Financial risk of smallholder dairy based on farm-scale at Malang district, Indonesia

Smallholder dairy farming become the promising venture for livelihood alternative among rural people since this farm can provide daily income from selling fresh milk and yearly yield one calf. However, farmers have limited accessed to capital and lead the question whether smallholder farmer can free from financial risks. The research objectives were to investigate profit, Debt to Asset Ratio (DTAR) and Current Ratio (CR). Respondents were divided into three scales, scale-1 (owning ≤ 4), scale-2 (having 4-7 AU), and scale-3 (controlling>7 AU). Primary data were collected by survey method with structured questionnaire and secondary data obtained from related sources. Data analysis employed descriptive technique with applying economic formulation namely profit, Debt to Asset Ratio (DTAR) and liquidity. Results found that Smallholder dairy farming in scale-3 can pursue the best daily income (IDR 15,197) in comparison with scale-2 (IDR 12,652) and scale-1 (IDR 12,559). Scale-1 represents the greater solvency (DTAR= 10.23%) than those for scale-2 (DTAR=13.40%) and scale-3 (DTAR=13.70%). Scale-2 performs the greater liquidity (CR= 3.28) compared to scale-3 (CR=3.18) and scale-1 (CR=3.16%). Study concluded that smallholder dairy farming in scale-3 (rearing>7AU) can pursue the best daily income. Scale-1 (controlling