Has the COVID-19 Pandemic created a New Pattern of Sugar Cane Trading?

Abstract

The pattern of sugar cane trading that occurred during the COVID-19 pandemic has created a new pattern of sugar cane trading in Indonesia. This study aims to determine the pattern of the trading system undertaken by sugarcane farmers, to reveal the role of social capital in shaping the sugarcane trade system during the pandemic. This research is a qualitative research that uses primary data from interviews with key informants by multistage sampling technique. The data processing includes data reduction, data display using Decision Explorer version 3.3 software. Data were analyzed through descriptive methods and content analysis. The study found that the COVID-19 pandemic formed a new pattern of sugarcane trading system, switching from a contractual trade model to a free market model (redeemer). The model refutes the theory stating that the contractual model will be more efficient than the free market model due to its lower transaction costs. The proposition (substantive theory) produced in this study states that in conditions of sugarcane commodities facing a captive market, the market mechanism is more efficient than the contractual mechanism. Furthermore, this study found that the development of accelerative information technology during the COVID-19 pandemic (social media) has destroyed social capital between sugarcane farmers and partners (sugar factories) due to cheaper information costs borne by sugarcane farmers.