Income and employment generation from agricultural processing and marketing at the village level: A study in upland Java, Indonesia

In the rapidly growing economies of Southeast Asia, besides the emergence of processing enterprises (as discussed in chapter 9) catering to the diversifying and growing domestic and international demand, partly combined with contract-farming systems (as discussed in chapter 10), sizable informal village-level processing and marketing activities are a feature of the rural growth process. The employment and income effects for the poor can be a major factor in the spreading of rural growth benefits of commercialization for development and nutritional improvement, as was so successfully achieved in the 1970s and 1980s in Indonesia (Java). the informal sector's potential to generate local income and employment through farm product processing and marketing activities has been demonstrated with a case study of soybeans in Indonesia (Hayami et al. 1987, 1988a). Those results suggest a critically important role of such activities in generating income in local economies, as well as in improving income distribution by increasing employment.