Banana Supply Chains in Indonesia and Australia: Effects of Culture on Supply Chains

Abstract

Research on banana supply chains (BSCs) was conducted in 2001 and 2002 through two case studies, BSC1 (Indonesia) and BSC2 (Australia). BSC1 supplied local banana varieties from small farmers in the Bayah District in Banten Province to traditional markets in Jakarta through the Jakarta central market. In BSC2, Cavendish bananas from growers in North Queensland were marketed through a wholesale agency in Sydney to supermarkets and other high-quality retailers. This paper discusses the effects of culture on the operation of both chains. Data were derived from interviews with chain members and observation of their daily activities, and transcripts were categorised using qualitative software.
In both chains, strong and long-term relationships formed the basis of all chain activities, however the nature of relationships between the chain members differed significantly between those in BSC1 and BSC2, particularly at the upstream (farmer and village) levels. Culture affected the way in which members related and communicated their ideas to each other. Relationships in BSC1 villages were dominated by traditional value systems, social stratification and indebtedness that encouraged paternalistic approaches by the buyers toward the sellers. Chain members’ relationships in BSC2 were more egalitarian and in some cases developed into strong friendships. The culture, as expressed through the nature of these relationships, affected the pricing mechanisms and farmers’ bargaining inclination. Despite the differences, each chain performed relatively effectively, adapting to its needs within its cultural environment.