Management of Agricultural Facilities through Village-Owned Enterprises in North Gorontalo Regency, Indonesia

Abstract

Village-owned enterprises represent a central institutional mechanism through which Indonesia's decentralization framework seeks to transform village fund allocations into sustainable local economic activity. Yet despite their developmental mandate, a substantial proportion of BUMDes particularly those operating in agricultural sectors in peripheral regions fail to generate meaningful economic returns for village communities, a pattern that remains insufficiently explained in the existing literature. Drawing on institutional theory and collaborative governance perspectives, this study investigates the governance factors constraining the management of agricultural facilities through BUMDes Ipilo Makmur in Ipilo Village, Gentuma Raya District, North Gorontalo Regency, Indonesia, with a focus on three interrelated dimensions: planning, cooperation, and supervision. A qualitative descriptive case study design was employed, with data generated through in-depth interviews with seven purposively selected informants, supplemented by field observations and document analysis. Thematic analysis of the data reveals that all three governance dimensions are critically deficient and operate as mutually reinforcing institutional constraints. Planning processes were formally initiated but substantively inadequate, lacking financial risk assessment mechanisms and community compliance protocols, resulting in systematic farmer loan defaults and working capital immobilization. Cooperative relationships between BUMDes management and farming beneficiaries were undermined by misaligned community perceptions of revolving fund capital, inequitable service delivery, and nepotistic practices within the management structure. Village government supervision was rendered ineffective by primordialism and supervisory capture, preventing the detection and correction of compounding operational failures. Together, these deficiencies constitute a governance deficit system in which inadequacies across all three dimensions interact to accelerate organizational decline driving BUMDes Ipilo Makmur to the verge of operational collapse within one year of establishment. The study contributes an integrated governance deficit model that conceptualizes planning, cooperation, and supervision as mutually conditioning institutional constraints, extending collaborative governance theory to the underexplored domain of agricultural BUMDes in peripheral Eastern Indonesia. The findings have direct implications for the design of governance reform interventions in village-owned agricultural enterprises across Indonesia's outer islands.