Contract Farming and Smallholders: Critical Perspective on Peanuts Contract Farming Experience in NTB Province of Indonesia

This paper examines the experience of contract farming between Garuda Food (which is represented by PT Bumi Mekar Tani (BMT) in NTB) and peanuts smallholders in NTB as the case study. The selection of this pilot model of private-smallholders partnership as the case study is worthy of study because the existence of opportunity to replicate the applied model both for the similar commodity or others in the future under the national policy on rural development. This is a complex contract farming scheme. It involves not only a private company and smallholders but also a donor program with national scale agendas that consist of testing various new approaches in rural agribusiness development and market driven research, development and extension services. This paper will present the analysis of fundamental aspects of the contract farming program, starting from the contract itself regarding how it has been designed and implemented, how the contractual relationship can emerge, as well as the changes and risks that have been caused by the scheme and how the contract addresses them.