Adoption of Multiple Dairy Farming Technologies – Issues and Opportunities for Smallholder Dairy Farmers in West Java, Indonesia

Abstract

Increasing domestic demand for dairy products presents market opportunities for smallholder dairy farmers in Indonesia. However, low productivity and poor milk quality prevent most smallholder dairy farmers from benefitting from these opportunities. The adoption of improved dairy farming technologies and practices can increase smallholder dairy farmers’ milk productivity and milk quality. There have been many dairy development programs in Indonesia attempting to increase technology adoption; yet, adoption of key technologies remains low. This thesis attempts to understand Indonesian smallholder dairy farmers’ awareness of technologies, their adoption behaviour, and their main barriers to adopting multiple technologies. It also examines the effects of technology adoption on smallholders’ milk production. The thesis has three main analytical chapters, which address the research objectives through multiple methods: descriptive analysis, cluster analysis and econometric modelling. The analytical chapters use a primary cross-sectional dataset from a survey of 600 dairy farming households located in four dairy producing districts in West Java Province, Indonesia. A Latent Class cluster analysis is used in the first analytical chapter to identify two unique subgroups of dairy farming households based on their awareness and adoption patterns (adoption, dis-adoption, and continued adoption) of multiple on-farm dairy technologies. Relative to the ‘High awareness/high adoption’ cluster, households in the ‘Low awareness/low adoption’ cluster have significantly lower levels of awareness of all technologies; and, among ‘aware’ households, technology adoption rates are also significantly lower. Farmers in the Low awareness/low adoption cluster are older, have less formal education, manage fewer dairy cows, have less productive and profitable dairy enterprises, live further away from the cooperative and farmer group leader, and have fewer contacts with dairy extension staff. Farmers face multilayered and heterogenous constraints to adopting dairy technologies. Thus, technology dissemination programs need to ensure they meet the unique needs of subgroups of farmers. A Multinomial Endogenous Switching Regression (MESR) approach is used in the second analytical chapter to estimate the effects of three feed technology bundles on milk production. The adoption of feed technology bundles is significantly associated with smallholder farmers’ ownership of capital. Further, the adoption of technology bundles has positive and robust effects on milk production per cow, with greater effects if the technology bundle includes high protein feed concentrates. We suggest improving farmers’ awareness of the benefits of complementary technologies and improving access to inputs, such as high-quality feed concentrates. The final analytical chapter uses a new institutional economics lens to understand factors contributing to the dis-adoption of key technologies. Farmers’ reasons for dis-adoption centred on limited availability and affordability of inputs, as well as limited knowledge and lack of improved skills required for adoption. Current institutional arrangements for milk and input quality assessment and institutions provision of dairy farm inputs and services are ineffective, and contribute to dis-adoption. Programs and policies aiming to increase farmers’ adoption of technologies need to address constraints at both a farm and an institutional level.