Market's Risk and Production Uncertainty: Drivers of Agroforestry Land Use Diversification of Smallholder Teak Grower in Gunungkidul District, Indonesia

Markets are always changing. To remain aware buyers and sellers must consistently update their market information. Most smallholder farmers consider only the most basic market information when making land management and crop production decisions. They have little understanding of market specifications or market channels, resulting in an unfavorable bargaining position and low prices received for their products. Market risk existed because market information is imperfect; there are information deficiency and information asymmetry. Information deficiencies include incomplete information or information that is expensive to obtain. Asymmetric information is 'when one party to an exchange has information that is not available at any cost to the other party, and that information affects the costs of the uninformed party'. Teak is planted as a 'green cash deposit' to meet urgent cash needs. Frequently teak growers sell timber trees to traders with little knowledge of 'market prices' and
'quality standards'. Better market information would be an incentive for teak growers to cultivate trees and applying proactive silvicultural management. Farmers also face high risk due to production uncertainties. As a result, they need to implement multi products strategy in their limited resources.