Establishing Food Business of Local State-Owned Enterprises in Agriculture and Agribusiness

Abstract

The agricultural sector contributes positively to regional economic development. However, current government programs tend to prioritize only on the supply side.  It can cause an imbalance between demand, supply, and market inefficiency. To overcome the problems, the regional government can establish a food BUMD, especially in East Java. This research aims to formulate a strategy for establishing a food BUMD as a step in developing agriculture and agribusiness in East Java.  The analysis method used was SWOT by examining internal and external factors as the basis for efficient strategy formulation. The results showed that East Java's agricultural conditions were in quadrant I (aggressive strategy). Recommended strategies that can be done are mapping and prospecting agricultural production in each region, maximizing infrastructure and social capital to build a supply and value chain, maximizing the marketing of agricultural products through information and technology to reach a broader market. Besides, developing the potential areas to agropolitan area, assisting young agricultural entrepreneurs, and formulating policies to facilitate local agricultural product marketing are suggested. The establishment of the East Java Food BUMD is a strategic step with significant support for the East Java economy and can create strong cooperation with small farmers and strengthen social capital (trust, norm, and networking). Therefore, it will create a balance of supply and demand in the market, which increases the economic level of East Java people.