Factors Influencing Farmers’ Willingness to Pay for NPK Fertilizer in Specialty Coffee: Insights from Pagar Alam, Indonesia

Abstract

Productivity is a crucial issue for smallholder coffee farming in Indonesia, including Pagar Alam City, where it remains low and cannot be improved by relying solely on subsidized fertilizers. Using unsubsidized NPK fertilizers specifically for coffee is an alternative, despite being more expensive. Many studies have focused on coffee but not on farmers’ perceptions and willingness to pay for these fertilizers. For this reason, this study aims to: (1) determine farmer perceptions of nutrient content, ease of use, and fertilizer quality, (2) determine farmers’ willingness to pay for unsubsidized NPK fertilizer for coffee in Pagar Alam City, and (3) identify factors influencing this willingness. The research was conducted in three sub-districts with the highest and lowest coffee production in Pagar Alam City, involving 100 respondents interviewed using a questionnaire. The contingent valuation method was used to determine willingness to pay, descriptive analysis to gauge perceptions, and multiple linear regression to identify influencing factors. Results showed that farmers had a high perception of unsubsidized NPK fertilizers. The average willingness to pay was IDR. 11,160 per kg, lower than the market price. Factors such as farm income, land area, age, farming experience, number of dependents, membership in farmer groups, fertilizer quality, ease of use, and nutrient content influenced willingness to pay. This study provides insights for policymakers and the fertilizer industry in developing NPK fertilizers and determining prices based on farmers’ willingness to pay.