Value Chain Analysis of Arabica Coffee in Karanganyar Regency, Central Java Province, Indonesia

¹ Department of Agribusiness and Bioresource Economics, Faculty of Agriculture, Universiti Putra Malaysia, Malaysia
² Department of Agribusiness, Faculty of Agriculture, University of Muhammadiyah Yogyakarta, Indonesia

^* Corresponding author: okiwijaya@umy.ac.id

Abstract

Coffee remains one of Indonesia’s most important agribusiness commodities, yet inefficiencies and unequal value distribution persist along its supply chain. This study aims to analyze the Arabica coffee value chain in Central Java by examining income structures, margin distribution, and value-added creation among different actors. Primary data were collected from farmers, a first processor (green bean), and second processors (Jokolangan and Juru Kopi). Using the Hayami method, value-added ratios and financial performance were calculated to assess economic efficiency. The findings reveal that farmers achieve the highest monthly income despite low cherry prices, attributed to low fixed costs and efficient small-scale operations. The first processor obtained the highest value-added ratio (30%), while the second processors incurred financial losses when depreciation was included, indicating limited asset utilization and unstable supply. Although roasted beans command higher prices, their downstream value-added ratios were lower (20.72% and 17.06%), reflecting distinct operational strategies between processors. These results demonstrate persistent structural inefficiencies and unequal value distribution within the regional coffee chain. The study highlights the need for improved post-harvest quality, more efficient roasting processes, stronger cooperative institutions, and adaptive pricing strategies to enhance competitiveness and sustainability in Indonesia’s coffee agribusiness sector.