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Economic development is inseparable from a number of supporting sectors and government policies. The agricultural sector in East-Java Province is one of the most important sectors in regional economic development. However, government programs that only focus on supply can cause an imbalance between supply and demand. The steps that can be taken by the Regional Government are to form a government institution, which is called the Food Business of Local State-Owned Entreprises or BUMD of Food Enterprises, presenting in the market and play a role in decreasing inefficiencies in the market. The purpose of this study is to analyze internal and external factors and then formulate a strategy in the effort to establish the BUMD Food Business as a means of agricultural and agribusiness development in East-Java Province. The location of this research is in Malang Regency, Jombang Regency, Nganjuk Regency, Kediri Regency, Blitar Regency, and Tulungagung Regency with the consideration that these locations can describe the condition of each sector in East-Java Province. Data were analyzed using SWOT analysis to formulate the right strategies in the formation of East-Java Province government Food Enterprises. The results of the SWOT analysis show that the fit strategy is an aggressive type strategy, which maximizes strength and utilizes opportunities to achieve goals. The establishment of East-Java Province government Food Entrepreses is a strategic step that has significant economic leverage for East-Java Province. It can create strong partnerships with small scale farmers and can strengthen social capital, which includes strengthening trust, norms, and networking. So, there will be a balanced market between supply and demand, which results in an increase in the economic level of the people in East-Java Province.

Establishing Food Business of Local State-Owned Enterprises in Agriculture and Agribusiness