Identification of Obstacles and Drivers of Smallholder Rubber Farmers to Become Members of A Processing and Marketing Unit in Indonesia

Abstract

The low quality of Indonesian smallholders’ rubber material has encouraged the government to make a policy to establish Processing and Marketing Units (PMUs). However, after 10 years of running the policy, the number of smallholder rubber farmers who are members of a PMU is still very small, even though by becoming a member of a PMU, farmers’ income increases as a result of rising prices. There have been no studies of the reasons why smallholders have not joined as members of a PMU. Therefore this study tries to discern these reasons and PMUs’ performance. The study population comprised 240 smallholders, half of whom represented PMU members and the other half non-members. These were interviewed to record the smallholders’ reasons to join or not join a PMU in South Sumatera Province, the largest rubber production area in Indonesia. Constraints for smallholders to join a PMU include already having a customer middleman, debt with the middleman, and the distance from the farmer’s house to the middleman’s house. Major supports for smallholders to join a PMU include the rubber material price, easily procured support from the government, and the distance of the farmer’s house. PMUs’ performance did not significantly affect the participation of farmers in becoming or not becoming members. Even though PMUs’ performance was good, the interest of smallholders in becoming PMU members did not increase.