Financial literacy and behaviour among smallholder farmers

Purpose. This study investigates financial literacy and behaviour among coffee and rice smallholders in Aceh Province, Indonesia. The objective is to identify determinants of financial literacy and behaviour and to analyse differences between annual coffee farming in Central Aceh and seasonal rice farming in Aceh Besar. Methodology. A quantitative survey of 392 farmers across six sub-districts was conducted using questionnaires and interviews. Partial Least Squares Structural Equation Modelling (PLS-SEM) was applied to examine latent variables including farmer characteristics, financial attitudes, decisions, knowledge, experience, and social references. Results. Coffee farmers demonstrate higher financial literacy and behaviour compared to rice farmers. Coffee farmers’ literacy is shaped by attitudes, decisions, and social references, while their behaviour is driven by literacy, experience, and social references. In contrast, rice farmers’ literacy is influenced by characteristics, attitudes, and social references, and their behaviour is determined by attitudes, knowledge, and social references. The findings highlight the mediating role of financial decisions and the strong influence of social norms. Financial attitudes and decisions are key drivers of literacy and behaviour, whereas social references play divergent roles across farming systems. Originality. The novelty of this research lies in contextualising financial literacy within two distinct farming systems – annual coffee farming and seasonal rice farming while emphasising the role of interpersonal relationships and social references in shaping financial practices. Practical implications. This research provided a better understanding of financial literacy and behaviour as well as information for developing more effective programmes and policies to improve the well-being of individuals and society. The results provide guidance for tailored financial education programmes, such as digital literacy and investment training for coffee farmers, and community-based savings and budgeting initiatives for rice farmers. These interventions are expected to strengthen rural financial inclusion, household resilience, and agricultural sustainability.