Analysis of Economic Incentive, Competitiveness and Sustainability of Vegetable Farming System in Upland Areas of Indonesia

Arsanti, I.W. and Böhme, M. 2007. Analysis of Economic Incentive, Competitiveness and Sustainability of Vegetable Farming System in Upland Areas of Indonesia. International Society for Horticultural Science; Improving the Performance of Supply Chains in the Transitional Economies. Hanoi, Vietnam

Abstract

Vegetables are considered as the most promising agricultural commodities in Indonesia due mainly to the following reasons: Increasing demand on these commodities as consequences of population growth as well as improved nutritional awareness of the community, and various government supports in terms of physical and non-physical infrastructures and facilities related with vegetable farming activities in the country. There are different problems influencing the vegetable production and marketing such as low yield, higher price in domestic market, various export barriers, increase of vegetable imports and environmental deterioration. This study was oriented to identify profitability of different vegetables, the comparative and the competitive advantages by using the Policy Analysis Matrix (PAM) methodology. The present study was conducted in three main vegetable production centres in upland areas of the country: Pangalengan in West Java Province, Kejajar in Central Java Province and Berastagi-Simpang Empat in North Sumatra Province. Results of the study indicate that vegetable farming in upland areas of Indonesia is the important source of income for the farmers. The vegetable farming provides profitability regarding the private and social profits as well as competitive and comparative advantages. The following products are generally considered to be competitive i.e. potatoes and headed cabbages grown in Pangalengan and Kejajar, tomatoes and carrots grown in Berastagi-Simpang Empat.

Keyword: horticulture, profitability, comparative and competitive advantage, smallholder farmer