Optimizing the Smallholder Arabica Coffee Supply Chain in Bondowoso, East Java, Indonesia: A Strategic Analysis Using A’WOT

The research site was selected using purposive sampling because Bondowoso Regency is the largest Arabica coffee production center in East Java Province. This regency is also designated as a national coffee cultivation hub, as stated in the Minister of Agriculture Decree No. 830 of 2016 and Decree No. 472 of 2018 on national agricultural zones. Data collection was conducted in April-August 2024, followed by data analysis in September-November 2024 using a quantitative descriptive approach. Report preparation and article writing were conducted in December 2024, and continued with the scientific publication process in 2025.

The expert sampling based on non-probability sampling, involved considerations such as the relevance of the experts' education, their experience, and their track record of expertise. The experts involved in evaluating an efficient coffee supply chain development strategy model comprised ten individuals, including two farmers, two representatives from processing units (UPH), one large-scale trader, one exporter, two experts from coffee agencies, and two academics/researchers in coffee. These experts possess substantial knowledge and experience in both academic and practical aspects of the coffee industry. The qualification of experts is either academics with masters/doctorate degree education and have research experience on supply chains or policy makers or practitioners, such as heads of farmer’s groups, processors, traders, exporters in the Arabica coffee industry with at least 10 years’ experience.

To evaluate and create effective strategies for developing the smallholder Arabica coffee supply chain, the SWOT-AHP method, also known as A'WOT, was employed. A'WOT analysis is a robust quantitative approach used to systematically evaluate the identified SWOT elements [21]. By assessing the supply chain's advantages, disadvantages, opportunities, and risks, this research helps create a model that can increase Arabica coffee producers' production. Based on the replies of the informants, indicators were chosen from these components. Each indication was then given a rating and a weight by the informants. An indicator's role in relation to other indicators is indicated by its weight. Each informant's weight was averaged to determine the weight value. On a Likert scale, the rating displays the informants' opinions on each indicator (1 being not important, 2 being less important, 3 being important, and 4 being extremely important). The average of all informants' ratings was also used to calculate the rating value. The weight and rating were then multiplied to determine the final score. The Arabica coffee supply chain efficiency plan is determined by this score. SO (Strength-Opportunity), WO (Weakness-Opportunity), ST (Strength-Threat), and WT (Weakness-Threat) are the methods that are given priority. The SO strategy is selected if the difference between the scores of strengths and weaknesses is positive while the difference between opportunities and threats is positive. If there is a positive difference between opportunities and threats and a negative difference between strength and weakness ratings, the WO approach is chosen. If there is a positive difference between the strength and weakness scores and a negative difference between the opportunities and threats, the ST strategy is chosen. If there is a negative difference between the strengths and weaknesses ratings, as well as between the opportunities and threats, the WT approach is chosen.

The Analytic Hierarchy Process (AHP) is a valuable decision-making tool. As AHP targets small to medium-sized groups rather than broader social surveys, it can only be used by specific experts [22]. The AHP structure includes components such as consistency, weighting, and hierarchical organization. A pairwise comparison scale with a value range of 1-9 based on a hierarchical structure, as indicated in Table 1, may be used by experts to determine the degree of relevance. Comparing items in pairs to determine which is more favored, which has more quantitative characteristics, or if the two are similar or identical is known as pairwise comparison. Scientific investigations pertaining to operational reduction (C1), product quality improvement (C2), distribution speed (C3), and stakeholder participation (C4) employ the pairwise comparison approach [23]. Relative weights between criteria and options are generated by the pairwise comparison matrix. A criterion's significance for the selected alternative will be evaluated by comparing it to other criteria.

Table 1. Pairwise comparison scale [24]

The AHP approach recommends suitable metrics for evaluating pairwise matrix consistency. The following is the formula for the Consistency Index (CI).

$\mathrm{CI}=\frac{\lambda \max * n}{n-1}$        (1)

The Analytic Hierarchy Process (AHP) is a useful method for making policy decisions. It allows for identifying pressing policy issues and prioritizing tasks within complex situations.

The A'WOT method combines both approaches effectively. Pairwise comparisons are carried out as part of the SWOT-AHP analysis procedure. The results from the SWOT analysis can quantitatively indicate preferences for setting future strategies using strategic factors from the SWOT structure, helping policymakers and top managers to minimize weaknesses and threats while leveraging strengths and opportunities [25, 26]. However, further debate and improvements are necessary to address existing weaknesses and threats. To tackle these issues, this research also conducted brief interviews with ten experts.

Coffee, as a commodity, faces price variability over time [27]. One of the biggest issues facing Bondowoso coffee producers is the volatility of world coffee prices. The viability of coffee cultivation operations and farmers' earnings may be directly impacted by this price volatility.

Based on the results of the research, strategies to improve the efficiency of the Arabica coffee supply chain can be described as follows:

1. Strengthening Quality and Standards: Improving production processes can enhance product quality, potentially increasing sales performance by 15% [28]. The specialty coffee sector in Nicaragua has improved a number of sustainable coffee certification programs in response to the livelihood crisis that millions of coffee growers and rural communities are facing. The value chain structure where certification programs are implemented is highly diverse and significantly impacts livelihood outcomes. Nevertheless, each certification necessitates more work and expenses for the organization and the farmer [29]. However, the implementation of this strategy is not free from various obstacles. Certification requires additional costs for training, post-harvest infrastructure and annual audits, which are difficult for smallholders to afford due to limited access to funding. In addition, there is a technical capacity gap, with some farmers lacking the skills to meet high-quality production standards. Another obstacle comes in the form of resistance to new policies, especially if farmers do not immediately feel the economic benefits. On the other hand, not all markets provide proper price incentives for certified products, which demotivates farmers. Lack of coordination among stakeholders can also slow down the implementation of this strategy. Therefore, comprehensive support from financial institutions, integrated training, and market assurance are crucial factors in driving the success of the coffee quality improvement strategy.
2. Development and Enhancement of Infrastructure: Investing in processing, storage, and distribution infrastructure to improve efficiency and reduce post-harvest losses. Research found that one of the causes of the underdevelopment in the coffee value chain is the high logistics costs associated with reaching markets [30]. The availability and quality of infrastructure supporting the flow of goods from farmers to end-users are crucial [31].
3. Capacity Building and Empowerment of Farmers: Providing the farmers with training on effective agricultural techniques, orchard management, and post-harvest practices. Training programs should be tailored to existing experience and include new techniques that can enhance coffee yield and quality.
4. Diversification and Adaptation: Coffee producers should enhance the production of high-quality coffee and diversify post-harvest processes to produce coffee with more distinctive characteristics [32]. Exploring new markets can help mitigate the impact of global price fluctuations.
5. Climate Change Adaptation Strategies: Coffee production and growth are both directly and indirectly impacted by climate change [33, 34]. The production of coffee, including both yield and quality, is significantly affected by climate change. Potential environmental solutions include shifting cultivation elevations, developing resilient new cultivars, altering agrochemical inputs, and implementing agroforestry [35, 36]. Additionally, improving water use efficiency and incorporating organic soil amendments are crucial for moisture retention, with organic fertilizers considered a strategic response to climate change [37]. Rainfall and slope also affected soil organic matter in coffee plantations [38].
6. Risk Management and Regulatory Changes: Ensuring compliance with quality standards and international regulations by implementing systems for monitoring and analyzing changes in export-import regulations.
7. Supply Chain Optimization: Optimizing the logistics processes from the farms to the global market by reducing transit time, transportation costs, and risk of damage. Coffee value chain partnerships have the potential to reverse the current decline in coffee production, enhance farmer productivity, and address issues related to low-quality and inconsistent coffee supply.

By empowering and improving the capacity of farmers, the efficiency of the coffee supply chain can be enhanced because the coffee they produce will be more productive and of higher quality. The supply chain heavily relies on a consistent and high-quality supply of raw materials. Empowered farmers can adopt more productive, innovative, and sustainable agricultural practices.

Through training and technical support, farmers can enhance their knowledge of more effective cultivation techniques, technology utilization, and improved land management. Training and capacity development, as well as ongoing retraining of farmers, are crucial for the adoption of advanced agricultural technologies [39]. Such training can significantly support the enhancement of coffee productivity [40]. Technology preferences shape adoption and land use decisions in production systems. This capacity improvement will directly impact better coffee quality and more optimal yields, thereby enhancing the efficiency of the entire supply chain by reducing reliance on additional inputs to improve quality at subsequent stages. Empowering farmers is also closely related to environmental and social sustainability. By educating farmers about environmentally friendly agricultural practices, the efficiency of the supply chain can be improved in the long term through the adoption of more sustainable practices. This approach not only reduces operational costs but also ensures the sustainability of the coffee supply. Coffee growers benefit from enhanced market access and more value addition as a result of these sustainable techniques, which also help to preserve the environment [41].

Empowering farmers also fosters closer collaboration among farmers and other stakeholders in the supply chain, such as cooperatives, processors, and distributors [42, 43]. Cooperatives can play a pivotal role in empowering smallholder farmers, particularly in enhancing their agricultural productivity and economic opportunities. With improved connectivity, the distribution and management of coffee supplies can be carried out more swiftly and efficiently, reducing communication and coordination barriers. Only through the integration of all involved parties can social, economic, and environmental benefits for all stakeholders be assured [44].

Empowerment helps farmers become more independent in managing finances, accessing markets, and negotiating prices [45]. The stability of the whole supply chain is preserved by more successful farmers since they have greater negotiating power and can generate more steady revenue. In the Analytical Hierarchy Process (AHP) study, the strategy of capacity building and farmer empowerment is seen as a top priority since farmers are essential to the success of the whole coffee supply chain. By adopting sustainable farming techniques, lowering costs, and fostering more collaboration, enabling them will result in increases in quality, production, and overall efficiency. Specifically for the coffee industry in Bondowoso, this strategy lays a strong foundation for long-term sustainability and success.

However, the implementation of this strategy also faces a number of potential barriers that could reduce the practical value of this approach. One of the main barriers is the funding gap, where many smallholders do not have access to sufficient financial resources to attend training, purchase tools, or implement new technologies. In addition, farmers' lack of trust in external institutions and resistance to changing traditional farming methods can hinder the effectiveness of empowerment programs. Limited experts and training facilities in rural areas are also a challenge. From a policy perspective, top-down program implementation without active involvement of farmers may lead to resistance to new policies. Therefore, the feasibility analysis of this strategy needs to include institutional readiness, access to funding, and participatory program design. Without adequate policy support and active multi-stakeholder involvement, this empowerment strategy risks not achieving the expected results despite its great theoretical potential.