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The purpose of this paper is to examine the factors influencing Indonesian farmers’ use of the warehouse receipt system (WRS) and their choice of private and public warehouses.

Primary data were collected through questionnaires administered to 500 farmers in two districts, Subang and Cianjur, in West Java Province in Indonesia. Binary logit regression was employed to examine the factors influencing farmers’ use of the WRS. Binary and bivariate probit regressions were employed to determine the factors influencing farmers’ choice of private and public warehouses.

The empirical results of the binary logit regression revealed that age, land ownership, selling price, the use of the warehouse receipt as collateral security and the availability of transportation facility positively influenced farmers’ use of the WRS, whereas education, income, farm profit and participation in farmers’ group negatively influenced farmers’ use of the WRS. The results of the binary probit regressions revealed that profit, availability of insurance and processing facility positively influenced the farmers’ decision to use the private WRS, whereas education, production, selling price and distance from the farm to the warehouse negatively influenced farmers’ decision to use the private WRS. Age, education, selling price and distance from the farm to the warehouse positively influenced the farmers’ decision to use the public WRS, whereas production and availability of processing facility negatively influenced the decision of farmers to use the public WRS.

This study highlights the importance of education and government assistance regarding the provision of facilities and price indemnified insurance for successful implementation of the WRS.

This study provides an empirical contribution to the existing literature on the development of WRS in Indonesia. In terms of methods of analysis, previous studies used purely qualitative and descriptive methods, whereas this study employed econometric techniques (i.e. binary logit, binary probit and bivariate probit regressions) to examine the WRS in Indonesia. In addition, whereas previous studies explored the WRS in general, this study investigated the farmers’ use of the public and private warehouses in addition to exploring the WRS in general. Finally, the finding that the average annual profit of non-users was significantly higher than that of the users of the WRS is striking, and this could be attributed to the current challenges of the implementation of the WRS, including high transportation and warehouse rental costs.

Warehouse receipt system (WRS) schemes aim to revitalize the market of cash crops, particularly those of the smallholder farmers. However, the existing government schemes for the smallholder farmers have not been much successful on account of issues related with transparency and trust deficit, thereby limiting farmers' access to credit for their farming activities as channeled via the formal financial institutions. Conceding that blockchain is an emerging technology, this study aims to theoretically posit the potential to optimize WRS in real time to bolster farmers' trust and privacy.

The research bases itself on the design science research (DSR) approach. Using the DSR approach backed by the literature review and evolutionary prototyping, a blockchain-based WRS has been advanced in the study.

This study provides a design of a digital WRS, which serves as a proof of concept of blockchain technology (BCT) applications in improving transparency in the WRS in the agricultural sector. The findings from this study present the possibility of leveraging blockchain smart contracts to improve the linkages between the WRS stakeholders to promote trust and transparency that would eventually unlock the potentials of WRS schemes. Furthermore, the findings inform decision-makers and practitioners to prioritize the emerging technologies in revamping the classical WRS.

The study leaves research pointers for implementing BCT in agricultural supply chain and furthering the findings from the present study with an empirical agenda.

Whilst research on the BCT applications across myriad sectors abounds, research on the BCT applications to address societal needs is conspicuously limited. Furthermore, research on the practical implementation of the BCT in real-world scenarios is few and far between. The present study seeks to plug these gaps by underlining the application and utility of blockchain in WRS. The study makes a significant contribution to the theory and practice of the agrarian supply chain management, specifically the WRS, by invoking design knowledge obtained through an iterative design process besides serving as an edifice for the integration of emerging technologies, notably BCT in the agricultural sector.