Market Channel Efficiency and Price Transmission Patterns of Virginia Tobacco in Bojonegoro, Indonesia

¹ Agribusiness Department, Faculty of Agriculture and Animal Science, University of Muhammadiyah Malang, Jl. Raya Tlogomas 246 Malang, 65144, Indonesia
² Agribusiness Department, Faculty of Agriculture, University of Bojonegoro, Jl. Lettu Suyitno No.2, Bojonegoro, 62119, Indonesia
³ Agribusiness and Food Entrepreneurship Department, Faculty of Animal Science and Agricultural Technology, Silpakorn University Phetchaburi IT Campus, MV27+J94, Sam Phraya, Cha-am District, Phetchaburi 76120, Thailand
⁴ Agrotechnology Department, Faculty of Agriculture and Animal Science, University of Muhammadiyah Malang, Jl. Raya Tlogomas 246 Malang, 65144, Indonesia

^* Corresponding author: festyputri@umm.ac.id

Abstract

This study aims to analyze the marketing channels, marketing efficiency, farmers' share, and price transmission elasticity of Virginia tobacco in Bojonegoro, Indonesia. The applied methods encompass a descriptive quantitative approach through field observations and interviews, complemented by calculations of marketing margins, margin distribution, farmers' share, channel efficiency, and price transmission elasticity. The results indicate that Marketing efficiency analysis indicates that Marketing Channel 1 is more efficient than Marketing Channel 2, reflecting a more optimal margin distribution and a profit share that is more favorable for farmers, allowing them to receive a fairer portion of the supply chain and minimizing dependence on intermediaries. Marketing efficiency in Channel 1 was recorded as superior, indicating relatively lower distribution costs and a more proportional profit allocation. The price transmission elasticity value of 10.62 that changes in prices at the end-market level are transmitted to farmers' prices at a greater proportion, making the prices received by farmers highly responsive to market fluctuations. Farmers should strengthen their bargaining position by forming cooperatives or establishing direct partnerships with processing industries to reduce dependence on dominant traders. Additionally, improving market access, price transparency, and post-harvest management can help stabilize income and minimize the impact of price fluctuations.