Analysis of Logistics Cost on Smallholder and Middleman to Foster Tea Supply Chain: A Case Study in Central Java Province, Indonesia

https://doi.org/10.22146/agritech.63671

Megita Ryanjani Tanuputri(1*), Hu Bai(2)

(1) 1. The United Graduate School of Agricultural Sciences, Ehime University, 3-5-7 Tarumi, Matsuyama, Ehime, 790-8566 Japan 2. Departement of Agroindustrial Technology, Faculty of Agricultural Technology, Universitas Gadjah Mada, Jl. Flora No. 1, Bulaksumur, Yogyakarta 55281
(2) Departement of Food Production Science, Faculty of Agriculture, Ehime University, 3-5-7 Tarumi, Matsuyama, Ehime, 790-8566
(*) Corresponding Author

Abstract


The competitiveness of Indonesian tea in the global market is diminishing due to the oversupply and inability to provide agile logistics and market-oriented quality. Therefore, this study aims to evaluate the current tea supply chain and analyze the logistics cost based on the activity-based costing (ABC) method in the smallholder and middleman tier to foster the sustainability of tea agribusiness. It was conducted in three main areas in Central Java Province, Indonesia, namely Batang, Pekalongan, and Banjarnegara regency. The method used was an in-depth interview and a semi-structured questionnaire to gain holistic information from 181 respondents. The results showed that material handling activity and transportation have the highest portion of the smallholder’s and middleman logistics costs, respectively. The total logistics cost of smallholders varied from case to case, ranging from IDR 821.7 to IDR 1,075.0 per kg of fresh tea leaves. Transportation activity and administration costs make up 30.8% of the total smallholder’s logistics cost. Meanwhile, the current development of the global tea market promotes policy adaptation on the commercial plantation tier and increases the cost of labor for plucking activity up to 2.5 times. Additionally, this study discovered the profit range of smallholders and middlemen. Therefore, the collaborative work of all parties is necessary to succeed in sustainable tea agribusiness.

Keywords


Activity-based costing; cost analysis; logistics cost; smallholder; tea supply chain

Full Text:

PDF


References

Bhatnagar, R. & Teo, C. (2009). Role of logistics in enhancing competitive advantage: A value chain framework for global supply chains. International Journal of Physical Distribution and Logistics Management, 39(3): 202 – 226. https://doi.org/10.1108/09600030910951700

Carli, G., & Canavari, M. (2013). Introducing direct costing and activity-based costing in a farm management system: a conceptual model. Procedia Technology, 8: 397-405. https://doi.org/10.1016/j.protcy.2013.11.052

DePamphilis, D.M. (2018). Mergers, acquisitions, and other restructuring activities: An integrated approach to process, tools, cases and solutions (9th ed.). USA: Academic Press. https://doi.org/10.1016/B978-0-12-801609-1.00004-X

Directorate General of Estate Crops. (2019). Tree Crop Estate Statistics of Indonesia: 2018-2020. Directorate General of Estate Crops.

Duncan, J.M.A., Saikia, S.D., Gupta, N., & Biggs, E.M. (2016). Observing climate impacts on tea yield in Assam, India. Applied Geography, 77: 64–71. https://doi.org/10.1016/j.apgeog.2016.10.004

Food and Agriculture Organization of the United Nations. (2014). Developing sustainable food value chains – Guiding principles. Rome: FAO.

Gansterer, M., & Hartl, R.F. (2020). Shared resources in collaborative vehicle routing. TOP, (28): 1 – 20. https://doi.org/10.1007/s11750-020-00541-6

Gonzalez-Gomez, J.I., & Morini, S. (2006). An activity-based costing of wine. Journal of Wine Research, 17(3): 195-203. https://doi.org/10.1080/09571260701286650

Guritno, A.D. (2017). Agriculture Value Chain as an Alternative to Increase Better Income’s Distribution: The Case of Indonesia. UK: IntechOpen. http://dx.doi.org/10.5772/intechopen.70141

Hong, S., & Najmi, H. (2020). The relationships between supply chain capability and shareholder value using financial performance indicators. Sustainability, 12 (8). https://doi.org/10.20944/preprints202003.0074.v1

International Tea Committee. (2020). Monthly Statistical Summary: October 2020. International Tea Committee.

Leung, L. (2015). Validity, reliability, and generalizability in qualitative research. J. Family Med. Prim. Care., 4(3): 324–327. 10.4103/2249-4863.161306

Lyu, X., Chen, H., Wang, N., & Yang, Z. (2019). A multi-round exchange mechanism for carrier collaboration in less than truckload transportation. Transportation Research Part E: Logistics and Transportation Review, 129: 38–59. https://doi.org/10.1016/j.tre.2019.07.004

Mataia, A.B., Beltran, J.C., Manalili, R.G., Catudan, B.M., Francisco, N.M., & Flores, A.C. (2020). Rice value chain analysis in the Philippines: Value addition, constraints and upgrading strategies. Asian Journal of Agriculture and Development, 17(2): 19 – 41. https://doi.org/10.37801/ajad2020.17.2.2

Ongkunaruk, P., & Piyakarn, C. (2011). Logistics cost structure for mangosteen farmers in Thailand. System Engineering Procedia, 2: 40–48. https://doi.org/10.1016/j.sepro.2011.10.006

Pettersson, A.I., & Segerstedt, A. (2013). Measuring supply chain cost. International Journal Production Economics, 143(2): 357-363. https://doi.org/10.1016/j.ijpe.2012.03.012

Pirttila, T., & Hautaniemi, P. (1995). Activity-based costing and distribution logistics management. International Journal of Production Economics, 41(1-3): 327–333. https://doi.org/10.1016/0925-5273(94)00085-9

Rahman, S.M., & Takeda, J. (2007). Measuring the cost of production based on size of farm operation: A study on rice farmers in Jessore Districts of Bangladesh. American Journal of Applied Science, 4(5): 274-283. https://thescipub.com/pdf/10.3844/ajassp.2007.274.283

Rybakov, D.S. (2017). Total cost optimisation model for logistics systems of trading companies. International Journal of Logistics Systems and Management, 27(3): 318-342. 10.1504/IJLSM.2017.084469

Statistics Indonesia – Badan Pusat Statistik. (2020). Indonesian Tea Statistics 2019. Statistics Indonesia.

Taghikhah, F., Voinov, A., & Shukla, N. (2019). Extending the supply chain to address sustainability. Journal of Cleaner Production, 229: 652 – 666. https://doi.org/10.1016/j.jclepro.2019.05.051

Tanuputri, M.R., Guritno, A.D., & Kristanti, N.E. (2014). Supply Chain Risk Management and Logistics Cost Structure Analysis of Corn (Zea mays L.) to Reduce the Negative Effects of Mycotoxins Growth. In Proceeding of the 16th Food Innovation Asia Conference (FIAC) 2014. Thailand, Bangkok.

Toompuu, K., & Polajeva, T. (2014). Theoretical framework and an overview of the cost drivers that are applied in universities for allocating indirect costs. Procedia - Social and Behavioral Sciences, 110: 1014-1022. https://doi.org/10.1016/j.sbspro.2013.12.948

Whicker, L., Bernon, M., Templar, S. & Mena, C. (2009). Understanding the relationships between time and cost to improve supply chain performance. International Journal of Production Economics, 121(2): 641-650. https://doi.org/10.1016/j.ijpe.2006.06.022

Zailani, S., Iranmanesh, M., Foroughi, B., Kim, K., & Hyun, S. (2020). Effects of supply chain practices, integration and closed-loop supply chain activities on cost-containment of biodiesel. Review of managerial science, 14: 1299 – 1319. https://doi.org/10.1007/s11846-019-00332-9



DOI: https://doi.org/10.22146/agritech.63671

Article Metrics

Abstract views : 2300 | views : 1681

Refbacks

  • There are currently no refbacks.


Bookmark and Share


Copyright (c) 2022 Megita Ryanjani Tanuputri, Hu Bai

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

agriTECH has been Indexed by:

Emerging Source Citation Index Directory of Open Access Journals CABI.org Dimensions Google Scholar Sinta Garuda

agriTECH (print ISSN 0216-0455; online ISSN 2527-3825) is published by Faculty of Agricultural Technology, Universitas Gadjah Mada in colaboration with Indonesian Association of Food Technologies.

website statisticsView My Stats