Farmer organization as the backbone of agro-sustainability

PISAgro News, May 2017, Issue No 15, pp. 2-4

By Fitrian ArdiansyahIndonesia country director of IDH-Sustainable Trade Initiative

Original link: http://pisagro.org/images/uploadsfiles/FA-PISAGRO-Newsletter%2315-May’16.pdf

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IDH supported Nestle’s coffee farmers through Nescafe Better Farming Practices Program

Given the fact that most of the 40 million workers in the agriculture sector are small farmers, and they are facing with recurrent challenges of low levels of productivity and profitability due to a lack of access to market and financing, the notion of strengthening farmer organizations has become imperative.

Reaching sustainable agriculture goals, comprising improved productivity, protection of the surrounding ecosystems and ensured welfare of farmers, is challenging unless farmers’ capacity and knowledge on good agricultural practices are improved. Such improvement is difficult to be facilitated without strong farmer organizations.

IDH-Sustainable Trade Initiative, in collaboration with partners, believe that innovations in supply chain sustainability require professional farming practices. Our approaches and pilots have shown that such farming practices can only be applied if strong farmer organizations are at the heart of our sustainable business model and values.

In our coffee program, with PT Asal Jaya(1) in Malang for example, efforts to strengthen farmer organizations is considered as a key intervention. These efforts focus on providing institutional support that will lead to the development of Sustainable Agriculture Business Cluster (SABC).

When different farmer organizations are aggregated further into an SABC, they will be perceived to be having an economic of scale. Such scale would help them access finance from financial institutions (FIs). They can also easily sell coffee bean in a bulk way with a relatively better price and as trade-off, receive good agriculture practices (GAPs) and good management practices (GMPs) including accounting system literacy from the company and organizations like IDH.

This type of aggregated farmer organizations would provide a greater opportunity for farmers to get support from off-takers or other organizations to secure legal entity over their lands. Off-takers would see an increased credibility of such organizations and reduced risks in investing in these farmers. As many have known, without legal entity, farmers would have difficulty in getting a deal or financial support from banks.

The presence of good farmer organizations with the support of off-takers and other organizations can help farmers gradually demonstrate that they can improve or have improved their practices shown by results over a particular period. In a good farmer organization, documentation of farming process and accounting system is usually the norm.

Strengthening farmer organizations, nevertheless, is not an easy task. Often farmers are unwilling to be grouped in an organization such as a cooperative. Innovation or slightly different approach is sometime required.

As an example, in our palm oil program in North Sumatra, working with a state-owned company(2), a different model for farmer organizations has been introduced to support farmers to achieve Roundtable on Sustainable Palm Oil (RSPO) certification. The difference is that the organizations still consist of farmer groups (kelompok petani) but managed by traders.

This slightly different approach is chosen due to the fact that traders have many farmers under their wings (approximately several hundreds) and this has been perceived as a way to scale up the coverage of farmers in a sustainable supply chain of palm oil. In addition, with traders’ involvement and their staff in supporting farmers, they can also be seen as some forms of extension services, not only connecting farmers to the supply chain but also providing concrete support in forms of GAPs.

A similar approach has been done with Asian Agri(3) in Jambi, in which farmer organizations are supported through traders. In this case, traders are trained so that they can further help and reach out farmers with GAPs and GMPs. With the increased capacity of traders, they also are gradually equipped with good capacity in taking bigger responsibility in this sustainable supply chain.

A traditional type of farmer organizations such as cooperatives (e.g. Koperasi Unit Desa or KUD), nevertheless, is still crucial since KUD or a similar organization exist in almost every kabupaten (district) in Indonesia. For this reason, IDH also works with different corporate partners to show that strengthening KUD can bring about better benefit for farmers. The recent initiative in South Sumatra with IndoAgri London Sumatra shows that KUD can also be a good platform for palm oil farmers to achieve RSPO certification.

Farmer organizations and aggregation or clustering, to a large extent, can help farmers to increase their economic scale. Such “clustering”, however, needs to be done with tailor-made services, so that choices are also created for farmers since different types of farmers may require a different type of approaches and clusters.

One key lesson-learned in establishing such cluster is, at least, a principle of open and transparent farmer organizations should be upheld. This is critical so small farmers will see such organizations as a fair and just platform and can support their agenda of improved productivity and sustainability – not only the agenda of off-takers or traders.

The presence of strong and credible farmer organizations will not only provide a vehicle for improved productivity for farmers in a relatively scalable level, but also can be used to support farmers in promoting the agenda of environmental protection in a significant way.

Encroachment and conversion of forests and peat – and cultivating using fires – have been perceived as challenging issues when it comes to small farmers and deforestation and environmental protection. A good farmer organization can, to some extent, be an umbrella that develop a treaty or agreement for conservation of the remaining or surrounding forest and peat, equipped further with a good plan, investment and monitoring system.

Examples of fire-free villages – a joint-work between companies and villages to address forest and land fires across Indonesia – can be used to show that with an organization of villagers or farmers, actions to address (prevent or mitigate) fires are much easier to apply. Without clear farmer or villager organizations, a company, donor agency or government would have difficulty in pushing the agenda of fire prevention or other environmental protection.

In brief, the presence of strong, credible and accountable farmer organizations has become a necessity in sustainable agriculture. Such organizations would help farmers to develop a good business case at farmer level, improved provision of service delivery or extension services, and increase access to adequate and sufficient finance.

The immediate next step, as often the case, is to replicate, magnify and scale up models of good farmer organizations. PISAgro and its members, in this case, have the opportunity to transform such models into larger applicable platforms across Indonesia and in variety of commodities.

Endnote:

  1. The IDH’s work with PT Asal Jaya is entitled The Ecosystem Chain Scale in a Sustainable Coffee Smallholder Business in East Java. The period of work is between January 2016 to December 2020, targeting 15,000 farmers. Currently, around 3,400 farmers are part of the program. The focus of the program is to support farmer organizations, GAP and GMP practices, and farmers driven research.
  2. The work is with PTPN 3 with approximately 600 farmers to be supported but 59 will be certified soon under RSPO.
  3. The initial target of the work with Asian Agri is to support 10,000 farmers and now 6,000 farmers (around 30,000 ha) are part of the program. The program focuses interventions that can be categorized as “beyond certification” approach (not only aiming to achieve certification).
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Feeding nation while protecting environment

The Jakarta Post, Thursday, 5 January 2017,

By Fitrian ArdiansyahIndonesia country director of IDH-Sustainable Trade Initiative

Original link: http://www.thejakartapost.com/academia/2017/01/05/feeding-nation-while-protecting-environment.html

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Farmer works cultivating rice in the field (Antara/Berto, as shown in the Jakarta Post)

The year 2016 has just ended, but a question remains. Will countries, including Indonesia, be able to supply food for their growing populations, taking into account the constraints of our limited natural resources?

The global demand for food, fiber and fuel is on the rise. This demand needs to be matched while we also need to ensure that our resources, landscape and ecosystems will be sustainably managed for the long term. Several projections, including from the Directorate General of Food Crops in 2013, for example, reveal that Indonesia’s rice consumption would exceed its production starting in 2020, taking into account land availability and climate change.

Threats to food security will likely increase as the population continues to soar and economic activities develop, while land availability becomes more limited. Hence, improved productivity and technological developments are necessary.

Globally traded commodities produced in Indonesia, namely palm oil, coffee and cocoa, face similar challenges.

Palm oil is one of the most efficient crops but the productivity level in Indonesia, especially on small farmers’ lands, is still relatively low at 3.2 tons of crude palm oil (CPO) per hectare — the global average is between 4 and 5 tons.

If productivity and practices are not improved, the increased global demand for palm oil could lead to expansion and exploitation of the remaining forests and peat lands and potentially to forest and land fires.

However, a decree for conservation has been adopted by the government, which is in tandem with global markets that increasingly support sustainable products.

Land cultivated for palm oil needs replanting. In South Sumatra alone, between 2016 and 2021, replanting needs are estimated to be at least 270,000 hectares.

The investment required for oil palm replanting could reach US$5,000 per ha. A new financial plan is needed to support replanting, especially if it involves small farmers.

Without adequate finances and technical support for replanting, growers and farmers could opt to expand their palm oil cultivation to high risk areas, such as forests and peat lands.

Concerning cocoa and coffee, low productivity is a huge challenge as land is often managed and cultivated by small farmers.

Low productivity has trapped small farmers in a cycle of poverty and a cycle of debt. The inability of small farmers to access finances and sound agriculture practices has led to reduced quality of input which in turn produces a low level of output (quantity and quality).

Without a provision of better input, farmers will have difficulty meeting global standards — hence, their struggle to break into the global market.

Funding for farmers is even more challenging because financial institutions perceive giving loans to small farmers as a high risk.

This perception relates to the unclear land status of farmers, low capability and accountability of farmer organizations and existing debt by farmers.

Innovation could help farmers gain agriculture knowledge, input material, improve farmer organizations and reduce investment risks. This is key to producing more with less — more productivity with less environmental impact.

Models for this have been tested across the globe, including in Indonesia.

A good model usually consists of a supply chain company committed as a long-term off-taker of commodities supplied by farmers, a farmer organization or cooperative, a bank that provides a soft-loan for a cooperative with a grace period taking into account the harvesting cycle, a provider of seeds and input materials and a donor or private foundation that provides technical support for farmers.

Such models have been applied in Aceh for aquaculture, Riau, Jambi and South Sumatra for palm oil, Lampung for coffee and Sulawesi for cocoa.

Individual corporations, organizations and banks or multi-stakeholders’ platforms, such as Partnership for Indonesia Sustainable Agriculture (PISAgro), are examining these models in collaboration with a number of cooperatives and government agencies.

A model in just one supply chain may not be enough as there are many challenges and issues shared among different actors in different supply chains.

These shared issues include land legality, water and landscape management, fire prevention and energy provision and require a holistic approach beyond just one farm or supply chain.

In Musi Banyuasin district, South Sumatra, a supply shed approach led by its regent is being tested to support the development of integrated sustainable commodities, such as palm oil, rice, rubber and protecting forests and peat lands.

This approach has gathered the support of local government agencies, mills and local and international organizations to collaboratively help identify and map independent small farmers and their challenges.

A combination of segregated supply chain and integrated supply shed approaches with clear financial support and sound agriculture practices is one of the most effective ways to develop commodities while protecting our fragile ecosystem.

The bold part of this journey is to build on these approaches to increase investment, develop commodity production and protect larger areas.

It is time for Indonesia to demonstrate its ability to “produce more with less”.

Forest and land-use governance in a decentralized Indonesia: A legal and policy review

By Fitrian Ardiansyah, Andri Akbar Marthen and Nur Amalia, published by Center for International Forestry Research (CIFOR), 2015. Please quote as:

Ardiansyah F, Marthen AA and Amalia N. 2015. Forest and land-use governance in a decentralized Indonesia: A legal and policy review. Occasional Paper 132. Bogor, Indonesia: CIFOR.

for the pdf version (988kb), please see: OP-132_Ardiansyah et al_2015

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Synopsis:

This report is a legal and policy review of the powers of key government agencies and lower-level governments and the relations among these different agencies at different levels (e.g. the relationship between the local and central governments) in forest and related sectors. The focus of this review is to identify a particular government agency or level of government that has the legal power to make resource decisions in different spheres related to forests, land use affecting forests and/or benefit sharing, including REDD+. It aims to provide an understanding of the legal basis for the powers of such agencies or a level of government. The review also examines different key actors in each sphere (including whether these agencies can make certain decisions according to the laws and regulations), the differences among agencies, and the scope of authority of lower-level governments.

The review in this report contains an introduction and four main sections. The first (Section 2) describes the division of responsibilities and power across the different levels of government. It provides a general overview of powers (e.g. the extent to which they are permitted to legislate or make decisions) and responsibilities as established by decentralization laws and policy, budget distribution as established by law, and other relevant aspects. This section addresses issues related to the overview of different levels of government in Indonesia, including the evolution and process of decentralization; the definition, scale and scope of regional autonomy/decentralization powers; the powers shared among agencies at different levels; and other relevant aspects.

The second section (Section 3) is on financial resource mechanisms and distribution. It serves as a background for the on-the-ground study of benefit-sharing mechanisms (e.g. actual and potential with regard to REDD+). This section seeks to address issues related to the arrangement of financial resources and the powers and responsibilities over them assigned and distributed among the different levels of government. Such responsibilities include forest fees and other royalties, as well as any existing benefit or incentive schemes (e.g. payment for ecosystem services, or PES) aimed at maintaining forests or promoting sustainable forest management or REDD+.

Section 4 describes the role that different levels of government play by law in the following list of land-use decision or policy arenas affecting forests: (1) spatial and land use planning, (2) defining the vocation of the land and conversion rights, (3) the titling of agricultural land, (4) the titling of indigenous land within forest areas, (5) the governments’ ownership and administration of the land, (6) natural protected areas, (7) mining concessions, (8) forest concessions, (9) oil palm, and (10) infrastructure. This section uses summary tables as far as possible, describing the division of responsibilities among the different levels of government, including in the making of formal decisions, which procedures are used, and the division and balance of powers across functions (i.e. in establishing policy and norms, authorizing, administering, controlling and monitoring, and auditing).

The last section (Section 5) further explains the role and opportunities for indigenous (adat) law. This includes a review of the definition of adat law and the legal basis for communities making land claims based on such law. This section discusses challenges and opportunities for adat law to be further recognized in the Indonesian legal system.

Original link: http://www.cifor.org/publications/pdf_files/OccPapers/OP-132.pdf