Comparative challenges, cost, and profitability of cooperative versus non-cooperative farmers: case of arabica coffee in Indonesia

Abstract

Coffee plays an important role as an Indonesian agricultural plantation commodity. Although Arabica coffee, which has a higher selling price on the international market than other coffee types, is a crucial source of income for small farmers, the production and quality of Indonesian coffee are very low, which affects the farmers’ income. Agricultural cooperatives can boost the welfare of members and society in general. However, despite the potential benefits of such cooperatives, many small farmers remain sceptical and are reluctant to become members. Within this context, our study aimed to quantitatively examine and compare the challenges, costs, and profitability of agricultural cooperatives using the Kerinci Regency in Indonesia as a case study. We used data obtained through a direct economic survey of 102 randomly selected farmers. Our results indicated that net profit differed significantly between cooperative and non-cooperative farmers and that hired labor represented the most variable costs for all farmers. Our novel findings highlight the financial benefits of agricultural cooperatives for small farmers.