Institutional Interconnectivity and Farm Economic Performance in Urban Chili Agribusiness Systems

HistoryRapid urbanization has increased the strategic role of peri-urban horticulture in supplying city markets, while exposing smallholders to price volatility, fragmented distribution, and coordination constraints.This study examined the economic performance of semi-organic curly chili (Capsicum annuum) farming in Makassar, Indonesia, and analyzed the association between institutional interconnectivity and farm economic outcomes using the Resources-Organization-Norms (R-O-N) framework.A descriptive quantitative design was applied using census data from 148 farmers across 11 farmer groups, complemented by interviews with 25 key informants representing farmer group leaders, farmer group associations, extension institutions, and marketing actors.Economic performance was evaluated through costrevenue analysis, R/C ratio, ROI, break-even analysis, price-decline sensitivity tests, and coefficient of variation (CV) risk assessment.Institutional conditions were analyzed through the R-O-N framework, an Institutional Interconnectivity Index, DEA-based technical efficiency (TE_VRS), and HC3-robust regression models.The results showed that semi-organic chili farming was financially feasible and relatively robust under moderate price shocks, with productivity of 12,126.82kg ha⁻¹, net income of IDR 184.15 million ha⁻¹, R/C = 2.55, and ROI = 154.70%.Institutional interconnectivity was very high, with an Institutional Interconnectivity Index of 4.612 ± 0.110.However, its direct associations with income per hectare and loss during shock were weak and non-significant.Farm income was more closely associated with technical efficiency, yield, selling price, and cost per kilogram, whereas shock-related loss was associated with land area and cost per kilogram.These findings indicate that institutional interconnectivity serves primarily as an enabling condition that supports farm performance through efficiency, productivity, price realization, cost management, and adaptive coordination, rather than as a single direct determinant of income.