Financing from agricultural supply stores as a solution for increasing productivity and welfare of potato farmers

Purpose. The study identifies and assesses the factors that influence potato farmers in Jambi Province, Indonesia, choosing agricultural store financing over other sources evaluates the causal effects of this financing on income and productivity, compares production costs across different financing sources, and examines the terms, payment mechanisms, and flexibility of agricultural store financing. Methodology / approach. The research used a mixed-methods approach, integrating qualitative and quantitative data. Data were collected through in-depth interviews, questionnaires, observations, and documentation from 211 potato farmers in Kerinci Regency. The qualitative data were analysed using content analysis. In contrast, the quantitative data were examined using a binary logit model and Propensity Score Matching (PSM) to assess the impact of financing choices on productivity and income. Results. The findings reveal that agricultural supply stores are the preferred financing source for potato farmers due to guaranteed input availability, technical support, and flexible payment options. Although input costs from agricultural supply stores are slightly higher than self-financing, they are lower than those from other external sources. The analysis indicates that farmers with larger landholdings and higher production costs are likely to choose agricultural store financing. Additionally, farmers reported increased incomes and productivity due to the flexibility and support provided by agricultural supply stores. Originality / scientific novelty. The novelty of this study is that it focuses on the financing patterns from agricultural supply stores, a common but less documented phenomenon in Jambi Province. It provides new insights into agricultural supply store financing dynamics and its impact on farmers’ productivity and welfare. Practical value / implications. The study offers practical policy recommendations for the government to support more effective financing models. It highlights the need for government involvement to make agricultural store financing more sustainable and beneficial for farmers. The findings can also be adapted to understand financing dynamics in other agricultural sectors.