Understanding dis-adoption of technologies by smallholder dairy farmers in Indonesia

Abstract

Farmer cooperatives represent a vertical coordination strategy aimed at reducing transaction costs and facilitating the adoption of technologies among farmers. In their roles, cooperatives undertake internal coordination of activities which may include enforcement measures, provision of quality inputs, internal control, and negotiation of favourable terms of exchange with buyers. However, limited attention has been given to understanding how cooperatives’ performance in the internal coordination of activities either promotes or hinders the continued adoption of agricultural technologies among cooperative members. We conducted a case study of the dairy sector in West Java, Indonesia, and utilised a mixed-method approach combining insight from dairy cooperative board members and dairy farming households. Our results suggest that the dis-adoption of dairy technologies is rooted in weak or non-existent monitoring and enforcement mechanisms to ensure input and output quality, the absence of price incentives, and inadequate provision of extension services. Furthermore, the lack of tight monitoring and control mechanisms reduces the cooperatives’ bargaining power with input providers and milk buyers. Unless these issues within the cooperatives are addressed, continued adoption of recommended dairy farming practices by smallholder farmers will not be sustained.