Contract Farming and Village Organisations: Three Case-studies from Indonesia

This paper presents some preliminary results from a larger ongoing project analyzing three farm contracts in East Java, Bali and Lombok. The primary purposes of the larger study are to examine the effects of the three contracts on welfare of participating smallholders, reasons for contract participation and identification of the implications of contract farming for government policy. Analysis of the data collected in the study has been completed for the East Javanese and Bali contracts, with preliminary results for the East Javanese work presented in Simmons et al. (2003). It was never our intention to pay particular attention to village farmer organisations associated with the three contracts, however after conducting our first smallholder survey in East Java it became apparent that such organisations were an important part of the story. The purpose of this workshop paper is to explain what we discovered about links between contract farming and farmer organisations from our three case studies. The first section of the paper identifies three types of farmer organisations associated with contract farming, the next section explains the ways that contract farming affects smallholder welfare, the next three sections are the case studies and the final section uses the case studies to discuss farm level linkages associated with contract farming and effects of contract farming on village organisations.