance. Farmers' incomes increased by 75
percent due to lower production costs. The contribution of smallholders in producing
premium quality products is still small. In line with the opinion of Takhashi and Todo
(2017), wh i c h states that certified coffee managed with an agroforestry model has an
impact on improving the surrounding environment. The government needs to make policies
and regulations for the development of coffee farmer certification that is integrated with the
environment. Rubben and Fort (2004) have observed that certified organic coffee farmers
have better access to credit, more advanced capacity and more entrepreneurial spirit.
Comparatively, there is no significant difference in income between conventional and
organic farmers.
According to Swason (2007), agricultural extension policies need to be directed
towards decentralization and sustainable agriculture. This aims to be able to assist small
farmers in facing global competition. Haryanto et al. (2018) stated that strengthening the
capacity of farmers can be through strengthening advanced farmers who are also self-help
extension workers.
2.1 Entrepreneurial Capacity
2.1.1 Entrepreneurship Concepts and Theories
According to Wibowo et al. (2012) most farmers in Indonesia do not fully have the
spirit and soul of entrepreneurship. To introduce entrepreneurship, farmers need a concept to
develop the dynamism of thinking and action, risk-taking and self-confidence. produce
something new, have added value, provide benefits, create a new product, add value to the
farmer's livelihood employment, and the results are useful for others (Soegoto, 2009 in
Wibowo et al. (2012)). Furthermore, Soesarsono in Wibowo et al. (2012) emphasizes more
on the aspect of wira, which means a knightly mental attitude so that it includes a noble and
great mental attitude, virtuous. Someone who only emphasizes the attitude of business may
justify all means to get as much profit as possible. But with a warrior attitude, an
entrepreneur will conduct his business with honor. A person who has an entrepreneurial
mental attitude is a picture of an ideal person because of his ability to manifest an
entrepreneurial attitude in fulfilling his needs and life. McCleland in Pambudy et al. (2017)
suggests that there are nine characteristics of an entrepreneur, namely: desire for
achievement, responsibility, preference for medium risk, perception of the possibility of
success, stimulation of feedback, energy, future orientation, organizational skills, and
orientation to achievement rather than financial alone. Meredith et al. (1996, 2000) argue
that entrepreneurship is not just practical knowledge, but tends to be a lifestyle and certain
principles that will affect the performance of a business. Entrepreneurs are people who have
the ability to see and assess business opportunities, gather the resources needed to take
advantage and take appropriate action to ensure success.
Entrepreneurship includes many important elements that are interrelated with each
other and cannot be separated in everyday life, namely: (1) cognitive elements (thinking
power), (2) psychomotor elements (skills), (3) affective elements (mental attitude), and (4)
intuitive elements (awareness). Current communication patterns according to Tufte and
Mefalopulos (2009): monologic, dialogic (Wibowo et al, 2012). Entrepreneurship cannot be
17
separated from small and medium businesses (smallholders) because in small and medium
businesses there are many obstacles and challenges that require new findings to survive and
grow to be large. Only people with entrepreneurial capacity who will be able to answer and
overcome all challenges with new creations, continued innovation, predictable risks, general
management and performance achievements.
Pambudy et al. (2017) stated that small business and entrepreneurship have noble
goals, among others: (1) fulfill individual goals (independence, high income, helping
families, and producing products needed by the community); (2) fulfill business goals
(service, social, profit, development). The condition is classic, static, waiting, and traditional
in the future, it is expected that the behavior of farmers can be more modern, dynamic and
able to anticipate free trade. The characteristics and disposition of an entrepreneur are
outlined in Table 2.2.
In line with the opinion of Hisrich et al. (2017) the entrepreneurial population will be
able to increase business creation and growth for the welfare of a nation and state. To be a
successful entrepreneur, it is necessary to think and act differently in viewing and deciding
what happens in the environment. The entrepreneurial way of thinking is (1) thinking
structurally, (2) limited resources trigger entrepreneurs to combine to solve problems and
new opportunities, (3) immediately start small and evaluate the results, (4) high adaptability
(dynamic, flexible, self-regulation, and continue the process of focusing on creating
performance results).
2.1.2 The Development of the Concept of Entrepreneurship as an Economic Innovation
The concept of entrepreneurship began to develop in the 18th century in France by
Richard Cantillon. Based on Schumpeter's theory of economic growth, the concept of
entrepreneurship has been recognized in a very important position in the implementation of
development. The definition of entrepreneurship itself continues to evolve according to the
evolution of the thinking of economists in the western world, then spreads to developing
countries including Indonesia with the concept of entrepreneurship referred to as
entrepreneurship or entrepreneurship.
Furthermore, the definitions of entrepreneurship put forward by experts are known to
have many variations. The concept of entrepreneurship itself is a general social science
concept that is dynamic and will always change along with the progress achieved by the
development of science itself. Entrepreneur is a person whose main capital is perseverance,
skills based on an optimistic, creative attitude, and doing business as the first founder
accompanied by the courage to bear risks based on proper calculation and planning. Until
the 1950s there were a number of definitions and references to entrepreneurship and most of
them were thoughts contributed by economists (Darojat et al. 2013).
Entrepreneurship is a creative endeavor built on innovation to produce something
new, has added value, provides benefits, creates jobs, and the results are useful for others
(Soegoto, 2009). Soesarsono (1996) emphasizes more on the aspect of wira, which means a
knightly mental attitude so that it includes a noble and great mental attitude, virtuous. A
person who only emphasizes the attitude of business may justify all means to gain profit.
Entrepreneurship includes several important elements that are interrelated with each other
and cannot be separated in everyday life, namely: (1) cognitive elements (thinking power),
(2) psychomotor elements (skills), (3) affective elements (mental attitude), (4) intuitive
elements (awareness). Communication patterns according to Tufte and Mefalopulos (2009):
monologic, dialogic. The condition is classic, static, waiting, and traditional in the future, it
is expected that the behavior of farmers can be more modern, dynamic and able to anticipate
free trade.
In accordance with the opinion of Curve (2001) that entrepreneurship is a soul that
can be learned and taught. In line with Jong & Wenekers (2008) who state that
entrepreneurship is taking risks to run their own business by utilizing opportunities in
creating new businesses, using innovative approaches. Businesses managed by entrepreneurs
grow to be large and independent in facing the challenges of global competition.
Mitchelmore and Rowley (2013) also state that entrepreneurial competence or capacity
can be measured individually with three main indicators: personal competence, management
and business competence and technical competence. Entrepreneurship is the act of realizing
values from something abstract/unthinkable into a reality that is valuable for human life.
Entrepreneurs can also be called people who make creative and innovative efforts through
developing ideas and combining resources to find opportunities. Able to understand how to
become a tough, creative, and innovative entrepreneur with good business management and
understand the importance of product quality which includes physical aspects, functions and
legality (Sulistiyowati et al. 2016).
In addition, developing marketing capacity and fostering an entrepreneurial spirit in
the community will have far-reaching impacts (Makkarennu et al. 2018). There needs to be
an effort from all parties for the spirit of entrepreneurship to become the basis of education
and community development. Personality with entrepreneurial ability is characterized by
characteristics such as extraversion, agreeableness, c o n sc i e n t i ou s n e ss , emotional
19
stability and openness to experience (Robbins and Judge, 2008). Entrepreneurship is one of
the solutions to improve the economy of a society and even a country. Many people believe
entrepreneurs are born rather than formed or influenced by environmental circumstances
(Hellriegel and Slocum, 1996). Entrepreneurs are action-oriented, highly motivated
individuals who take risks in pursuit of their goals (Meridith et al., 1996). A modern
entrepreneur basically has specific psychological characteristics, is able to face challenges,
moves in a world full of competition and shows his persistence in fighting to finally emerge
as a winner (Pio & Ratulangi, 2017).
Entrepreneurship is the process of creating new value by coordinating resources for
profit. Entrepreneurship has unique characteristics as stated by Bjerke (2007) and Dale
(2007), namely having performance that is not related to age and tends to encourage
economic growth to other communities. Entrepreneurship is closely related to the economic
aspect of growth creative, strong-spirited and hard-working, always aiming and planning,
daring to make decisions responsibly, able to use opportunities, resistant to criticism,
intelligent, suffering-resistant and steadfast, agile and able to communicate well, broad-
minded and futuristic, good human relations, honest and introspective, able to control
themselves and discipline, and always praying for strength to God. The added value of
coffee is high if it is transformed into a wide variety of derivative products at the primary,
secondary and tertiary levels of coffee processing (Figure 2.3).
Danuhardimedjo (1981) has also described the characteristics and methods of
superior entrepreneurs, namely; (1) Dare to take risks. (2) Always strive to achieve and
produce works of dedication. (4) Creative (5) Always trying to improve the excellence and
image of the company. The development of the concept of entrepreneurship is presented in
Table 2.2. Oliver Clayton in Darojat et al. (2013) entrepreneurial characteristics, namely:
must be aggressive, must be competitive, must be goal-oriented, must be confident, must
focus on their own interests, be able to make decisions, must be a pursuer of success from an
early age, must be independent / strong in the final decision. bangkan by coffee farmers to
increase added value and income.
In accordance with Hornaday's statement in Darojat et al. (2013) that the
characteristics inherent in entrepreneurs, are; self-confidence, determination, strength and
perseverance, have a long mind and power. Lack of success in building entrepreneurial
capacity results in the impact of unpreparedness of traders (Aruman et al. 2018). Farmers'
entrepreneurial communication patterns are influenced by the characteristics of group
membership that allows for dialogic communication between farmers and the organizers of
the assistance. The entrepreneurial capacity of farmers increases in line with the
strengthening of dialogic communication patterns between farmers and assistants (Wibowo
et al. 2012). There are 3 aspects related to institutional strengthening, namely: human
resource development through education and training, institutional development through
improving procedures and methods in the organization and growing the capacity of the
social system (Triharyanto & Susilowati, 2015).
2.1.3 Characteristics and Role of Entrepreneurship
There are various general characteristics of a successful entrepreneur, so it is
necessary to summarize these characteristics so that they are easy for ordinary people to
understand. A deeper understanding of the profile of an entrepreneur can be explained as
follows (Darojat et al. 2013). First, calculated ri s k taking. Every aspect of business is
always faced with the risk of failure, but entrepreneurs must dare to start, with careful
calculations because success will never be created if the business never starts. According to
Meredith et al. (1996) these conditions depend on: the attractiveness of each alternative, the
possibility of loss, success and failure.
Second, commitment and perseverance. Commitment to the business and a strong
will to achieve goals are the most important aspects of an entrepreneur. By having these
characteristics, an entrepreneur will devote himself totally to the business he handles. Third,
integrity and reliability. According to Kuratko and Hodgetts (1989), integrity and reliability
are the glue and rope that will unite one's success with all clients. Fourth, creativity (having
high creativity). According to Kuratko and Hodgetts (1989) creativity is an inherited human
trait. However, this opinion is disputed by some entrepreneurship observers who say that
creativity is not merely a genetic factor, but is something that can be learned.
Fifth, self confidence (having a strong sense of self). Entrepreneurial humans have a
strong belief in their own strengths. Humans are born and endowed with strength by the
Creator so that humans can live and manage nature wisely. Sixth, independence (not
dependent on other parties). Soemanto (1982) states that entrepreneurial people do not
depend on others likes to depend on others in the surrounding world. Seventh, team building
(being able to work together in a team). The desire to be independent does not mean setting
aside an entrepreneur's desire to build a solid team building. Eighth, foresight. An
entrepreneur seeks to prepare his independent business steps carefully and calculatingly,
21
analyzing the prospects for his business in the future, analyzing future circumstances
including possible changes, and finally determining a business strategy. Ninth, managerial
and leadership. The main function of a manager is to utilize the combination of economic
resources needed through people who work for the organization.
The role of entrepreneurship is very important for the development and progress of
society, both in terms of economic growth, social and competitiveness of a nation and state.
Some of the roles of entrepreneurship according to various expert opinions are as follows.
First, the role and function as an innovator. Peter F. Drucker (1985) revealed that the main
role of an entrepreneur is to innovate. Second, the role and function as a risk bearer.
Meredith (1996) revealed that entrepreneurs are calculated risk takers. Entrepreneurs act as
realistic risk takers, which is a situation that is risky and challenging, but achievable.
Third, the role and function as a leader. One of the important roles of an entrepreneur
is to act as a leader / to create a vision. Fourth, the role and function as a decision maker.
Every entrepreneur must perform the role of decision maker in any work situation. Meredith
(1996) reveals that an entrepreneur must be creative, especially in making decisions. Fifth,
the role and function as a liaison. This study formulates that what is meant by
entrepreneurial capacity is the personal ability of coffee farmers who have the character of
an entrepreneur to be able to develop people's coffee agribusiness, including indicators:
having the determination to succeed, the level of orientation towards the future, self-
confidence, courage in taking risks, creative and innovative power, and cooperation skills.
Agribusiness Capacity
2.1.4 Agribusiness Concepts and Theories
There are several definitions of agribusiness that have developed in general. The first
definition only mentions the input sector. This is a narrow or traditional definition of
agribusiness, referring only to producers and manufacturers of inputs for agricultural
production. Businesses included here include distributors of chemicals, artificial fertilizers
and farm machinery, seed and feed manufacturers, as well as agricultural credit and other
financial institutions serving the production sector. The view of agribusiness that is
generally considered appropriate has become more widespread. According to this view,
agribusiness includes all enterprises associated with activities ranging from procurement of
inputs to trading. It encompasses the entire input sector, farm businesses, products that
supply farm inputs, are involved in production, and in the end, the agribusiness sector.
handles the processing, distribution, wholesale and retail sale of products to end consumers
(Downey & Ericson, 1992).
Furthermore, Pambudy (1999) explains that agribusiness is the integrated principles
of agricultural business management. Managing agricultural production from pre-harvest to
post-harvest, even to the hands of consumers, as a whole and integrated unit which is a
system concept. In line with the opinion of Saragih (1995) agribusiness is a relatively new
concept in looking at the agricultural sector, because it emphasizes added value in the agro-
industrial process. Agricultural development needs to be mechanized on interrelationships,
namely between: (1) the potential of the domestic market, (2) increasing the purchasing
power of the farming community and the underprivileged, and (3) industrial development
that is closely related to agriculture.
Agribusiness development in the perspective of sustainable agricultural
development needs to pay attention to several aspects, namely resource aspects,
technological aspects, institutional aspects and cultural aspects (Soekartawi, 1997). In the
aspect of resources (resource endowment) it is very important that there are efforts to
maintain its sustainability. Efforts to conserve resources include: (1) increase agricultural
productivity (productivity) with technical or socio-economic engineering, (2) increase
productivity stability (stability), (3) maintain aspects of sustainability (sustainability) of
agricultural enterprises, and (4) maintain and improve equity (equitability).
Technological endowment is closely related to increased production. Agricultural
production cannot increase if the implementer does not master the technology. The process
of adopting innovations to new technologies is very important and the role of agricultural
extension is very strategic. The institutional aspect (institutional endowment) is a driving
force and a medium to increase competitiveness for farmers. The development of the
agribusiness concept should enable producers or farmers to cultivate independently by
optimizing their agricultural production institutions, processing the results and at the same
time marketing them at favorable price conditions. Cultural endowment is an aspect that is
inherent in the characteristics of farmers as agribusiness managers. This aspect is often
forgotten by people and therefore many analyses assume the culture problem is constant
(Soekartawi, 1997).
2.1.5 Agribusiness System
23
Agribusiness has a much broader scope than just the notion of primary
agriculture/farming. Agribusiness generally consists of four subsystems, namely: (1) the up
stream subsystem, trading in production facilities (fertilizers, seeds, medicines, and
equipment); (2) the on farm subsystem of cultivated agriculture; (3) the down stream
subsystem; and (4) the supporting services subsystem. As a system, agribusiness is an
integrative concept of all its subsystems that influence each other. Agribusiness subsystems
can be further broken down into: (1) production facilities procurement subsystem, (2) farm
production subsystem, (3) agricultural product processing and industry subsystem, (4)
agricultural product marketing subsystem, and (5) supporting institutional subsystem.
Agricultural development must pay attention to all of these subsystems, both on farm and off
farm subsystems in an integrated manner. The agribusiness approach is reoriented from
sectoral to intersectoral handling and from production orientation to business orientation
(Drilon, Cramer & Jensen in Krisnamurthi 2001).
2.1.6 Agribusiness Capacity Indicator
According to Collins Essential, Thesaurus (2006) in Fatchiya (2010) that the concept
of capacity can be divided into three meanings, namely as; (a) Ability (strength, facility,
provision, intelligence, efficiency, capability, readiness, and competence); (b) Size (space,
range, location, volume, breadth, dimension, direction, and frequency); (c) Funztion
(position, role, service, division of tasks). Furthermore, Liou (2004) also states that capacity
leads to the context of performance, ability, capability and qualitative potential of an object
or person. Milen (2001) defines capacity as the ability of an individual, organization or
system to properly perform its functions effectively, efficiently and sustainably. The
capacity is related to the performance set, and the accuracy in carrying out functions and
tasks, such as the level of one's contribution in achieving set goals. Similarly, Govnet
(Morgan 2008) states that capacity is the ability of people, organizations, and communities
to manage their affairs successfully. Kaplan (Morgan 2008) defines capacity as the ability to
organize according to activities, so that they are resilient, strategic, and independent.
Schematically, the agribusiness system can be presented in Figure 2.2.
Morgan (2008) states that capacity in the context of community development and
development, as assets and skills needed in the implementation of development programs,
and the need to organize a collective infrastructure of skills, intelligence and problem
solving and their effects on the lives of the people themselves. The perspective of
strengthening agribusiness capacity in agricultural development continues to develop its
paradigm and indicators. Starting from the technology transfer paradigm whose success
indicators in strengthening capacity are the adoption of technology and strengthening
technical skills and infrastructure. Furthermore, the Farming System Research paradigm
with indicators of success in strengthening capacity is seen from the adoption of technology
and strengthening technical skills and infrastructure through ecological integration and
economic conditions of farming. Related perspectives on strengthening agribusiness
capacity in agricultural development are more clearly presented in Table 2.4.
In line with the Agricultural Knowledge & Information Systems paradigm, indicators
of success in strengthening agribusiness capacity include strengthening effective
communication between empowerment actors, involving joint technology for better
agricultural systems. The latest paradigm, Agricultural Innovation Systems, has indicators of
success in strengthening agribusiness capacity on the capacity for interaction of innovations
and learning to build conditions conducive to development (Tropical Agriculture Platform,
2016). Thus, the capacity of coffee farmers in agribusiness in this study is the use of
production facilities, farm management, harvesting handling, post-harvest handling, primary
processing, secondary and tertiary processing and marketing of production.
2.2 Farmer Capacity Building
Morgan (2006) states "capacity is that emergent combination of attributes t h at
enables a human system to create developmental value". Capacity has 5 cores that can stand
alone but are interrelated. These are: (1) the capability to act; (2) the capability to generate
development results; (3) the capability to relate; (4) the capability to adapt a n d finally;
and (5) the capability to integrate. By emphasizing the needs of developing countries and
sustainable development priorities through a participatory process, by strengthening human
resources and institutional capacity. Capability is a collection of capacities needed by
humans. More clearly presented in Figure 2.3.
According to Friederichsen, Neef (2013) in extension activities to increase the
capacity of farmers need to establish synergistic cooperation with professionals, namely; (1)
formal networks such as village heads, sub-district heads and other formal leaders who can
help in terms of access and provision of facilities, (2) self-help extension groups, groups that
voluntarily introduce innovations to targets, (3) mass organizations, such as farmer
25
associations, traders and others, (4) farmer groups, (4) private parties, such as fertilizer
traders and home industries of agricultural equipment, (5) professional farmers, farmers who
can be used as examples and models in developing farming business capacity.
Human resource development (HRD), which is the process of equipping individuals
with understanding, skills, and access to information, knowledge and training. In terms of
the level of the object of capacity development, Syahyuti (2006) divides it into three, namely
(1) individuals and groups, (2) institutions and organizations, and (3) institutions as a whole
including legal, political, and economic and administrative frameworks. Capacity
development can be carried out by the government or by the community. Capacity
development programs by the community will be achieved if they are based on the
principles of transparency and sustainability (Linell 2003). Basically, capacity building
should prioritize the role of t h e community and not outsiders, meaning that outsiders only
facilitate the process of building community capacity.
Morgan (2008) revealed that capacity naturally has four aspects, which are as
follows: (1) It has basic components or elements, in the form of: financial resources,
structures, information, culture, location, values and so on, (2) It leads to competencies that
focus on energy, skills, behavior, motivation, influence, and individual abilities, (3) The
term capabilities covers a broad field of collective skills, both technical and logistical
(policy analysis, fisheries resource forecasting, financial management) and "softer"
generative (ability to gain legitimacy, adaptation, create meaning and identity), and (4)
Capacity means the entire ability of a system to create value. Capacity development is not a
transfer of knowledge from experts, but is based on the concept of co-learning, and
knowledge can come from people who have more knowledge. (3) The process of achieving
results in capacity development is not determined by external community organizations.
For a developing country, capacity building plays a role in enhancing its role in the
international community. UNDP (1998) states that capacity building or capacity
development is developing the level of human and institutional capacity. Capacity
development is the creation of appropriate conditions through the accuracy of policy and
regulatory mechanisms, institutional development, community participation, human
resource development, and managerial systems (Fatchiya, 2010).
Independence
2.2.1 Concepts and Theories of Independence
Independence is a psychosocial issue that arises at every stage of an individual's life
cycle. Independence becomes important when individuals are required to depend and rely on
themselves. Independence is the ability to perform and take responsibility for their actions
and to establish supportive relationships with others (Steinberg, 2002). Shaffer (2002)
explains that independence is the ability to make decisions and make himself a source of
emotional strength so that he does not depend on others.
According to Setiawan's (2015) review, the concept of independence has developed
rapidly and can be divided into three general levels, namely independence as; outonom,
interdependence and independence. First, independence as outonomy (Sumardjo, 1999,
Steinberg, 1993; Echols and Shadily, 2000; Santrock, 2008). Independence refers to the
right or ability (competence) of individuals to organize themselves responsibly. Piaget's
autonomous morality perspective views that in assessing an action, the perpetrator's
intention and its consequences must be considered. Advanced (modern) in behavior,
efficient and highly competitive (competitiveness), so as to be able to make decisions
quickly and precisely without being subordinated to other parties, and able to partner and
network. Independence refers to individuality, not individualism or egoism. Belief in one's
own potential and ability to solve problems and make decisions alternatives, taking
responsibility for their decisions and assertiveness to carry out their roles without the control
of others. Independence refers to competence, freedom of action and independence from
others, but also cooperation. Establishing partnerships and networking. The principle of
authority is anticipatory of unfavorable environmental influences, with due regard to
morality. Free from control, intervention, exploitation and colonization.
Second, independence as interdependence (Sumardjo, 1999; Covey, 2010). An
independent individual is one who is able to create interdependence and sit equally in a
collegial pattern (partnership) with other parties. The decisions taken by individuals are
independent decisions and are consciously assessed by th e individual as the most
beneficial decision. The characteristics of independent people at this stage are adaptive,
empathic, anticipatory, participatory, aspirational, innovative tenacious or not giving up
easily and continuous improvement. Able to create a climate that allows the birth of various
alternatives and mutually beneficial cooperation. Independence is the product of a series of
stages, starting from dependence, to independence and ending with interdependence.
Individuals are free from influence, pressure, intervention and control of others in making
decisions, solving problems and generating alternatives. The basic principle is self-
sufficiency. A reflection of competitiveness and cooperation. Able to overcome problems
27
and fulfill the needs faced by them, both personally and through cooperation or collectivity.
Individuals who are competitive and filtered.
Third, self-reliance as independence (Steinberg, 1993; Covey, 2010). The ability of
individuals to perform their own life activities, without relying on the help of others (free
from colonization). Personal independence that reflects the quality of self. Its characteristics
are: biological maturation, taking the initiative to overcome obstacles, having high self-
confidence, unwillingness to be controlled by others, and taking responsibility for what they
do. Internal abilities in the form of freedom of action and meeting their own needs,
confidence in their own ability to solve their problems without relying on the help of others,
having achievement motivation, the principle of initiative (sovereignty), and internal
independence (independence). Steinberg (2002) divides the aspects of independence into
three parts, namely: (1) emotional independence, (2) behavioral independence, and (3) life
value independence. A person will perform certain behaviors (behavioral aspects) after
thinking about it first (cognition aspects). Thus, behavioral independence already includes
independence of cognition. Behavioral independence is not only the ability to do something
freely, but also the ability to consider and decide on the behavior freely. Emotional
autonomy. Emotional autonomy is an aspect of independence that relates to changes in
relationships with someone. Behavioral independence, an individual is independent when
able to change opinions and suggestions from others in appropriate conditions, choose
decisions to be made based on their own judgment and reach their own conclusions or final
decisions in behavior. Value independence, individuals have an abstract mindset in various
matters that shape their beliefs to increasingly follow general principles that have an
ideological basis, and finally their beliefs are increasingly in the values passed down by
parents or other figures.
Hamzah (2015) reveals that self-reliance is an attitude that prioritizes one's own
ability to overcome various problems in order to achieve a goal, without closing oneself off
to various possibilities of mutually beneficial cooperation. According to Asmoro (2018),
self-reliance is defined as the ability of individuals, groups, and communities to choose,
decide, plan and carry out activities and types of businesses that suit their needs
(filterability), the ability to produce quality products efficiently and effectively
(competitiveness), and the ability to manage social capital, build networks and partnerships
with various parties in parallel and mutual need or interdependence (comparability) to
realize a better quality of life.
2.2.2 Independence Indicator
The development of the concept of behavioral independence characteristics can be
measured at the individual and collectivity levels of individuals and communities with the
concepts of filterability, competitiveness and competitiveness. Hamzah (2015) states that the
success or independence of an individual/community group can be seen through indicators
of improvement: (1) intellectual independence, including: the ability to formulate problems,
plan businesses, choose the best innovations, control inhibiting factors and creativity, (2)
independence in emotions, especially related to the ability to control emotions, such as:
holding prestige, shyness, both to friends, family and society, (3) independence of action is
able to act alone, such as: being able to make decisions, never giving up, honest and
responsible, being able to identify their needs well, being able to apply elements of open
management, caring and cooperation, having the ability to seek and utilize new information
and opportunities.
Furthermore, the independence of young actors in agribusiness is characterized by
various indicators, namely the behavioral conditions of young agribusiness actors who are
humane (humanistic), who are empowered, who are able to help themselves, who are free
from control and intervention of other parties, who are free from dependence, who are
sovereign, who are able to create interdependence. Independent individuals are able to
determine their own decisions and fate, who are able to articulate their behavior, who are
able to make effective choices from a number of alternatives, who rely on their own
initiative, who are rooted inward but open outward, who are futuristic, who are able to meet
their needs in a sustainable manner, who are autonomous in managing resources and
institutions, and who are able to manage themselves responsibly. Such behavioral conditions
are actually a representation of a modern society (advanced, dynamic, adaptive, efficient,
effective, anticipatory, innovative and ecological), quality (reliable, resilient, responsive,
assured, empathetic) and competitivene. According to Sumardjo (2015, 2016, 2018) the size
of individual independence can be seen from three main aspects, namely: filterability,
competitiveness and competitiveness. First, filterability in individuals is related to adaptive,
anticipatory, actual and insightful attitudes. In the group, the size of filterability is related to
decision-making, planning, dynamic, collegial decisions in a participatory manner. The
realization of a group with high filtering power will be reflected in group behavior that is
always dynamic in decision-making and planning activities through a participatory approach
so that the decisions taken are collegial.
Second, competitiveness, the measure of competitiveness relates to productivity or
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efforts to produce quality and efficient products. A quality product is something that
satisfies and exceeds the wants and needs of customers (Sallis 2007). Efficient behavior
(Sumardjo 1999) means thinking and acting accompanied by a positive nature in using
facilities appropriately or efficiently. In other words, it is more selective in utilizing and
developing potential and resources. Measures of competitiveness in individuals are related to
efficiency and quality products. Efficiency, namely the use of appropriate technology and
efficient resource management. Quality products relate to products that exceed expectations
and meet needs). The competitiveness measure group relates to cooperative advantage,
competitive advantage, and market orientation. To support cooperative advantage,
competitive advantage, and market orientation, good governance is needed in order to
realize business sustainability. Highly competitive groups will be reflected in the behavior of
groups that always try to produce products that meet consumer needs (market oriented) and
have cooperative advantages and competitive advantages and have good governance for
business sustainability.
Third, competitiveness is the ability to work with other parties in an equal position so
that there is interdependence in a mutually beneficial situation in a sustainable business
partnership (interdependence) is a characteristic of independence related to competitiveness
(Sumardjo, 1999). There is an improvement in the concept of competitive self-reliance
measure of self-reliance to be competitive self-reliance, where the indicators of competitive
self-reliance measure become indicators of competitive self-reliance. This situation is in
accordance with the concept of the measure of competitiveness in individuals related to
interdependence, networking, and trust. Thus, for individuals, the main measure of
filterability is adaptive, anticipatory, actual and insightful. Competitiveness, namely
efficiency (use of appropriate technology and resource management), quality: (exceeding
expectations and meeting needs). Comparability, namely; interdependence, networking, trust
and the ability to partner.
In groups, the measure of comparability relates to the group's ability to manage
social capital, interdependencies and partnerships. The realization of group self-reliance
with high competitiveness This is reflected in the group's ability to manage social capital in
a relationship of interdependence and equality in partnering with various parties. Group
filterability is seen in terms of; decision-making ability, planning, collegial and participatory
decisions. Group competitiveness can be measured by; cooperative advantage, competitive
advantage and market orientation. The comparability of a group can be seen in terms of its
social capital, dynamism, interdependence and partnership.
2.3 Concept of Individual Characteristics of Farmers
Individual characteristics are personal characteristics or traits that a person has that are
manifested in his or her mindset, attitude and actions towards the environment.
Characteristics underlie a person's behavior in work situations and other situations (Rogers
& Shoemaker 1995). According to Garcia et al. (2015) the capacity of farmers to adopt a
technology is influenced by the characteristics of their farming business and the
characteristics of the farmers themselves. In line with the opinion of Kutter et al. (2011) that
stakeholders and important institutions that can disseminate information on innovations for
extension activities in order to increase the capacity of farmers. Furthermore, Mardikanto
(1993) states that individual characteristics are traits inherent in a person and related to
aspects of life, such as: age, gender, position, position, social status, and religion. Lionberger
(1960) suggests that individual or personal characteristics are all factors related t o all
aspects of life and the environment, namely age, education and psychological characteristics.
Personal characteristics as an internal factor will affect a person's ability to carry out
their work. Some studies show, among others conducted by Chianu and Tjujii (2005) in
Nigeria, that young age and higher education tend to have the ability to apply the
innovations introduced. Similarly, research by Kposowa (1996) in Maryland, United States
showed that land size, knowledge, business experience influenced his business. Internal
characteristic factors that can affect the capacity of farmers to do business are age, formal
education, non-formal education, work experience, family dependents, income, and business
scale (Fatchiya, 2010).
Research by Aziz (1995) and Siahaan (2002) concluded that age is related to
increased community knowledge. Research conducted by Suparta (2001) found that age
affects a person's behavior in agribusiness. Furthermore, Rakhmat (2002) states that
psychologically all human thinking, personality and temperament are determined by sensory
experience. Slamet (2003) states that changes in behavior caused by education are in the
form of: changes in knowledge or things that are known, changes in skills or habits in doing
something, and changes in mental attitudes or everything that is felt.
Padmowihardjo (2002) says that age is not a psychological factor, but something
caused by age is a psychological factor. Wiraatmadja (1990) argues that the age of farmers
will affect farmers' acceptance of innovations. Rakhmat (2001) says that
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new technology. Robbins (2007) says that older workers tend to be less flexible and reject
new technology. According to Kusnadi (2006), age has a significant relationship to farmer
group effectiveness.
According to Van Den Ban and Hawkins (1999), education is a means to form
opinions and courage in decision-making. In his research, Aziz (1995) concluded that
education is related to farmers' knowledge of shifting cultivation. Relatively high education
and young age cause farmers to be more dynamic. According to Soekartawi (1986), one of
the factors that can change the mindset and reasoning power of farmers is education.
According to Tjondronegoro (Sastraatmaja, 1986), non-formal education is a combination of
activities to arouse interest or desire, disseminate knowledge, skills and abilities, so that it is
expected that farmers will be able to understand the importance of education Expected the
occurrence of changes behavior (attitude, action and knowledge).
Pambudy (2003) argues that agribusiness farming behavior is strongly related to the
size of the land area. Padmowihardjo (2002) argues that experience, both pleasant and
disappointing will affect a person's learning process. Experience can be measured
quantitatively based on the number of years a person is in the field of farming; as well as
qualitative experience. Farming experience is one of the factors that influence the motivation
and activity of farmers in their farming business (Mosher 1986). The experience of a farmer
is influential in managing the farming business (Mardikanto, 1993). According to Kusnadi
(2006), farming experience has a significant relationship to the effectiveness of farmer
groups.
Rogers and Shoemaker (1995) argue that a cosmopolitan attitude will be able to
increase the ability of empathy and empathy. Empathy will increase one's communication
skills in seeking or receiving new ideas. The openness of farmers to the outside world and
can easily accept the form of new ideas in the framework of renewal. According to Kusnadi
(2006) that the cosmopolitan showed a significant relationship to the effectiveness of farmer
groups in farming. Rogers and Shoemaker (1995) stated that cosmopolitan will be able to
increase the ability of farmers to develop their business empathy and empathy power.
Empathy will enhance a person's communication skills in seeking or receiving new ideas. In
this study, the characteristic factors of coffee farmers that allegedly affect capacity are; age,
formal education, non-formal education, work experience, land tenure, business scale, and
cosmopolitan.
2.4 Partnerships and Private Extension
In the context of agricultural development with the concept of agribusiness, the
government issued Law No. 9 of 1995 on Small Businesses which was later elaborated in
Government Regulation No. 44 of 1997 on Partnerships. These regulations are aimed at,
among other things, overcoming the problems of limited capital and technology for
smallholders, improving product quality, and marketing problems (Ministry of Agriculture,
2003). Plantation problems are also related to institutional issues. Existing institutions are
still not able to develop the economic activities of the community, as well as to sustain the
commodity structure and efficiency of the entire set of activities. The growth of farmers'
institutions and the development of business partnerships between farmers and entrepreneurs
or large plantations still face several obstacles, namely: (1) The occurrence of a dualistic
economy between smallholder plantations and large plantations, as well as between
upstream and downstream which often causes conflict, (2) The occurrence of practices of
monopoly, oligopoly, and spatial monopsony activities, especially in downstream activities
which cause business inefficiencies, and (3) Farmer institutions are still weak, both from
social and economic aspects. The weakness of these institutions may be due to excessive
intervention from the government.
According to Hafsah (2000), partnership is a business strategy carried out by two or
more parties within a certain period of time to achieve mutual benefits with the principle of
mutual need and mutual improvement. Partnership is a business strategy, so the success of
the partnership is largely determined by the existence of compliance among partners in
carrying out business ethics. In accordance with Law No. 9 of 1995, the definition of
partnership is business cooperation between small businesses and medium or large
businesses accompanied by guidance and development by medium or large businesses by
showing the principles of mutual need, mutual strengthening, and mutual benefit.
The application of agribusiness partnerships aims t o overcome the problems of
limited capital and technology for small farmers, improve product quality, and marketing
problems. However, in reality, t h e implementation of these partnerships often faces
problems, both from the partner farmers and from the company, which causes the
partnership to be unsustainable. There are several weaknesses in the implementation of these
partnerships: (1) partnerships only build and strengthen horizontal ties, then the bargaining
of farmers remain weak; (2) Partnership is not able to improve the social capital of
smallholder farmers; because it is top down; (3) There is a new partnership usually also
formed a new farmer institutions as well, so easily ignited conflict and fragile; and (4)
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Management of farmer institutions less touched more touching aspects of production,
equipment and physical facilities only. Looking at the potential and challenges of
implementing partnership patterns
Hafsah (2000) has divided the elements of partnership into several main elements,
namely: business cooperation, guidance and development and the principle of mutual need,
strengthening and benefit. First, cooperation between large businesses and small businesses
is based on equality of position or the same degree for both parties in the partnership. Such
alignment also applies to the equality of reciprocal rights and obligations so that no party is
disadvantaged, no one exploits each other and the development of mutual trust between
related parties in developing their business. It is expected that large or medium entrepreneurs
can establish mutually beneficial cooperative relationships with small entrepreneurs or other
economic actors, so that small entrepreneurs will be more empowered and resilient in trying
to achieve prosperity.
Second, coaching and development. Basically, what distinguishes partnerships from
ordinary trading relationships is the element of coaching and development carried out in the
partnership concept. Coaching carried out in partnerships includes coaching in accessing
larger capital, business management coaching, coaching in improving human resources
(HR), production management coaching, production quality coaching and coaching in
developing institutional aspects, allocation facilities and investment.
The three principles of mutual need, mutual strengthening, and mutual benefit. The
principle of mutual need in partnerships, the efforts of large companies in streamlining their
production costs is by saving on labor. The labor saving is done by using the labor owned by
the small company. On the other hand, small companies make efficiency efforts by using
technological facilities, capital, and means of production from large companies. The
principle of mutual need needs to be fostered between the two parties in the partnership.
The principle of mutual strengthening, as in the implementation of other businesses,
partnerships are carried out so that all parties get meaningful added value. The added value
can be in the form of economic value such as increased capital, profits, and expansion of
market share. Other forms of added value can be in the form of non-economic values such as
improved management skills and mastery of technology. By implementing the partnership
concept, it is hoped that between the two parties there will be mutual complementarity or
mutual strengthening of the shortcomings of each partnering party.
The principle of mutual benefit, one of the goals of the partnership is a mutually
beneficial relationship. Based on equal position, no party is exploited and harmed, but
instead creates mutual trust so that in the end it can increase profits or income through
business development. The goal of partnership is win- win solution partnership. Awareness
and mutual benefit here do not mean that the actors in the partnership must have the same
capabilities and strengths, but rather that there is an equal bargaining position based on their
respective roles. Under ideal conditions, the goal of The objectives to be achieved in the
implementation of partnerships are to increase the income of small businesses and
communities; increase the acquisition of added value for partnership actors; increase equity
and empowerment of communities and small businesses; increase rural, regional and
national economic growth; expand employment opportunities; and i n c r ea s e national
economic resilience (Hafsah, 2000).
The partnership program is expected to bring benefits to both parties. The benefits
include an increase in productivity from both parties. Productivity is defined as output
divided by input, productivity will increase if with the same input will be obtained higher
results or with the same results required lower input (Schonberger and Knod in Hafsah,
2000). Based on the above theory associated with the partnership approach, the increase in
productivity is expected to be felt by the partnering parties. For large companies,
productivity improvement can be done in two ways. First, the expected level of production
(output) can be achieved by reducing input factors. Second, the increase in productivity for
large companies is done by increasing production (output) by using the same / fixed own
resources both in quantity and quality. The benefit of increasing productivity for partner
farmers is by reducing input factors that can be used together with fellow partner farmers
(Sutawi, 2002).
Business partnership is a business relationship involving one or a group of
persons/legal entities with one or a group of persons/entities where each party earns income
from the same or interrelated business ventures with the aim of ensuring the creation of
balance, harmony and integration based on mutual benefit, mutual need, and mutual
implementation of business ethics. As an implementation of the partnership relationship, it is
carried out through partnership patterns that are in accordance with the nature/conditions and
objectives of the partnered business by creating a conducive business climate, both in
guidance and operational implementation (Hafsah, 2000). The partnership pattern based on
Law No. IX.
9 Article 27 in Hafsah (2000), on partnerships, states that partnerships are implemented with
the pattern of core plasma, subcontracting, general trading, franchising, agency, and other
forms.
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According to Sumardjo (2004), in the agribusiness system in Indonesia, there are
five forms of partnership between farmers and large entrepreneurs. These forms of
partnership are the core plasma partnership pattern, the subcontracting partnership pattern,
the general trading partnership pattern, the agency partnership pattern and the Agribusiness
Operational Cooperation (KOA) partnership pattern. The forms of partnership in question
are as follows. First, the nucleus plasma partnership pattern. The nucleus plasma partnership
pattern is a relationship between farmers, farmer groups, or partner groups as plasma and
core companies that have business partnerships. The core company provides land,
production facilities, technical guidance, management, accommodates and processes, and
markets production. Meanwhile, the partner group is tasked with fulfilling the needs of the
core company in accordance with applicable requirements. Second, the subcontracting
partnership pattern. The subcontracting pattern is a partnership pattern between a business
partner company and the core company. A group of business partners who produce
components that the partner company needs as part of its production. The pattern is
characterized by an agreement on a joint contract that includes volume, price, quality, and
time (Sumardjo, 2004). According to Sutawi (2002), in some cases the subcontracting
pattern is also very useful and conducive to the transfer of technology, capital, skills and
productivity, as well as ensuring the marketing of products to partner groups.
Third, the general trade partnership pattern. The general trade partnership pattern is
a business relationship in marketing production. The parties involved in this pattern are
marketing parties with business groups supplying commodities needed by the marketing
parties. Basically, the partnership pattern is a buying and selling relationship so that a strong
funding structure is needed from the partnering parties, both partner companies and partner
groups. Fourth, the agency partnership pattern. The agency partnership pattern is a form of
partnership consisting of partner companies and partner groups or small business partners.
Fifth, the partnership pattern of agribusiness operational cooperation (KOA). The KOA
partnership pattern is a business relationship pattern run by partner groups and partner
companies. The partner group provides land, facilities and labour, while the partner
company provides costs, capital, management and procurement of production facilities to
cultivate or cultivate an agricultural commodity. Partner companies also often act as
guarantors of product markets by increasing the added value of products through processing
and packaging (Sumardjo, 2004).
Thus, sustainable partnerships can be defined as the cooperation of several parties
with mutual needs and benefits that in the future can be competitive, productive, profitable,
conserve existing local resources and protect the environment, improve the health of farmers
and partners and the safety of consumers (Saptana and Ashari, 2007). Kutter et al. (2011)
also argue that the form of cooperation between farmers and related stakeholders can run
well, it is also necessary to involve support from various parties such as; (1) agricultural
technology firm, (2) research institution & university, (3) farmer union, (4) government
advisory service, (5) private extension services, ( 6) agricultural NGO, and (7)
farmer/contractor.
In a partnership, the core company generally provides an assistant or supervisor,
who can be referred to as a private extension worker. Private extension workers are
extension workers who come from the business world and or institutions that have
competence in the field of extension (Law No. 16/2006). The characteristics of private
extension workers. They are; (1) employees of private companies who are paid to introduce
and market agricultural production facilities. (2) Seeking economic gain by delivering new
technology or trade services. (3) As motivators and communicators who deliver extension
for profit. (4) Strong technical knowledge and extensive business networks. (5) Unrecorded
and uncontrolled and government coordination. (6) Monovalent capabilities and even very
narrow in the products and innovations that are offered to farmers. The partnership referred
to in this study is a partnership that has been carried out by coffee farmers with other farmers
various stakeholders. The partnership pattern that has been carried out by coffee farmers
approaches the core plasma partnership pattern and the agribusiness operational cooperation
partnership pattern.
2.5 Government Extension
Agricultural extension is a learning process for main actors and business actors to be
willing and able to help and organize themselves in accessing market information,
technology, capital, and other resources, as an effort to increase productivity, business
efficiency, income, welfare, and increase awareness in preserving environmental functions.
Government extension w o r k e rs are civil servants (PNS) and non-civil servants (THL)
who are given full duties, responsibilities, authority and rights by authorized officials in the
organizational unit of agriculture in general to carry out extension activities (Law No. 16 of
2006). According to Amanah (2007), extension is needed t o support the life of mankind.
Communities must be able to improve the quality of their independence to overcome
the problems they face. Development counseling, as an applied social science, should be
37
able to play a role in improving the quality of human resources (HR). The formation and
change of behavior, both in the dimension of all aspects of human life; the societal
dimension that includes the range of welfare from material to non-material; the dimension of
time and quality, namely the short term to the long term and the improvement of the ability
and quality for services, as well as the target dimension, which can reach all strata of society
(Karsidi, 2001).
Slamet (2001) proposed nine characteristics that constitute the new paradigm in
extension. According to him, the new paradigm developed is not to change the principles,
but is needed to be better able to respond to new challenges arising from new situations. The
new paradigm includes: First, information services, where extension must be able to prepare,
provide, and present all the information needed by farmers (production, processing,
marketing, and so on). Information needs to be prepared and packaged in a form and
language that is easy for farmers to understand. Secondly, locality, where to fulfill the
principle of locality, the Agricultural Technology Assessment Center (BPTP) and similar
institutions must be further activated, and even expanded to level II regions in the form of
experimental and research stations. The research conducted should aim to solve problems or
needs of local farmers.
Third, agribusiness-oriented, where principles and technologies related to
agribusiness must be more developed and studied by extension workers. Cooperation and
coordination with institutions that handle processing and processed products are needed by
agricultural extension institutions. Fourth, the group approach, where extension workers
need to be well prepared to foster groups and develop group leadership so that groups grow
into dynamic farmer groups that are able to launch the development of rural communities
that really come from below (bottom up).
Fifth, focus on the interests of farmers, where extension workers must be closer to
farmers and be able to identify farmers' interests and pour them into extension programs
through cooperation with farmers. Sixth, humanistic-egalitarian approach, where extension
workers need to be equipped with a set of knowledge and skills related t o social
communication, social psychology, and social stratification. Seventh, professionalism,
namely the need for structuring and improving the education and training institutions that
handle extension workers.
Eighth, accountability, namely the need to create an evaluation and accountability
system that can be operated precisely and accurately, each type of extension activity must be
clear and measurable objectives, the cost of extension must be considered with the results
and impact of the extension. Ninth, satisfying farmers, where proper education, training and
role modeling can produce extension workers who are able to teach wholeheartedly.
Extension activities so that they can run well and A certain
design of methods, materials and intensity is required. Extension method is a method used
by extension workers in extension activities to the target audience. The methods referred to
in the study are the ways and techniques used by livestock extension workers in delivering
information and materials to smallholder coffee farmers. In order to be well received by the
target audience, extension materials must be able to answer problems in the field and are
needed by farmers. The material in this study is defined as the exposure material or
substance selected and delivered by the extension agent to the target audience, namely
smallholder coffee farmers. Fu rt h e r m ore, the intensity of extension according to Syufri,
2005 in Bakhtiar (2016) is the frequency of face-to-face meetings between extension
workers and their targets. The intensity of counseling referred to in the study is the number,
suitability of schedules and flexibility of t h e implementation of extension activities
carried out by extension workers. Thus, government extension is expected to apply a new
extension paradigm with the following characteristics (Syahyuti 2014): (1) see extension as
a set of functions that can be carried out by various parties and levels and more open; (2) the
task of extension is broader (mobilize, organize and educate farmers); (3) Coherent, there
issynergistic andcomprehensivebetween technological innovation findings, innovation
transfer and extension in one unit; (4) more realistic, cyclical and dynamic (farmers,
researchers, extension workers and educators); (5) always develop learning models and
involve stakeholders, (6) prioritize problem solving, information technology, and solid
organizing and (7) can be used as a learning model act as the object and subject of
development counseling.
2.6 Independent Extension Workers
The support of self-help extension workers now and in the future is needed in order to
fulfill and assist the government in agricultural development. Self-help extension workers
are the main actors who are successful in their business and other community members who
with their own awareness are willing and able to become extension workers (Law No. 16 of
2006). Syahyuti (2014) said that self-help extension workers have capabilities, a unique and
strategic social position, so that the limits of their role must be given appropriately.
39
Appropriate support from all parties needs to be strengthened as a figure that is different
from government and private extension workers. The characteristics of self-help extension
workers are: (1) self-help extension workers can be farmer contacts, advanced farmers, and
administrators of certain organizations in community institutions, (2) help farmers socially,
but in practice will also get social and financial benefits, (3) the figure is more complete as a
reformer, facilitator, motivator, community organizer and mediator, and direct leader in the
field, (4) they have strengths in common language, perceptions and culture with farmers and
have extensive experience as farming practitioners, (5) their expertise base is narrow and
monovalent so that they can be assigned to various areas according to their expertise, and (6)
the number of self-help extension workers is still limited and their guidance is also limited.
There needs to be regulations and institutions that can increase the capacity of these
independent extension workers. The advantages of self-help extension workers, namely;
being able to conduct participatory extension, being able to organize farmers because they
are also administrators, stronger liaisons, potential business agents, reliable teachers of
technology and skills because they are directly involved as farmers.
In line with the opinion of Indraningsih 2013 in Syahyuti 2014 that self-help
extension workers can be divided into four types, namely: (1) the type of technical assistant,
(2) the type of community mobilizer, (3) the type of reformer or innovator and (4) the type
of extension agent as a business actor driving the economy of the farming community. There
should be a strong synergy between government, private and independent extension workers
in an effort to empower farmers. Government and private extension services play a greater
role in farmer capacity building than research and education institutions. The development
of advanced farmers can increase farmers' capacity and independence. The capacity of
advanced farmers can increase the independence of farmers through the learning process,
alturism, social capital, environmental support (Haryanto et al. 2018).
2.7 Farmer Institutions
Farmer institutions have a strategic point in driving the economy and agribusiness in
rural areas. Institutions are rules (constraints) created by humans to organize and shape
social, economic and political interactions. The rules can be formal and informal.
(Khoirunnisak, Satria A. 2016). According to Uphoff (1992, 2014) institutions are a
collection of norms and behaviors that have existed for a long time. In line with Syahyuti's
(2003) opinion that institutions are a stable, steady, and patterned aspect. In addition, the
function of institutions is for certain purposes in society that exist in traditional and modern
social systems so that social life is more efficient. Every institution always contains two
important aspects, namely: institutional and organizational aspects. In more detail, Sumardjo
et al. (2010) in the perspective of agricultural information network systems, institutions can
be divided into: (1) research and development institutions; (2) educational institutions; (3)
agribusiness institutions; (4) service institutions; and (5) policy/regulatory institutions.
According to Uphoff (1992, 2014) local institutions can be divided into three main parts
which are is a continuum, namely: (1) public sector (government) institutions; (2) private
sector (private) institutions and (3) participatory (community) institutions.
The institutions referred to in the study are local institutions related to the community
of smallholder coffee farmers, which can be divided into three: government institutions,
private institutions and community institutions. Government institutions are represented by
government agencies, state universities, research and financing institutions. Private
institutions include product processing units (UPH), agro-industries and exporting
companies. Furthermore, community institutions are represented by farmer groups and
cooperatives.
The function of the farmer group institution is as a forum for the learning process,
cooperation, a unit for providing production infrastructure, production, processing and
supporting services (Law No. 16 of 2006). Smallholder plantations need to be supported by
economic institutions such as cooperatives, FMUs and banks, especially in supporting the
sustainability and growth of business scales that have the potential to meet the needs of the
export market. Susilo (2013) states that cooperative institutions are the most suitable legal
entity for rural communities that are mostly engaged in the agricultural sector and the nature
of mutual cooperation is still strong. Agribusiness cooperatives can also support the food
system and the welfare of its members. The existence of support and financing schemes
from the banking sector to cooperatives will be able to strengthen the business and role of
cooperatives in farmers.
2.8 Coffee Farmer's environmental concept
The environment has an influence on the sustainability of the agricultural sector.
According to Law No.32/2009 on environmental protection, the environment is the spatial
unity of all objects, forces, conditions, living beings, including humans and their behavior,
which affects nature itself, livelihoods and human welfare. Thus it can be stated that the
environment is a socio-cultural factor (human), physical nature a n d other living things
(ecological), and other components.
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According to Hafif et al. (2014) most coffee plantations in Indonesia are located in a
typical ecological environment and diverse conditions, such as acidic drylands, steep slopes,
high climatic and rainfall variations, and poor nutrients that require good conservation and
management efforts. In addition, many protected forests have been converted to plantation
farming, which impacts on water management and soil erosion control. If the ecological
environment is improved, coffee productivity will be able to be increased.
One of the important environmental elements is the socio-culture o f t h e people
themselves, in this study represented by the strength of the local wisdom of the farming
community culture. According to Aulia et al. (2010) cited by Khoirunnisak and Satri (2016)
local wisdom is a wisdom of ideas, science, beliefs, understanding, and customs of local
communities that are considered good and to be implemented, are good, traditional,
inherited, in a long period of time and the result of human interaction with the environment.
Another component of the environment that is quite important in the current era is the
availability of media. Media conventional as well as the availability of cyber media as
communication media for agricultural development.
Media is a tool or means used to convey communicator messages to audiences.
Communication media is an intermediary that delivers information between the source and
the receiver. Conventional communication media can be in the form of print and electronic
media. Print media such as leaflets, posters, flyers, brochures, stickers, pamphlets which can
be classified as small format media. Including electronic media such as television, movies,
photo cameras, radio, and the like. If the media carries messages that have instructional
purposes, then the media is called teaching media (Henich in Kimanun and Serom, 2018).
Cyber Media is all equipment linked to the internet network for agricultural
communication. According to Wijekoon et al. (2009) in Sumardjo et al. (2010) Cyber
extension is a virtual imaginary space behind the interconnection of computer networks
through communication equipment. The better the availability of cyber media, the better the
potential for cyber extension applications in sharing information on a technological
innovation. The same thing was also stated by Listiana et al. (2018) that the availability of
information technology greatly affects the extension process and the capacity of extension
workers. Kimanun and Serom, (2018) state that communication media plays a role in
accelerating technology transfer. The form of communication media should be adjusted to
the demand of farmers because it affects the adoption of technology, especially
technological innovation. The most popular forms of media for farmers are leaflets,
communication media in the form of field visits or counseling, and training, TV broadcasts,
radio broadcasts, and brochures. In the study, the scope of the coffee farmer's environment
was seen from three aspects, namely the ecological environment, local wisdom and
conventional media.
2.9 Sustainability of Smallholder Coffee Plantations
2.10 Concepts and Theories of Sustainable Agriculture
Widiyanti et al. (2016) in general, performance is measured through several
indicators, such as productivity, price, and income. While the concept of sustainable
development can be explained as a development process that can meet the current generation
without reducing the fulfillment of the needs of future generations (Jaya 2004 in
Khoirunnisak, Satria 2016) The success can be seen from the aspects of production, quality
and sustainability. Plantation sustainability can be measured from business, social, and
environmental dimensions. The added value of coffee needs to be increased for the welfare
of farmers and other business actors in accordance with the coffee commodity industry tree.
Sustainable coffee production basically refers to the concept of sustainable agriculture
that has been intensively socialized in recent decades. Sustainable coffee development is
considered very important because the world's coffee production centers are generally
developing countries that are prone to social, political and economic turmoil that can directly
or indirectly disrupt the sustainability of coffee production. In addition, many coffee
production centers are wet areas with high rainfall and slopes that are physically at risk.
There is a need to revamp the certificate standard from a social perspective.
A sustainable coffee production system has four dimensions that are interrelated with
each other, namely: (1) the physical environment dimension, which includes land
sustainability (soil, water, and genetic flora and fauna) and the sustainability of coffee
production itself; (2) the economic dimension, namely the existence of interdependence and
mutual benefit between coffee agribusiness actors; (3) the social dimension, the social
impact of coffee agribusiness and the welfare of coffee farmers involved in coffee farming;
and (4) the health dimension, no negative impact on the health of the use of coffee products.
Sustainable farming practices include maximizing coffee farm diversity, livestock
integration, soil degradation control, production optimization in accordance with the
potential of the land, application of location-specific adaptive technology, optimization of
production quality, and protection through certification. Premium price incentives will be
given to coffee producers who have implemented sustainable farming systems.
Development extension activities can be interpreted as a continuum of behavior
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change. These behavioral changes lead to capacity building starting from individuals or
communities that are still fatalistic and apathetic, developing into individuals who are
optimistic but still dependent (dependence), then becoming empowered (independence), and
then becoming independent individuals (interdependence) (Suvedi & Koplowitz, 2016;
Covey, 2013). According to Suvedi and Koplowitz (2016), extension is a bridge to
implement non-formal education for the community. Extension materials and methods
should be based on research results from educational institutions, research, policy and all
relevant stakeholders. Extension that aims to increase the capacity of farmers and their
families in its implementation needs to use the approach of meeting needs (demand driven),
full participation (participatory) and diversity (pluralistic). Plantation extension activities
need to pay attention and adapt to regional autonomy policies (decentralized), aspirations
from below (bottom up), and collaboration across fields and sectors (research, extension,
education and private sector) and can work together to complement each other (synergism).
Furthermore, Sumardjo (2004, 2017) states that in agricultural development communication
to empower farmers, it is necessary to apply dialogic communication patterns, equality and
interaction (convergent). In addition, extension as a development communication activity
should provide materials that are current and in accordance with the interests, problems and
needs of farmers (cafetarian). The purpose of implemetation of plantation extension
convergent pattern is to condition the increasing readiness of farmers with agribusiness
capabilities so that they can benefit economically (better bussines) and prosper (better
living). The behavior of farmers who were previously apathetic, passive and localized with
these extension approaches can become farmers who are creative, independent and
innovative / cosmopolite.In summary, the relationship between extension activities, capacity
building, empowerment and independence conceptually can be seen in Figure 2.6.
building in farming is the key to success in obtaining results and welfare; and (4) always be
proactive and highly dynamic to participate in every development program.
Conclusions:
The characteristics of smallholder coffee farmers with organic and non-organic
systems have some strong differences, namely: On average, organic coffee farmers have
higher age and cosmopolitanity, longer coffee farming experience, and lower motivation.
Government extension activities, the use of information technology, the role of independent
extension agents as facilitators and motivators, are higher among non-organic coffee
farmers. The role of private extension agents as facilitators, motivators and mediators is
higher among organic coffee farmers. Partnerships are more useful for non-organic farmers
in providing capital and market guarantees for organic farmers. Support for environmental
conditions in ecological aspects and the use of conventional mass media are higher for non-
organic coffee farmers. Entrepreneurial capacity is higher for non-organic coffee farmers,
especially in the aspect of confidence in coffee farming. Agribusiness capacity of primary
coffee processing aspects is higher for organic coffee farmers, while secondary and tertiary
processing capacity is higher for non-organic coffee farmers. Organic coffee farmers are
more independent than non-organic farmers, especially in the aspect of competitiveness. The
level of sustainability of organic farmers is higher than non-organic coffee farmers, but
organic farmers need adequate assistance from all coffee stakeholders considering that the
application of the organic system is still at the confirmation stage.
The entrepreneurial capacity of smallholder coffee farmers in East Java is moderate.
The entrepreneurial capacity of smallholder coffee farmers is dominantly influenced by:
weak motivation for business development, support from government extension workers and
private extension workers, partnerships, and environmental support. The agribusiness
capacity of coffee farmers tends to be weak, which is influenced by the low support of
government extension workers, independent extension workers, and private extension
workers. In addition, low agribusiness capacity is also caused by farmers' lack of experience
in farming, entrepreneurial capacity, and partnership cooperation. The independence of
coffee farmers is also not maximized due to the influence of the weak role of institutions and
partnerships, as well as the less than optimal entrepreneurial and agribusiness capacity of
smallholder coffee farmers. The lack of maximum independence of smallholder coffee
farmers can affect the sustainability of smallholder coffee plantations in the future.
The strategy of strengthening self-reliance can be pursued by increasing the
agribusiness and entrepreneurial capacity of coffee farmers through the intensity and
synergism of support from government extension, self-help extension, private extension,
partnership cooperation, and the role of institutions. The condition of smallholder coffee
farmers still requires adequate attention, extension, assistance and empowerment; because
the average coffee farmer is elderly, low formal and non-formal education, long farming
experience, land tenure, business scale and cosmopolitanity are also weak. Support for
extension, institutions, environment and partnerships in the Bondowoso region is higher than
in the Malang region because the support of the Bondowoso district government is higher as
evidenced by the achievement of Geographical Indication (GI) certification and the
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existence of a special regulation on coffee trading in the coffee industry cluster area as well
as the coffee industry. Bondowoso Republic of Coffee has been appointed as the region's
flagship product. Therefore, smallholder coffee farmers also need extension services that
update material based on the cafeteria model from government, private and community
institutions to optimize support for partnership cooperation and environmental potential both
ecological, social and development communication media. An increase in adequate
extension, mentoring and empowerment can increase the entrepreneurial and agribusiness
capacity of coffee farmers which ultimately strengthens the independence of farmers
towards economic, social, environmental and health sustainability of smallholder coffee
farmers.
Short-term extension strategy to i n c r e a s e s e l f - r e l ia n c e is to increase the
synergistic role of government, private and self-help extension as mediators, motivators and
facilitators in increasing the awareness of main actors so that productivity, quality and
continuity of coffee products are high through the application of GAP and GMP, marketing
access and cooperation with stakeholders, to strengthen the independence of smallholder
coffee farmers towards sustainability. Medium-term extension strategies to increase the role
of partnerships and multi-agencies in harvest and post-harvest processing at the primary,
secondary and tertiary levels, through optimizing the role of private extension agents in
market assurance to strengthen the independence of smallholder coffee farmers towards
sustainability. Long-term extension strategies to increase the sustainability of smallholder
coffee plantations by optimizing the role of government and self-help extension for
strengthening entrepreneurial capacity and integrated agribusiness to strengthen the
independence of smallholder coffee farmers.
Alternative strategies to increase the effectiveness of cooperation and partnerships on
the part of smallholder coffee farmers are; (1) Revitalizing extension and assistance to
smallholder coffee farmers that focuses on strengthening capacity and applying innovations;
(2) Building synergies between research institutions, government and the private sector in
assisting empowerment programs; and (3) Strengthening the integrated function of the
coffee agribusiness system through sustainable partnerships. Alternative strategies to
increase the effectiveness of cooperation and partnerships with the private sector/companies
are; (1) Increase the role of the government as a regulatory institution and supervisor of
cooperation so that the role of the private sector is expanded; (2) Make instructions and
proportional division of roles through agreements and guarantees of risks borne together; (3)
Record and coordinate private extension workers and be involved in education and training
to increase competence; (4) Increase CSR programs and agribusiness system integration and
place farmers as an important part of the supply chain system so that they deserve a decent
profit. Alternative strategies to increase the effectiveness of cooperation and partnerships in
local government are: (1) Development of agricultural extension through public private
partnerships. (2) Strengthening government institutions through the application of
regulations and policies that are firm, integrated, fair and sustainable; (3) Strengthening
monitoring and evaluation by building a coffee commodity information center from the
center to the regions; (4) Improving coordination and cooperative partnership relations that
are mutually reinforcing and beneficial between economic actors in a fair and sustainable
manner.
