Coconut remains an important agricultural commodity for rural communities in Indonesia. Many coconut plantations are managed by smallholder farmers, making farm-gate prices a critical factor in household income and the sustainability of coconut production.
However, the price received by farmers does not always move in line with international market prices. A major issue identified by the researchers is the gap between international reference prices and the prices paid to farmers.
International Price Increases Do Not Always Reach Farmers
The study highlights an asymmetric pattern in price transmission. In simple terms, changes in international prices are not necessarily passed on to farmers equally when prices rise and fall.
When international prices decline, farmers can experience relatively rapid reductions in their selling prices. But when international prices increase, the increase may not be fully transmitted to the farm level.
This creates a price gap between the international market and farmers.
The researchers point to the structure of the coconut marketing chain as one factor behind this situation. Coconuts may move through several intermediaries, including village collectors, district-level traders, regional agents, exporters, and processing industries. Transportation, handling, storage, and differences in bargaining power can all affect the final price received by farmers.
The data illustrate the problem clearly. In 2022, when the international CNO CIF Rotterdam reference price reached approximately Rp18,500 per kilogram, the farm-gate price was only around Rp9,000 per kilogram. The difference reached approximately Rp9,500 per kilogram, or about 51.3 percent.
When international prices subsequently declined in 2023, farm-level prices also fell to approximately Rp7,000 per kilogram.
Wider Price Gaps Discourage Formal Market Participation
To examine how price disparities affect farmer decisions, the researchers used an econometric approach known as the Heckman Two-Step model. Rather than focusing only on production, the analysis considered two related decisions: whether farmers participate in formal markets and how much they supply once they participate.
The study surveyed 100 coconut-farming households in Tanjung Jabung Barat and Tanjung Jabung Timur. Information collected from farmers included land size, production costs, harvest and sales volumes, farm-gate prices, market access, credit access, and cooperative membership.
The researchers then combined these data with international CNO Rotterdam CIF price information covering 2020–2025.
The results show a significant negative relationship between price disparity and farmers’ participation in formal markets.
According to the model:
- A Rp100-per-kilogram increase in price disparity was associated with an approximately 0.98 percent decline in the probability of formal market participation.
- A Rp1,000-per-kilogram increase in price disparity was associated with a reduction of approximately 0.1854 tons, or 185.4 kilograms, of coconut supplied per farmer per year to the formal market.
- The estimated supply elasticity with respect to price disparity was -0.285.
- Overall, a 10 percent increase in price disparity was associated with an approximately 1.85 percent decline in the volume of coconut supplied to formal markets.
These findings suggest that farmers respond not only to the absolute price they receive but also to how that price compares with broader market conditions.
When farmers see a large difference between international prices and their own selling prices, their incentive to channel products through formal marketing channels can weaken.
Cooperatives Can Strengthen Farmers’ Bargaining Position
The study also shows that price is not the only factor influencing farmers’ market decisions.
Land size, transportation access, education, financing opportunities, and institutional support also play roles. Among these factors, cooperative membership stands out as an important mechanism for improving farmers’ market position.
The researchers report that cooperative members received farm-gate prices approximately 12–15 percent higher than non-members. Cooperatives can also collect larger quantities of coconut, giving farmers greater bargaining power when negotiating with buyers and processing industries.
The survey found that the average farmer was 48.65 years old, had approximately 22.30 years of farming experience, and managed an average of 2.15 hectares of land.
Of the 100 respondents, 78 percent actively sold their coconut through formal markets, while 22 percent were classified as non-participants or sold irregularly through informal channels. Only 34 percent of respondents were cooperative members, while 42 percent had access to credit or financing.
These figures indicate that strengthening farmer institutions could be an important part of improving the coconut supply chain.
Four Policy Priorities for the Coconut Sector
Based on the findings, the researchers propose several measures to reduce the impact of price disparities and strengthen farmers’ market access.
First, cooperatives and farmer groups should be strengthened. Collective marketing could reduce farmers’ dependence on long intermediary chains and improve their bargaining position.
Second, rural coconut-processing industries should be developed. Products such as virgin coconut oil (VCO), high-quality white copra, and coconut flour could provide additional sources of value beyond the sale of fresh coconuts.
Third, farmers need better access to real-time price information. A digital price-information system could help farmers monitor international and domestic prices and make better-informed marketing decisions.
Fourth, transportation infrastructure in coconut-producing coastal areas should be improved. Better roads and collection-port facilities in Tanjung Jabung Barat and Tanjung Jabung Timur could reduce logistics costs and improve farmers’ access to markets.
The researchers’ findings suggest that improving coconut production alone may not be enough to strengthen the sector. Farmers also need a marketing system that provides transparent prices, reliable infrastructure, access to financing, and stronger collective bargaining.
A more efficient supply chain could benefit not only farmers but also processors, traders, exporters, and consumers by creating a more stable flow of coconut products.
Author Profile
Ahmad Edi Saputra: Lead/Corresponding Author, Universitas Jambi. The source article does not provide his academic degree or a detailed individual expertise profile, so those details are not added here to avoid unsupported information.
The study was co-authored by Zulgani, Suandi, Zamzami, and Ridwansyah, all affiliated with Universitas Jambi.
Research Source
Journal Article: The Effect of International and Domestic Price Disparities on the Supply Volume of Coconuts: An Econometric Approach Using a Farmer Preference Model
Authors: Ahmad Edi Saputra, Zulgani, Suandi, Zamzami, and Ridwansyah
Affiliation: Universitas Jambi
Journal: Indonesian Journal of Advanced Research (IJAR)
Publication: Volume 5, No. 8, 2026, pp. 1601–1618
Journal Website: https://journal.formosapublisher.org/index.php/ijar
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