Agency Theory in Explaining Farmers Contract with Murabakhah System in Legundi, Ngawi Region
Farida Rahmawati(1*), Yoga Satrio Aji Kuncoro(2)
Universitas Negeri Malang
Abstract
This study explores the farmer-s contract of rice field cultivation at Legundi village, Karangjati District, Ngawi Regency. The subjects of the study are internally and externally interconnected. Internally, this study involves owners, farmers, and laborers, who are contracting the rice field cultivation. Meanwhile, it externally includes groups of farmers and markets (tengkulak). Using qualitative design with descriptive of economics type, the researcher infers that from the contract identification result seen in institutional perspective, internally, there are rice field owners as the principal, farmers as the principle/agents, and the agricultural labor as the agent. Moreover, externally, there are groups of farmers and markets (tengkulak) as the principles. Accordingly, based on sharia perspective, there are forms of ijarah (rent) cooperation and mukhabarah (profit sharing). The result of contract analysis, on the other hand, found out that there was a problem of asymmetric information and moral hazard suspected from institutional perspective due to an incomplete contract. Meanwhile, from the perspective of sharia, there was a problem which was suspected not related to the principles of sharia because of the lack of understanding about fiqh muamalah.
Keywords: Agency Theory, Murobakhah System, Farmers Contract
Topic: Halal Business Management, Marketing, and Communication