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Agriculture and Agricultural Science Procedia 3 (2015) 143 – 148

The 2014 International Conference on Agro-industry (ICoA): Competitive and sustainable Agro-
industry for Human Welfare

The Strengthening Factors of Tea Farmer Cooperative: Case of

Indonesian Tea Industry
Henry Yuliandoa*, Novita Erma K.a, Anggoro Cahyo S.a , Wahyu Supartonoa
a
Department of Agro-industrial Technology, University of Gadjah Mada, Indonesia

Abstract

Plantation sector such as tea has been playing an important role to rural economic. This sector is labor intensive and
has been providing an aid program to involve farmers in surrounding area to plant the same crops and buy the yield.
However due to lower productivity of farmers, problem in quality and price selling arose and prolonged to other
problems. Several policies has been proposed to overcome the problem, and including a policy to establish a tea
farmer cooperative. Here, this study is aimed to determine factors that able to strengthen the tea farmer cooperative
in commercializing tea farmer products. Some factors that are concerned to influence the performance of
cooperative are analyzed using the analytical network process (ANP). The results show that factor of cooperation
with other related institutions and environment played an important for the farmer cooperatives in order to increase
commercialization aspect of their products. Effort to create added value, market and finance information access, and
shareholding are among elements that are most prioritized by farmers groups.
©© 2015
2015 The
The Authors. Published
Published by
byElsevier
ElsevierB.V.
B.V. This is an open access article under the CC BY-NC-ND license
Peer-review under responsibility of Jurusan Teknologi Industri Pertanian, Fakultas Teknologi Pertanian, Universitas Gadjah
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review
Mada. under responsibility of Jurusan Teknologi Industri Pertanian, Fakultas Teknologi Pertanian,
Universitas Gadjah Mada
Keywords:tea farmer cooperative; commercialization; ANP; priority

1. Introduction

Tea is the most popular and cheapest beverage next to water and is an important commodity in terms of jobs
and export earnings for a number of tropical developing countries (Onduru et al, 2012, Sanne, 2008). Despite its

* Corresponding author. Tel.: +62-274-551219; fax: +62-274-551219

E-mail address:henry_yuliando@yahoo.com

2210-7843 © 2015 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license
(http://creativecommons.org/licenses/by-nc-nd/4.0/).
Peer-review under responsibility of Jurusan Teknologi Industri Pertanian, Fakultas Teknologi Pertanian, Universitas Gadjah Mada
doi:10.1016/j.aaspro.2015.01.028
144 Henry Yuliando et al. / Agriculture and Agricultural Science Procedia 3 (2015) 143 – 148

importance to the economic, the tea sector is faced with a number of constraints. In a review of six major tea
producing countries (India, Indonesia, Sri Lanka, Kenya, Vietnam and Malawi), Wal (2008) reported that tea
production is hindered by rising production costs (labor, fuel and electricity), mismanagement, age of tea bushes,
high overhead costs, bad agricultural practices, low labor productivity, climate change and dilapidated
infrastructure. In real terms, prices of tea have gone down by about 35% in the past 25 years (Mulder, 2007).
The tea plantation area in Indonesia has been shifting to other crops such as coffee, oil palm, cocoa, and
horticulture crops due to the low price of tea in the international market which is mainly destination for Indonesia
tea. This has implied for the low price of tea in the domestic market as well. As a result, the tea farming becomes
less attractive (DTI, 2013).
The tea plantations in Indonesia mostly belong to estates. They are also responsible for developing farmers at
surrounding area. A program namely “core-nucleus project” are used to be implemented by involving farmers to
plant crops with technical and financial aid provided by estate and the yield is sold to estate at certain price level
based on afforded quality. However due to the dynamic changing in market requirements, technology and other
factors, tea farmers are used to suffer for the lack in productivity and quality. There are several policies to overcome
this problem, and a policy to establish tea farmer cooperative is considered as a comprehensive solution. Tea farmer
cooperatives aim more bargaining position in commercialization effort through the development of product
varieties, market and financial access. Here, this study is aimed to determine factors that able to strengthen the tea
farmer cooperatives in commercializing their products. By taking a sample at Pagilaran tea plantation, Indonesia,
several factors that proper for the analysis were treated its interrelationship using Analytic Network Process (ANP)
method. As Multiple Criteria Decision Making (MCDM) method, ANP has been widely applied to the complexities
of many real world (Tsai et al, 2011; Yeh, 2014; Hsu and Hu, 2009; Tsai and Kuo, 2011). This method shows the
relationship among analyzed factors based on respondents (farmers groups) opinion. In further, the output of ANP is
a priority and this isvaluable for promoting more effective policy.

2. Data and method

Tea farmer is facing problematic issues include low farm gate prices, poor extension services, limited market
channels, poor access to credit and low level of farmer organization. Addressing the emerging issues requires
adoption of alternative agricultural practices when making improvements in the current farming systems. To
enhance sustainability of smallholder tea production, farmers need to acquire skills and knowledge about good
agricultural practices and how to implement them as well as on how to respond to new situation as farming
environments change (Onduru et al, 2012). Application of good agricultural practices requires facilities for learning
process to enhance the creativity and competence of farmers. These are among constraints that become a trigger to
draw factors that can influence the development of tea farmer cooperative. Here, 4 factors were identified based on
literature and the pre survey including: (A) Learning, (B) Cooperation, (C) Business Unit, (D) Economic
Environment. In further, these factors are divided into 14 elements, as shown in Table 1.

Table 1. Supporting Factors and Element for Tea Farmer Cooperative

Factors Element
Government and company aid program (PRPI)
Learning (PB)
Supervisor (KP)
Role model of successful tea farmer (CP)
Financial buffer (PD)
Cooperation (KA) Facility and infrastructure (IF)
Mechanism monitoring, control and evaluation (Monev)
Trading mechanism (MT)
Added value increasing program (VA)
Information access (SIM)
Business
Financial institution (Bank)
Unit (US)
Training program (PP)
Mediator (Med)
Economic Shareholding program (Share)
Environment (EE) Down streaming program (HH)
 Henry Yuliando et al. / Agriculture and Agricultural Science Procedia 3 (2015) 143 – 148 145

2.1 Analytical Network Process (ANP)

ANP comprises four major steps (Saaty, 1996):

a. Identifying elements or criterion of the network and their relationships. Relationships between criteria can
be determined by decision makers’ opinions via brainstorming or other appropriate methods such as
literature reviewing (Chang, 2013).
b. Conducting pairwise comparisons on the elements or criterion. Decision maker makes a series of pairwise
comparisons to establish the relative importance of criteria (Chang, 2013). Synthesizing decision maker’
opinions is in compliance with the geometric mean method (Tsai et al, 2011).
c. Placing the resulting relative importance weights (eigenvectors) in pairwise comparison matrixes within the
supermatrix.
d. Measure the consistency index (C.I) and consistency ratio (C.R) where C. I = λmax -n/n-1, n is the number
of criteria. C.R= C.I/R.I with regard to the randomness index (R.I) is 0.00; 0.58; 0.90; 1.12; 1.24; 1.32;
1.41, respectively.When C.R ≤ 0.1 so the consistency of the pairwise comparison matrix is acceptable.
e. Construct and solve the supermatrix. The perspectives and criteria weights derived from step 3 are used to
obtain the column of the supermatrix. The supermatrix represents the influence priority of an element on
the left of the matrix on an element at the top of the matrix with respect to a particular control perspective
or criterion. Finally, the supermatrix will be stabilized by multiplying the supermatrix by itself until the
supermatrix’s row values converge to the same value for each column of the matrix namely limiting matrix.

3. Result and Discussion

The analysis was begun with randomly dissemination of the pairwise comparison questionnaire to 17 tea farmer
groups. The geometric average is used to weight the n number of answer. The interrelationship among criteria
(factors) is presented in Table 2.

Table 2. Interrelationship among factors (criteria)

PB KA US EE
PRPI KP CP PD IF MONEV MT VA SIM BANK PP MED SHARE HH
PRPI X X
PB
KP X X
CP X
PD X X
KA IF X X X
MONEV X X X X
MT X X X X
VA X X X X
SIM X X X
US BANK X X X X
PP X X X X X
MED X X X
SHARE X X
EE
HH X X

The highlighted cell in Table 2 proves inner loops in the framework of interrelationship among factors. This loop
is caused by element of CP and VA that influence other elements in the related factors to be inner dependence. This
is as a basis to draw the network of the ANP framework.
146 Henry Yuliando et al. / Agriculture and Agricultural Science Procedia 3 (2015) 143 – 148
 Henry Yuliando et al. / Agriculture and Agricultural Science Procedia 3 (2015) 143 – 148 147

requirements. Therefore, the development of information system facilities will indirectly give a positive effect on
famer income which in turn will positively support the development of agribusiness Tea (Adinugroho, 2011).

Table 4. Summary of local and global weights

Local Local Global
Factor Element Ranks
weight weight weight
PRPI 0,70 0,079 5
Learning (PB) 0,11
KP 0,30 0,035 12

CP 0,18 0,041 10

PD 0,13 0,029 14
Cooperation (KA) 0,23 IF 0,19 0,042 9

MONEV 0,36 0,082 4

MT 0,14 0,033 13

VA 0,35 0,172 1

SIM 0,30 0,147 2

Business 6
0,50 BANK 0,14 0,071
Unit (US)
PP 0,13 0,065 7

MED 0,08 0,040 11

Economic SHARE 0,64 0,104 3

0,16
Environment (EE) HH 0,36 0,060 8

The third element that must be evaluated is ownership program or shareholding. According to Mwaura and Muku
(2007) the limited ownership and decision making by smallholders on processing, marketing and distribution of
profits at the factory levels failed to provide incentives to produce quality tea and reduce operational inefficiencies in
tea collection and processing.

4. Conclusion

In this study, factors that influence the development of tea farmer cooperative in Indonesia was evaluated. When
the cooperatives able to be independent commercially to produce and distribute their products, efficiency that is
achieved will become a provision to be paid to farmers. Value added and access information system for tea through
branding and diversification of markets will ensure better returns to the farmers. It is necessary to formulate
appropriate policy that would enhance smallholders' skills and bargaining power. Policies have to be geared towards
creating an enabling environment in which smallholders could access and compete in fully functioning and efficient
markets, both for internal consumption and export. The ownership program should be induced to help farmer in
reducing their risk for expenses in managing their tea business.

Acknowledgement

The research was funded by Directorate General of Higher Education (MP3EI), Ministry of National Education
and Culture.

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