This study is a post-positivist paradigm phenomenologyc-interpretive research. Itwas conducted to provide an overview on how contract farming between dairy farmers and dairy cooperative is developed and what issues and challenges are faced in this contract partnership. This study also aimed to analyse the transaction cost arise in the contract. Face-to-face interviews using semi structured-questionnares were carried out with 87 contract dairy farmers located in the districts of Malang, Batu and Pasuruan in East Java Province. Result of the study shows that the practice of contract farming raised the transactioncost in the dairy cattle business resulting an increase in total cost. However, the practice of contract farming has improved the production skills of farmers, provided access to credit and guarantee market for their milks. In addition, the productivity and efficiency of dairy farmers can be further improved by introducing good farming practices through an improvement on farm management practices including the provision of inputs, transportation, extension services, and technological support.
Impact Factor
2022: 6.012
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