Madiun – Rice farmers' dependence on middlemen is influenced not only by limited access to capital but also by transaction efficiency, long-standing partnerships, and restricted access to alternative markets. These findings were revealed in a study conducted by Silviana Siska Permatasari and Mohammad Wahed from the Development Economics Study Program, Faculty of Economics and Business, Universitas Pembangunan Nasional "Veteran" Jawa Timur, published in 2026 in the International Journal of Scientific Multidisciplinary Research (IJSMR). The study provides valuable insight into why middlemen continue to play a dominant role in Indonesia’s rice marketing system despite offering prices that are often lower than those available through alternative marketing channels.
The relationship between rice farmers and middlemen remains a major issue in many agricultural regions across Indonesia. In Sukorejo Village, Kebonsari District, Madiun Regency, East Java, middlemen are more than just buyers of harvested rice. They also provide production loans, collect harvests directly from farms, offer immediate cash payments, and connect farmers with broader markets. These services have made middlemen an integral part of the local agricultural economy, encouraging many farmers to continue selling their harvests through the same marketing channel.
According to Silviana Siska Permatasari and Mohammad Wahed, farmers' reliance on middlemen should not simply be viewed as a consequence of limited knowledge or traditional habits. For many small-scale farmers, selling to middlemen is a rational economic decision. Limited working capital, transportation constraints, incomplete market information, weak bargaining power, and long-established social relationships all contribute to farmers' marketing decisions. These interconnected factors make middlemen the most practical option for many producers.
To examine these factors, the researchers conducted a survey involving 90 rice farmers in Sukorejo Village. Participants completed structured questionnaires measuring access to capital, transaction efficiency, partnerships with middlemen, market accessibility, and the level of dependence on middlemen. The collected data were analyzed using multiple linear regression to determine how each factor influenced farmers' dependence.
The findings demonstrate that all four variables significantly and positively influence farmers' dependence on middlemen. Among them, transaction efficiency emerged as the strongest determinant. Farmers considered middlemen the most convenient marketing option because they purchase rice directly at the farm, minimize transportation costs, simplify negotiations, and provide immediate payment after harvest. These practical advantages often outweigh the possibility of receiving slightly higher prices from alternative buyers that require more time, effort, and additional costs.
Access to capital also plays a significant role in strengthening farmers' dependence. Many farmers struggle to obtain financing from formal financial institutions due to collateral requirements, administrative procedures, and lengthy approval processes. Middlemen, on the other hand, provide faster and more flexible financial assistance before planting season. However, this informal financing is commonly accompanied by an unwritten expectation that farmers will sell their harvest to the same middlemen who provided the capital, reinforcing long-term dependence.
The study further highlights the importance of partnerships between farmers and middlemen. Trust, personal relationships, repeated transactions, and support during difficult times create strong social bonds that encourage farmers to remain loyal to their buyers. While these relationships reduce uncertainty and provide farmers with a sense of security, they may also discourage farmers from seeking better market opportunities or comparing prices offered by other buyers.
Limited market access represents another important factor. Many farmers still face barriers in obtaining accurate price information, reaching rice mills, or establishing connections with alternative buyers. As a result, middlemen become the most accessible and reliable market channel. The research indicates that the more limited a farmer's access to markets, the stronger their dependence on middlemen becomes.
The regression analysis revealed that the four variables collectively explain approximately 76.1 percent of the variation in farmers' dependence on middlemen. This finding suggests that reducing dependence requires more than simply encouraging farmers to seek better prices. Alternative institutions must also provide practical services comparable to those currently offered by middlemen, including seasonal financing, transparent pricing, direct harvest collection, and efficient marketing systems.
Silviana Siska Permatasari and Mohammad Wahed emphasize that strengthening farmer organizations, cooperatives, village-owned enterprises (BUMDes), and partnerships with rice mills could provide sustainable alternatives for farmers. By improving access to financing, expanding market information systems, and developing collective marketing strategies, these institutions can enhance farmers' bargaining power while reducing excessive dependence on middlemen without eliminating the valuable services they currently provide.
The study concludes that middlemen continue to play an essential role because they fulfill services that formal institutions and alternative marketing channels have yet to provide effectively. Therefore, improving farmers' welfare should not focus solely on reducing the role of middlemen but also on developing alternative systems that offer equally efficient transactions, accessible financing, and broader market opportunities.
Author Profile
Silviana Siska Permatasari – Development Economics Study Program, Faculty of Economics and Business, Universitas Pembangunan Nasional "Veteran" Jawa Timur.
Mohammad Wahed – Development Economics Study Program, Faculty of Economics and Business, Universitas Pembangunan Nasional "Veteran" Jawa Timur.
Source
Article Title: The Influence of Access to Capital, Transaction Efficiency, Partnerships, and Limited Market Access on Farmers' Dependency on Middlemen in Rice Farming
Journal: International Journal of Scientific Multidisciplinary Research (IJSMR), Vol. 4, No. 7, 2026.
DOI: https://doi.org/10.55927/ijsmr.v4i7.67
Journal Link: https://journalijsmr.my.id/index.php/ijsmr
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