Increased production and price stability: Alternative solutions to the poverty trap of small farmers

Abstract

This article discusses the problem of coffee as an important commodity in trade and sources of foreign exchange as well as a source of income for coffee smallholders. Conditions as in the case of agriculture in general are that coffee production cannot be separated from the role of small farmers and in fact the dominant is still in the poverty line. This study aims to determine the factors that influence the income of coffee farmers in South Sulawesi Province by using a path analysis. In addition, this study also examines efforts in formulating programs aimed at increasing the income of smallholder coffee farmers. The results showed that the significant variables on the income of coffee farmers who were indicators of poverty were production variables, farm costs, number of productive trees, exchange rates, and quality of coffee produced by farmers. The main result in this study is that the exchange rate plays an important role in increasing farmers' incomes. In addition, increased production also contributes to increasing farmers' incomes. Therefore, to overcome the poverty of coffee farmers, a strategic program to increase production is needed, namely the expansion of coffee plants, the use of superior seeds, the development of post-harvest technology, improvement of quality and quantity of coffee, improvement of knowledge and skills, development of the marketing sector and optimization of the role of institutions.