why small-scale tuna fishers in indonesia enter into contracts
TRANSCRIPT
Life Impact | The University of Adelaide
Why small-scale tuna fishers in Indonesia enter into contracts: the influence of transaction costs, risk and trust (study case in East Java, Indonesia)
Dias Satria
Life Impact | The University of AdelaideSlide 2
Introduction
• The development of the small-scale fishing economies requires an improvement of the market institution to ensure the reduction of the transaction costs.
• The development of the market institution in artisan Tuna’s fishing economies is one of the important parts in connecting smallholders from the remotes area to the global markets.
• These improvements at the end will support local economic development that can improve artisan fisher’s welfare.
Life Impact | The University of AdelaideSlide 3
Transaction Costs Economics (TCE) model posits that a governance structure is chosen in order to economize on transaction costs. (Williamson, 1995)
The increased use of contract arrangements in small-scale Tuna Fishing Economies between fishers and middlemen.1. Reduce price risk (Boehlje and Ray, 1999).2. Risk management (Hayenga et al. 2000)3. Access to capital, so they can invest in productive assets (Key
and McBride, 2003).4. Get a wider market access (Muth, 2007).
Life Impact | The University of AdelaideSlide 4
Transaction cost economics framework
Governance structure
choice
Asset and human
specificity
Uncertainty
Frequency
Life Impact | The University of AdelaideSlide 5 (Chilles and McMackin, 1996; Khoi Son 2011)
Risks and trust in Transaction cost economics framework
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Fish marketing arrangements and organization Transaction characteristics in SFE (Small-scale fishing economies) Transaction costs in SFE Role and services provided by intermediaries (Middlemen) in SFE (Platteau &
Nugent 1992); (Lem et al. 2004); (Khoi & Son 2011); (Carnaje 2007) and (Merlijn 1989).
The importance of social ties and relation norms (trust) in contractual arrangements (B. 1975; Batt 2003; Batt & Rexha 1999; Doney & Cannon 1997; Hoffler 2006; Moorman, Deshpande & Zaltman 1993).
Small-scale tuna fishing economies
Life Impact | The University of AdelaideSlide 7
Research Gap
Transaction Cost Economics
Risks behavior
Trusts
small-scale Tuna
fishing economies
Life Impact | The University of AdelaideSlide 8
Transaction Characteristics
• Asset and human specificity
• Uncertainty• Frequency• Others
Marketing arrangements
• Spot markets (auction markets)
• Hybrid (contract)• Vertical
integration
Risks behavior
Trust
Transaction costs
Model development
Life Impact | The University of AdelaideSlide 9
Objectives
To examine the importance of risks behavior, trust and the transaction characteristics (asset and human specificity, frequency and uncertainty) in triggering small-scale tuna fishers to engage in a contract with intermediaries.
1. To investigate the transaction characteristics factors (asset & human specificity, frequency and uncertainty) influencing small-scale fishers to engage a contract with the intermediary.
2. To examine the importance of risk behavior in the contract relationship between small-scale fishers and the intermediary.
3. To analyze the role of trust in the contract fishing in small-scale tuna fishing economies.
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Methods
1. Introduction
2. Questionnaire development
3. Operationalization and measurement variables
4. Selection of the samples
5. Data analysis
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Result and discussion
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Demographic of tuna fishers in East Java
Slide 12
Life Impact | The University of AdelaideSlide 13
Ethnicity
Jawa
Madura
Bugis
Bajo
Flores
Ambon
Lombok
Others
0 10 20 30 40 50 60 70 80
23.57
0.38
68.44
0.38
0.76
0.76
3.04
1.13
Slide 13
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Transaction costs, risks and trust in artisan Tuna fishing economies
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Demographic profile • Age• Ethnic• Education • Andon
Transaction Characteristics • Asset specificity• Human specificity• Uncertainty • Frequency
Transaction costs • Searching costs• Negotiation • Monitoring
Risks behavior
Trusts
Probit model
Life Impact | The University of AdelaideSlide 16
Policy options
• Development of market institutions especially in functioning the auctions market system (Market access to regional and international traders)
• The importance of legal frameworks and enforcement in market arrangements to reduce risks.
• Investment policy in regards to the attraction of the foreign processors close to the port. (cut the transaction costs)
Life Impact | The University of AdelaideSlide 17
Acknowledgment
Ministry of Education, Indonesia School of agriculture, food and wine, The University of Adelaide Brawijaya university, Malang, Indonesia Dr Elton Li (Principal supervisor) Dr Amos Gyau (External supervisor) A/Prof. Johan Bruwer (Prev. co. supervisor) Mark K. Brindal (Independent supervisor)
Life Impact | The University of AdelaideSlide 18
Thank you