DistantNews
Support us
🇮🇩 Indonesia /Economy & Trade

When Will Intermediary Traders Love Farmers?

From Republika · () Indonesian

Translated from Indonesian, summarized and contextualized by DistantNews.

At a glance

Analysis Sources not specified Context piece
  • Intermediary traders, known as 'tengkulak,' play a dual role in Indonesia's agricultural sector, acting as both buyers and financiers for farmers.
  • While they provide quick cash and logistical support, 'tengkulak' often dictate lower prices, potentially trapping farmers in debt and limiting their profits.
  • Despite their sometimes exploitative practices, farmers often prefer 'tengkulak' over formal institutions like banks due to simpler procedures and immediate financial assistance.

In Indonesia's agricultural landscape, the 'tengkulak,' or intermediary trader, occupies a complex and often controversial position. These traders buy produce directly from farmers, acting as a crucial link between rural producers and urban consumers. Their role extends beyond mere purchasing; they frequently provide essential capital to farmers at the start of planting seasons, offering loans or necessary supplies.

Tengkulak, usually as the one who gets the purchase price which is generally lower than the market price.

— Entang SastraatmadjaDescribing the pricing power of intermediary traders.

This financial support, coupled with their function as a ready buyer and distributor, makes 'tengkulak' appear as "saviors" to many farmers, especially during times of financial hardship. The ease of transaction and speed of payment offered by 'tengkulak' often make them a more attractive option than formal financial institutions like banks or cooperatives, which are perceived as having cumbersome procedures.

Even in the eyes of farmers, the tengkulak is considered a 'savior god' when farmers are in trouble.

— Entang SastraatmadjaHighlighting the farmers' perception of the 'tengkulak's' role during difficult times.

However, this reliance comes at a cost. 'Tengkulak' wield significant power in setting prices, often purchasing harvests at rates below market value. This practice can lead to price monopolies and trap farmers in cycles of debt, where the profits from their labor are disproportionately low compared to their initial investment and the 'tengkulak's' cut. Despite these drawbacks, a long-standing emotional and practical bond often exists between farmers and 'tengkulak,' highlighting a system that, while flawed, remains deeply embedded in the rural economy.

It is a big mistake if we 'make enemies' with the tengkulak.

— Entang SastraatmadjaAdvocating for a less adversarial relationship with intermediary traders.
DistantNews Editorial

Originally published by Republika in Indonesian. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

More Stories

From Our Blog