Agribusiness Economic Sustainability in Indonesia: A System Thinking and System Dynamics Model of Productivity, Market Access, Value Chain Integration, and Farmers’ Welfare

Abstract

Agribusiness plays a strategic role in strengthening agricultural economic sustainability through the interaction of productivity, market access, value-chain efficiency, and farmers’ welfare. However, agricultural economic performance emerges from complex feedback relationships among production, market conditions, income, investment, and agribusiness capabilities. This study develops a conceptual System Thinking and System Dynamics framework for analysing agribusiness economic sustainability in Indonesia. Using a structured model-development approach based on the literature, the study identifies key causal relationships and formulates reinforcing and balancing feedback mechanisms linking agricultural productivity, market access, value-chain integration, production costs, farmers’ income, reinvestment, digitalization, and agribusiness capability. These relationships are organized into a Causal Loop Diagram (CLD) and a conceptual stock-and-flow structure that specify the principal accumulations, rates, auxiliary variables, and policy intervention points. Three policy scenarios—Business-as-Usual, Value-Chain Integration, and Integrated Agribusiness Transformation—are formulated as analytical scenarios for subsequent quantitative simulation. Because the present study is conceptual and does not yet report calibrated numerical simulation, its contribution lies in providing a dynamic policy architecture and a transparent pathway for future empirical calibration, validation, sensitivity analysis, and scenario testing. The framework highlights potential leverage points through which coordinated interventions may strengthen farmers’ economic capacity and long-term agribusiness sustainability.