Family Business in Agriculture: Challenge and Strategy to Face Global Business

Family business as the most business practice in the agricultural sector faces a challenge from global business via the Free Trade Agreement (FTA). The purpose of this paper is to provide business strategies that support the competitiveness of the family business in the global value chain. We reviewed related literature on family business and agriculture to describe the challenge and propose strategies that can bridge agricultural family business to become competitive. The study highlighted two challenges, namely labor usage, and capital usage. The amount of labor usage in Indonesia's family business was higher than the global business. However, the competitiveness by labor usage was determined by knowledge transfer and farmers' cooperation. Thus, the total value of capital usage in Indonesia's family business was lower than the global business. The capital usage was driven the competitiveness by social capital reinforcement, capital allocation, and capital availability. In this case, The Indonesian family business was found not able to take advantage of capital usage. The study proposed a strategy for the family business was to overcome the threat of labor usage by using its capital usage strength. These findings highlighted the importance of strengthening family business in agriculture sector based on each strength to overcome global trade challenge and take the opportunity from it. This paper may avail governments in drawing up policies for assisting the family business in the agriculture area to get global. It also contributes to the limited source of references literature regarding family business in agriculture in Indonesia. Keywords— family business, agriculture, business strategy, global trade, global value chain