Determinants and effects of small chilli farmers' participation in supermarket channels in Indonesia

Abstract

The number of supermarkets in Indonesia is increasing, but small-scale farmers may be at risk of being excluded from these emerging marketing channels. Drawing on data from our survey of 600 small-scale chilli farmers in West Java, we examine the factors that influence farmers’ decisions to participate in supermarket channels. We use a treatment-effect model to examine the effect of supermarket participation on income, while controlling for the possibility of selectivity bias. Our results indicate that participation in the supermarket channel significantly increases farm income, even after we controlled for differences in education, chilli-farming experience, storage-house ownership, and the distance from the farmer's house to a bitumen road.