Social Interaction and Price Transmission in Multi-Tier Food Supply Chains

Abstract

This research focuses on social interaction associated with price transmission in a multi-tier rice supply chain. A case study and qualitative methods are employed to examine a well-established supply network in Karawang District in Indonesia. Farmers and traders used their existing network in selling rice crops to traders and adopted a payment scheme for cash-and-carry transactions. Information on the market situation was obtained through personal interviews and observations including text messaging with farmer and trader informants. Evidence reveals that social relationships are vital in transmitting price information among networked actors to maintain the flow of rice, mitigate risk, and avoid losses due to poor quality of the rice product. Findings show that social interaction enables actors in an end-to-end rice supply chain to deal with the assurance of supply rationing.