GET TO KNOW WHAT CORPORATE FARMING IS

BACKGROUND AND DEFINITION

Agriculture is a sector that plays an important role in the development of the national economy, both in terms of economic growth, meeting food needs, and employment. The food industry is an important industry because it influences people’s food and is also a symbol of people’s power. The crop cultivation model with corporate farming is an alternative solution to cases of land conversion that continue to increase. In addition, land fragmentation based on the ownership of farming families that has been passed down from generation to generation has reduced the amount of land used for agricultural production. Productivity and income for farmers also decreased. The production factor affecting corporate agriculture is rural. Factors that increase the economic efficiency of rice cultivation are experience and farming activities in groups. While the factors that reduce financial efficiency are the number of family members and counseling. Counseling is a factor that can reduce the economic inefficiency of rice cultivation by increasing the intensity of counseling and the activities of members of the farmer corporation. This allows farmers with long-term experience to improve their farm management. Harmonization and implementation of agricultural accounting systems in agricultural companies are changing the way business management works.

Fragmentation of agricultural land is the division of land into separate parts that do not form a single broad unit. This is caused by factors such as buying and selling land, inheritance systems, infrastructure development, and others. Fragmented land on a narrow scale that is only managed by individuals causes diverse productivity and is not economically efficient, so agricultural products become less competitive. In addition, many agricultural lands are undergoing conversion, where the land is converted into the service sector, industry, property, or settlements. This causes changes in the structure and use of agricultural land. Efforts to overcome land fragmentation and land conversion can be made by using corporate farming.

Corporate farming is an agricultural activity that combines two or more lands to be managed by a farmer’s management. This is in accordance with the opinion of Musthofa and Kurnia (2018) which states that Corporate farming is the activity of combining agricultural land jointly held by farmers and integrated into one government.

POSITIVE IMPACT

The number of intermediaries in the agricultural commodity marketing chain causes marketing inefficiencies. This affects both producers who receive a low selling price and consumers who pay a high buying price. At the same time, profits went to traders. This makes farmers unable to increase their income because traders always put price pressure on farmers, and their bargaining position is low. Therefore, it is necessary to shorten the flow of goods distribution to minimize actors or intermediaries in the marketing chain. This can be overcome by implementing corporate agriculture so that food marketing can be more efficient by collaborating with actors within a structure.

Corporate agriculture can also increase farmers’ income because, generally, it sells goods directly to global or international markets. This corporate agriculture can also overcome the dwindling global food security. Corporate agriculture can also increase the creation of independent, competitive, and sustainable farming companies through corporate land use. This corporate farming is implemented by utilizing effective and efficient resources, taking advantage of optimal institutional opportunities, and can also be applied to rural areas with a modern agribusiness model. This is in accordance with the opinion of Nuryanti (2005) which states that the corporate farming model can effectively help farmers. Capital constraints can be overcome through operational partnerships. Agricultural efficiency targets can be achieved through the integration of production facilities, simultaneous cultivation models, technology uniformity, integrated post-harvest marketing, and organized marketing. Without land management, each farmer’s individual land ownership rights will not be violated.

PROBLEM AND CONTRAVENTION

Corporate farming is indeed very effective in its application to agricultural land and farmers. The existence of corporate farming can also increase the income of farmers in groups. In addition, the application of corporate agriculture can be used as a government strategy to increase the income of farmers in rural areas. However, corporate agriculture has several problems that make it a challenge for farmers to implement it. This corporate farming requires a lot of money and adequate manpower so that when there are problems regarding market imbalances, corporate agriculture is generally closely related to global market developments, especially if it implements monoculture agriculture. These problems can lead to a reduction in company income, causing a decline in farmers’ economies.

PROBLEM SOLUTION

Fragmentation of agricultural land, which occurs due to the splitting of land into separate parts, has become a serious problem in the agricultural sector. This can hinder productivity, reduce competitiveness, and make it difficult for farmers to manage their land. One interesting solution to overcome the problem of land fragmentation is to apply corporate farming.

Corporate farming is an agricultural model in which large companies or corporations manage large-scale agricultural land. In the context of land fragmentation, corporate farming can bring several benefits as an effective solution:

1. Land Consolidation: Corporate farming can consolidate land by combining small land areas into larger land areas. Thus, fragmented pieces of land can be integrated into a single whole, increasing efficiency in land management and use.
2. Technology and Efficiency: Corporate companies usually have access to advanced agricultural technology. By applying modern technology, corporate farming can increase production efficiency, reduce wastage of resources, and increase agricultural productivity.
3. Resource Concentration: Corporate farming has strong financial resources and organized management. Thus, they can optimally allocate investments and resources to develop agricultural infrastructure, provide training for farmers, and improve production techniques.
4. Diversification and Food Safety: Corporate farming tends to implement crop and livestock diversification. This can improve food security, reduce risks from fluctuations in commodity prices, and increase national food security.
5. Sustainable Approach: In some cases, corporate companies adopt sustainable and eco-friendly agricultural practices. This can help reduce the negative impact of agriculture on the environment and increase the sustainability of production.
6. The role of various parties: There is a need for guidance for farmers so that they can increase their knowledge in implementing corporate agriculture, especially in the use of modern technology.

DEVELOPMENT IN INDONESIA

Corporate farming is a form of economic cooperation between farmer groups and agribusiness-oriented parties by maintaining the ownership of each farmer’s land. Implementation of Corporate farming can assist in standardizing quality, business efficiency, and better resource management. Corporate farming is considered as a combination of collectively managed land under one management with the aim of creating an independent, sustainable and competitive agricultural business through corporate land management. Other benefits obtained economically are being able to reduce production costs, increase production scale, and increase member income. Meanwhile, socially, corporate farming can strengthen cooperation between members, revive rural development, and facilitate access to education for rural communities.

The development of corporate farming in Indonesia can be seen from the various activities that have been carried out by large companies in Indonesia, such as PT. Pupuk Indonesia (Persero) is developing a 1,000 hectare Corporate Farming project developed by the SOE Food & Fertilizer Cluster in Sukamandi, Subang, West Java. The development of Corporate Farming involves 4 (four) SOEs, namely PT Pupuk Kujang as a subsidiary of PT Pupuk Indonesia (Persero), PT Rajawali Nusantara Indonesia (Persero), PT Sang Hyang Seri (Persero) and PT Pertani (Persero). The aim of this program is to increase agricultural productivity in the region and to improve the welfare of farmers from upstream (production) to downstream (marketing). In addition, this also helps increase productivity by increasing around 40 percent from the original 6 tons per hectare to 8.5 tons per hectare so that from an area of 1,000 hectares, 8,500 tons of dry unhusked rice (GKP) can be obtained.

CONCLUSION

Corporate agriculture is an alternative solution to the increasing problem of agricultural land fragmentation and land conversion in Indonesia. In this model, large companies or corporations manage large-scale agricultural land in collaboration with farmer groups. The goal of corporate agriculture is to create independent, sustainable, and competitive agricultural businesses. The application of corporate agriculture has shown positive impacts, such as reducing intermediaries in the marketing chain, increasing farmer incomes, and improving farm management. However, challenges and controversies related to high costs, the use of modern technology, and environmental impacts must be overcome by education and training for farmers and the integration of sustainable agricultural models. The development of corporate agriculture in Indonesia, such as the Corporate Farming Project by PT. Pupuk Indonesia (Persero) in Sukamandi, shows the potential to increase rice production, farmer welfare, and national food security, although its successful implementation still requires support and adjustments from various parties.

FOOD SECURITY AND CORPORATE FARMING RELATIONSHIP

By implementing corporate farming, the government seeks to improve national food security by increasing rice production and the welfare of rice farmers. Through this system, farmers will manage agriculture using modern methods, so that agricultural productivity can be increased.

HOW IS CORPORATE FARMING SUCCESSFUL?

Based on research conducted by Kasijadi et al., (2003), it was found that farmer empowerment through the corporate farming model in East Java has not been well received by farmers, especially regarding the handover of land management and land consolidation. However, the results of a study conducted by Musthofa and Kurnia (2018) show that implementing a corporate farming system can increase the income of farmers who are members of the Golden Gate Agricultural Cooperative in Bandung Regency, West Java.

SOURCE

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• Kasijadi. 2003. Pemberdayaan petani lahan sawah melalui pengembangan kelompok tani dalam perspektif corporate farming di Jawa Timur. Jurnal Pengkajian dan Pengembangan Teknologi Pertanian, 6(2): 117-130
• Kementan. 2023. Ingin Membentuk Korporasi Tanaman Pangan? Begini Caranya. Media Indonesia.
• Musthofa, I dan G. Kurnia. 2018. Prospek penerapan sistem corporate farming. Jurnal Agrisep, 16(1): 11-22
• Nuryanti, S. 2005. Pemberdayan petani dengan model coopertaive farming. Analisis Kebijakan Pertanian, 3(2), 152-159.
• Susanti, D. 2020. Kesiapan Penyuluh Pertanian Dalam Korporasi Petani. Cybext Pertanian.
• Yulianto, A. 2020. BUMN Corporate Farming, PI Strengthens Agricultural Productivity. REPUBLIKA.