Digitalizing the Food Value Chain: Strengthening Farmers’ Position and Welfare
Authors
Koes Afifah Qurratuaini Putri
Kadir Ruslan
The lengthy value chain in Indonesia’s food commodity trade continues to be a factor that can disadvantage farmers. Concrete implementation of direct market access for farmers, as mandated by Law No. 19/2013 on the Protection and Empowerment of Farmers, still needs to be improved, as it has significant implications for farmers’ welfare.
Digitalizing the food value chain in distribution and marketing is a transformative effort to create a more equitable system. By ensuring farmers’ rights and improving their welfare, the digitalization of the food value chain will build a resilient food system and strengthen national food security.
The shift toward digital markets through digitalization creates opportunities to address existing market-access barriers and improve farmers’ welfare. This occurs through various mechanisms, including reducing information asymmetry, providing farmers with greater flexibility in marketing and promotion, and lowering the costs of distributing and circulating products.
Digitalization drives a transformation in the agricultural development paradigm through a demand-driven model, moving from a production centric approach to an income- and welfare-centric approach, which aligns agricultural production with market dynamics and needs.
The government must set policy directions that prioritize farmers’ welfare and empowerment, as well as creating a regulatory environment that supports innovation and private-sector engagements. As such, digital transformation can take place effectively and inclusively. It is also imperative to develop a comprehensive roadmap, expand internet penetration in rural areas, improve farmers’ digital literacy and capacity, and strengthen physical infrastructure to support distribution.
