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

Nestle Farmers.jpg
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).

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

2016_12_30_18720_1483095893._JP5January2017.jpg
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”.

The Launching of “Little Sustainable Landscapes Book”

by Fitrian Ardiansyah, 5 December 2015, Global Landscape Forum, Paris, COP-21.

Little Landscape Book

Picture: by Nienke Stam

The book is written collaboratively by GCP (Global Canopy Program), EcoAgriculture, IDH-The Sustainable Trade Initiative, TNC (The Nature Conservancy) and WWF (World Wide Fund for Nature).

My remarks at a panel discussion during the launching if this book are:

1) Transformation of commodities throughout supply chain may improve individual concessions and sectors but cross-sectoral challenges are still there and may need to be addressed further. These challenges include land legality, peat/forest management at a larger scale, water/ hydrological management, social dimension/conflicts, and improving productivity of smallholders.

2) Hence, combining productivity improvement and forest/peat protection is required to be done also beyond the scope of concessions. The scale we are talking about include a larger landscape level.

3) This “Little Sustainable Landscapes Book” appears to be little in its presentation but can have a huge impact since it can provide lessons-learnt and guidance for land use players and stakeholders to have a better landscape approach and initiative – and to collaborate meaningfully.

4) In the context of government leadership, not only national government, but sub-national level governments need to take the lead. Nevertheless, they need to be supported by the private sector as well as NGOs and communities to ensure that a healthy mosaic landscape can be achieved.

5) IDH, in our capacity, is piloting 7 to 9 landscapes around the globe and we have provinces in Indonesia that we are trying to support: i.e. South Sumatra, West Kalimantan and Aceh. We believe landscape interventions in this province would entail components of better spatial planning, green growth plan, individual commodities/sectoral plans that take account sustainability, and co-financing/investment to improve productivity of small players and protection/restoration.

6) The costs/investment for landscape interventions, nevertheless,is enormous. Financial sources need to come from both public sources (e.g. government budget, CPO/crude palm oil Fund in the context of Indonesia) and private sources. If these can be combined, challenges in a landscape can be addressed in a structured way.

Copy of the book can be found at http://globalcanopy.org/sustainablelandscapes

The complete coverage of Little Sustainable Landscapes Book Launch Panel can also be watched on YouTube