M. Akbar Siregar Universitas Medan Area, Medan, Sumatera Utara, Indonesia.
Email: akbar@uma.ac.id
Ihsan Effendi Universitas Medan Area, Medan, Sumatera Utara, Indonesia.
Email: ihsaneffendi@staff.uma.ac.id
Saribulan Tambunan Universitas Medan Area, Medan, Sumatera Utara, Indonesia.
Email: sari@staff.uma.ac.id
Ikbar Pratama Universitas Medan Area, Medan, Sumatera Utara, Indonesia.
Email: ikbar.p@gmail.com

Abstract:

This study investigates the determinants of coffee production among smallholder farmers in Indonesia, focusing on factors such as land area, climate change, capital investment, labour availability, and coffee prices. Utilizing a structured questionnaire for data collection, the research employs Partial Least Squares Structural Equation Modelling (PLS-SEM) via Smart-PLS software to analyse both direct and moderating effects of these variables on coffee production. The findings indicate that increased land size and capital investment significantly enhance coffee yields. Conversely, climate change adversely impacts coffee production through detrimental weather patterns and elevated temperatures. Additionally, issues related to labour availability are identified as critical barriers to improving farming efficiency. The study also reveals that coffee prices mediate the relationships between these variables, with higher prices incentivizing increased production. This research contributes to theoretical understanding by elucidating the dynamics of price volatility and agricultural yields within the coffee market. It offers practical recommendations for stakeholders, advocating for policies aimed at enhancing land consolidation, promoting climate-smart agricultural practices, and improving access to financial services for coffee farmers. The study acknowledges limitations related to its geographic focus and cross-sectional design, suggesting avenues for future research at diverse geographical scales and production levels.

Keywords:Coffee Production, Climate Change, Capital Investment, PLS-SEM, Coffee Prices.