Why Small Mills Outperform Large Ones: A Tripartite Governance Framework for Indonesia
Abstract
Postharvest losses in Indonesia’s rice supply chain have averaged 10.82% annually since the 2026 self-sufficiency declaration, highlighting the need to evaluate government interventions targeting small rice mills. This study investigates the rationale, optimal locations, and enabling conditions for public investment in small-scale milling infrastructure. Drawing on Transaction Cost Economics, the Resource-Based View, and supply chain resilience theory, the study integrates GIS-AHP to assess mobile dryer suitability, K-Medoids clustering to segment partners, and TOPSIS with sensitivity analysis to prioritize investments. Primary survey data from 2,267 milling units and procurement records from 574 active BULOG partners (2022–2025) identify Bone, Sidrap, and Pinrang in South Sulawesi as the only “Highly Suitable” region for mobile dryers, with scores above 0.75. K-Medoids shows that small mills (Cluster C; 66% of partners) achieve the highest purchase order fulfillment rate (52.63%) despite having the oldest machinery and smallest capacities, consistent with TCE predictions of high asset specificity toward BULOG. TOPSIS prioritizes 32 units in South Sulawesi, 9 in West Java, and 4 in Central Java. Sensitivity analysis confirms ranking robustness (Spearman’s ρ >0.89). The study introduces an integrated framework for targeted and resilient postharvest infrastructure investment planning.
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