Summary of Literature Review

The main points found in the literature review summarizes the definitions of agriculture cooperatives, DFS, profitability, and evidence of impact. One thing that needs to be highlighted is the definition of agriculture cooperatives versus agriculture enterprises, and which one is appropriate to use in this research. In conclusion, for the ease of understanding, the term ―agriculture cooperatives‖ are redefined as ―agriculture enterprises‖ to give the same perspective in the discussions that follow.

In this study, profitability is measured by total revenue, total variable costs and gross margin. Based on a similar study by Mugula and Mishili (2018), the measure for profitability commonly used in agriculture is the gross margin. It indicates the cost of production of alternative agriculture, which helps to make farm management decisions.

Gross margin is useful in analyzing the performance of the use of agriculture technology, including DFS, and will discover areas where one could possibly make improvements (Mugala & Mishili, 2018). Although gross margin provides the information about how much mark up to make on sales, it is not the best measure of profitability of an enterprise as a whole because it excludes many costs such as financing costs and overhead expenses.

However, gross margin is a term that is easily understood by farmers and the data can be found easily, so this is the reason why gross margin is taken as one of the measures of profitability.

The research questions are developed based on the summary of the literature review, which found a research gap as a starting point for this research. The summary of the literature review is presented in table 8.

Table 8. Summary of the Main Literature Review

Authors Topic Result

Dogandjieva, et al.

(2015)

How to measure the impact of rural and agricultural finance on clients.

There is little quantitative evidence around some factors that contribute to the assessment of impact, therefore there are research gaps that could be prospects for future studies.

Franken & Cook (2015) Informing measurement of agriculture enterprise performance.

The measurement commonly used is the typical financial ratios for investor-owned firms.

The nature of business and the dual objective of agriculture enterprises (member benefits vs.

profit) are challenges that need to be answered in future studies.

Gomber, et al. (2017) Digital finance and fintech:

current research and future research directions. researchers and practitioners in the field of digital finance,

How efficient and productive are co-operatives in Indonesia?

Empirical evidence from data envelopment analysis.

This study empirically measured total factor productivity level of the agriculture enterprises in 33 provinces nationwide. The results show that agriculture enterprises were enormously inefficient. Of 33 provinces, only agriculture enterprises in 14 provinces were found to experience an increase in their total factor productivity. The agriculture enterprises should

Table 8. (continued) Lisányi (2018) Integration efforts in

Hungarian agriculture after regime change.

The break-up of large agri-cultural holdings had serious negative impacts on food increase in consumer prices.

Agriculture enterprises have a key role in effectively tackling the common challenges that small-scale producers have to face.

McIntosh & Mansini (2018)

The use of financial technology in the agricultural sector.

The finance sector allows agriculture to contribute to economic growth and poverty reduction. A rapidly evolving technological landscape opened up new possibilities to target and price credit, share risk, and use of agriculture enterprises in Indonesia.

One of the focus in this paper is on financial access and business development of agriculture enterprises. The limitation of this research is in its use of aggregate level of agriculture enterprise data as a whole,

Table 8. (continued) Mugula & Mishili (2018) Profitability analysis of

sustainable agriculture practices to smallholder maize farmers in Kilosa district, Tanzania.

The study assessed smallholder farmer‘s decision to adopt sustainable agriculture practices (SAPs) based on the profitability margin among smallholders.

The decision to adopt SAPs was largely influenced by the profit margin between different practices and that a farmer was likely to adopt SAPs after comparing the returns obtained to a number of agriculture practices.

Ozili (2018) The impact of digital finance on financial inclusion stability.

The digital finance area has not been critically addressed in literature. Digital finance and financial inclusion has several benefits to financial services users, digital finance providers, governments and the economy.

There are still a number of issues, which if addressed, can make digital finance work better for individuals, businesses and governments.

Shofawati (2019) The role of digital finance to strengthen financial inclusion and the growth of SME in Indonesia.

The literature study in this paper mostly refers to Ozili (2018).

The results show if the excluded population of Indonesia are willing to actively participate in financial data inclusion by obtaining online banking login and other forms of digital access credentials, they will be able to use digital channels to carry out basic financial services, leading to greater financial inclusion.

Szabó (2012) Support for farmers‘

cooperatives: case study report Performance and sustainability of new emerging cooperatives in Hungary

Regarding performance and sustainability, it is extremely important for cooperatives to get EU and national support.

However, collective action problems of farmers and coordination issues in food chains cannot depend on the EU and/or government support.The other most important factor is reletad to the „human factor‖ of cooperation.

Source: Researcher’s own summary, 2020

Those literature review presented in table 8 are the main sources that made up the basis of this research. The results found in table 8 disclosed a research gap: DFS as one aspect of digital innovation in agriculture enterprises could have a more significant role in order to increase the profitability of the agriculture enterprises as a whole.