Analysis of Market Structure, Conduct, and Performance of Cashew in Muna District, Southeast Sulawesi Province
Abstract
Cashew is the leading commodity in Muna District. Most of the cashew plantations are small-scale plantation. Total cashew plantation area in Muna District in 2013 amounted to 17 884 hectares with a production of 42.76 percent. The production of cashew in Muna District, nearly 95 percent, are sold out of Muna District, through the inter-island transportation lines and marketed by interisland traders (PAP) in Buton, Bau-Bau and Kendari and outside Southeast Sulawesi in Makassar City and Surabaya. High prices of cashew at the trader level have not felt by cashew farmers in Muna District. It is shown from the increasing cashew price from 2007 until 2013 which was from Rp 8 000 to Rp15 000 per kilogram, while at the farm level it was only about Rp 3 000 to Rp 5 000 which was not followed by an increase in prices at the farm level. Average share price received by farmers from the sale of cashew produced annually was only 14.83 percent of the share price, which means farmer share was still relatively low (<40%). The main problem faced by cashew farmers in Muna District is a weak bargaining position of farmers in price determination. Uncompetitive market conditions affect marketing institution in price formation and determination; therefore efficient marketing has not been conducted. How fast price changes being responded by marketing institution will be analyzed through market performance. Based on these problems, it is necessary to analyze market structure, conduct and performance as an appropriate analytical method to determine the cashew marketing system. This study aims to 1) analyze the structure, conduct and performance of cashew market in Muna District, 2) analyze the impact of market structure, conduct and performance on cashew marketing system in Muna District, and 3) formulate policy recommendations on cashew marketing system in Muna District. Descriptive and quantitative analyses were employed by using Microsoft Excel 2007 and Eviews 6. The result showed that the market structure faced by cashew farmers in Muna District was oligopsonistic. This is due to the market conditions at the trader level were concentrated with a low competition (HHI=1 521). Market power possessed by inter-island traders will influence the behavior of a marketing institution in the lower level that is shown in the market conduct. Institutions and practices of marketing functions involved in the cashew marketing were farmers, village traders, sub-district traders and inter-island traders. The marketing functions performed include the function of exchange, physical, and facilities. Marketing channels of cashew in Muna District consists of two channels. The first channel, farmers sell to village traders and then to subdistrict traders and lastly to inter-island traders. The second channel, farmers sell to sub-district traders and then to inter-island traders. High dependency of farmers on traders is due to capital constraints, especially in distributing cashew to the market. Bad transportation access leads to less information obtained by farmers and accordingly weak bargaining position of farmers in price determination. Farmer condition in facing oligopsonistic market and weak bargaining position in price determination will affect market performance. This is shown from the low cashew price share received by farmers (<20%) with a relatively high margin. This condition is due to the high dependency of farmers to traders and limited facilities and infrastructure owned by farmers so that farmers do not add value to their marketed cashew. Analysis of vertical market integration showed that cashew market at the farmer level was not integrated with cashew prices at the village traders, subdistrict traders and inter-island traders at the present and the previous time did not affect the cashew price at the farmer level. This suggests that in the short and long terms, farmers tend to be the price taker. SCP analysis has shown that high price increase at the inter-island traders is not followed by a price increase at the farmer level. This condition illustrates that the cashew marketing system in Muna District was not efficient in terms of marketing margin, farmer share, and vertical market integration. Effort that can be made to improve the bargaining position of farmers is by empowering farmer groups in sustainable aspect. In addition, the role of government in ensuring infrastructure, improvement of roads, price controls and information (local and world prices) are appropriate. Although there are currently cooperation between cashew farmers and cooperative, improvement in cooperation is expected, especially to provide price information for farmers. This can be done by increasing the interest of farmers to join the cooperative as well as make improvements in cooperative management system in order to improve the bargaining position of farmers in price determination. Therefore, the efficient cashew marketing system can be realized and accordingly will improve the welfare of farmers.
Collections
- MT - Economic and Management [2970]