Popular Report VECO Indonesia 2013

POPULAR REPORT 2013

Contents 5 7 8 11 12 15 16 19 20 23 24 26

Foreword About VECO Indonesia Important changes Increase and (more) secure income Improved influence of family farmers Reduced vulnerability Improved food sovereignty Food sovereignty hero from village Increase in sales of healthy rice Learning and knowledge sharing Lessons learned Finance

4

Foreword Economic growth in Indonesia is on a positive note since the last 5 years with rates between 5-8 per cent per year. Most of this growth is based on extractive industries and a growing domestic consumption. Specifically for the food sector this significant domestic consumption growth offers good opportunies for small-holder farmers as consumers are buying increased quantities and demand better quality food products.

At the same time there is also a growing awareness of the importance of healthy/safe food among the expanding Indonesian middle class.

These growing markets offer opportunities for small-holder farmers to enjoy better prices and sell larger volumes of their products. However this is far from automatically achieved since both direct market access and capacity of organized farmers are often limited which suppresses prices for farmers. We need to develop inclusive market models along with fair agriculture value chains for farmers and at the same time strengthen the (business) capacities of farmer organizations. On the other hand we also need to think about an enabling environment in which the different Value Chain actors/facilitators (farmers, private sector, service providers, banks, government, etc.) can build these inclusive markets and where farmer organizations can develop themselves. We

should think about good certification standards, agri-finance, government collaboration, etc. supporting small-holder farmers.

The new 6-year VECO Indonesia programme that officially started in 2014 largely builds on the activities, results and networks already being implemented by VECO Indonesia and its partners for the last 30 years. This new programme focuses its strategies and activities exactly on what is described above in the second paragraph and is a direct result of extensive consultations with both internal and external stakeholders in Indonesia and at the Southeast Asian level during 2013.

In 2013 we worked in the Rice, Cocoa, Coffee and Cinnamon sub sectors in 19 districts with 29 partner organizations, including 11 Farmer Organizations. A selection of the results of our work during 2013 is presented in this publication. If you are interested more detailed information can be found on our web site or in our “Lontar� newsletter http://www.veco-ngo.org/veco-indonesia I hope you like our writings and please do send us your feedback.

Rogier Eijkens Regional Representative VECO Indonesia 5

6

About VECO Indonesia About Us VECO Indonesia is as part of Vredeseilanden, an international NGO headquartered in Leuven, Belgium. For more than 25 years, we have worked continuously to achieve one goal: a better deal for farmers.

Vredeseilanden also has regional offices in West Africa, East Africa, South America, Cental America, and Southeast Asia.

Our Mission Improving livelihoods of small-holder farmers in Indonesia through agriculture value chain development and inclusive business development.

Where We Work 1.

VECO Indonesia was running programme in 19 districts of 9 provinces.

2. East Nusa Tenggara in East Flores, Sikka, Ende, Nagekeo, Ngada, Manggarai and East Manggarai for rice, coffee, and cacao commodity.

3. Jambi in Kerinci for cinnamon commodity.

4. West Sulawesi in Polewali Mandar for cacao commodity.

5. South Sulawesi in Toraja, Enrekang, East Luwu Timur and North Luwu Utara for coffee and cacao commodity.

6. Central Sulawesi in Parigi Moutong for cacao commodity.

7. West Java in Tasikmalaya for organic rice.

8. East Java in Malang and Lumajang for coffee commodity.

9. Central Java in Boyolali for healthy and organic rice commodity.

10. Great Jakarta for healthy food campaign and government purchasing price (HPP) of multiquality rice.

7

Important changes 2013 is a very important year for VECO Indonesia because this year, VECO Indonesia ended programme phase 2010-2013. In 2014, VECO Indonesia will start new phase for 2014-2020 period.

There were some important changes in the programme during 2013.

Cinnamon-Kerinci Private company (Cassia Coop) and IDH from the Netherlands requested that VECO Indonesia facilitate development of Rainforest Alliance organic cinnamon in Kerinci, and initiate the establishment of a cinnamon farmer organisation in order to change the cinnamon trading system in favour of cinnamon farmers.

Food Sovereignty (DMP DS Programme) The DMP-DS program has been adopted by the NTT government and replicated in several districts, such as TTU, Belu and Sumba Timur.

Sumba Timur district government has provided additional support for the DMP-DS program for 2014 of IDR 90 million, and in TTU, IDR 40 million per village has been allocated for the community food stock program. A formal, legal framework is still required to ensure the sustainability of this program in the coming years.

This Popular Report 2013 explains more about VECO Indonesia achievements in 2013.

8

9

10

Increased and (more) secure income The results of the analysis of the incomes of 2013 program participants using 20 sample farmers for each chain indicate that as of the end of 2013, farmer incomes in several commodity chains had exceeded the program target. These chains were: (1) Sulawesi cocoa, (2) Manggarai/Ngada Robusta coffee, and (3) Manggarai/Ngada Arabica coffee.

The increase in farmer incomes in certain commodity chains, such as Sulawesi cocoa, and Robusta and Arabica coffee in Manggarai, was due to increased production volumes and good prices in 2013 (Sulawesi cocoa sold at premium prices). For coffee in Flores, the income increase was more due to a rise in production volumes, as prices remained much the same as in 2012 (IDR 20,000 – IDR 21,000/kg) for Robusta, and were very low for Arabica (average IDR 19,400/kg in 2013 compared with IDR 28,100 – IDR 33,400 in 2012).

The impact of program interventions were evident in Sulawesi, notably in the improved cocoa cultivation system thanks to the adoption of good agricultural practices (GAP) for sustainable cocoa, and the premium prices secured as a result of lobbying private companies (PT Mars, PT Armajaro, Petrafood).

11

Improved influence of family farmers The collective marketing created a shorter chain and the high volume of sales of good quality cocoa beans through collective marketing made farmers receiving prices above the normal price.

Good cooperation has been established with major exporters who are committed to develop cocoa as a sustainable commodity. Apart from the better price, farmers also received facilitation related to sustainable cocoa farming practices and quality control. There is an increased number of certified farmer groups and groups applying ICS. In addition, cacao farmers have better access to information (about price, sustainable farming practices) and can use the information to negotiate with the traders to get a good price.

The program enables Amanah and Masagena farmer organisation conducting collective marketing of quality cocoa beans. This is done at all levels from the farmers (better cocoa farming practices, harvest and processing, and introducing quality control), farmer organisations (setting up the structure and improving the capacity to facilitate collective marketing including ICS and to conduct other businesses), and exporters (lobbying for good terms for all parties).

12

13

14

Reduced vulnerability Farmers have applied sustainable coffee farming practices that helped to reduce (not fully) the production loss brought about by the infestation of crop diseases and pests and the natural shocks/trends.

Farmers have increased the coffee yield and received a higher price from the collective marketing. It has enabled them to receive a higher income and helped them to better cope with the economic shocks/trends (that lead to increased living costs and production costs). More farmers have been able to access more reliable sources of finance.

Because of their good work, members of Asosiasi Petani Kopi Manggarai (Asnikom) and Perhimpunan Petani Watu Ata (Permata) have started to gain recognition and trust from other parties (government, private actors and farmers).

In Kerinci, Jambi, 25% of farmers who have been intensively facilitated by the program have started to adopt sustainable agriculture practices with intercropping. This has led to improved soil fertility and capacity to absorb water and reduced air pollution brought about by chemical inputs.

The increased production as shown by these farmers has attracted the interest of other farmers to learn about sustainable agriculture practices and to apply organic fertilizers, as shown from their high demand for the organic fertilizers produced by TAKTIK farmers.

15

Improved food sovereignty A major change happened to the APPOLI farmers whose farms are certified. This allows them to receive prices above the market price. The adoption of organic farming practices has increased the production and reduced the costs, and therefore farmers receive higher incomes and as a result, food is more secured.

Farmers also benefit from consuming organic rice every day and some claimed to get healthier, and less people suffer from diabetes and gout.

The improved access to the government makes the farmer groups receive more support such as livestock, irrigation, machinery and working equipment, financial support for the application of System of Rice Intensification (SRI), vegetable garden, etc. All these have increased the security of the rice farming as the main source of income.

Farmers are more self reliant for growing their own food, and livestock raising provides a backup during harvest failure.

The success of the program in Boyolali, Central Java has proven that farmers can increase income, securing their source of food, as well as enabling the support of the government to the farmers.

16

17

18

Food sovereignty hero from a village Jacob Tanda received a "Heroes for Indonesia" award on Heroes’ Day, 10 November 2013. Head of Mbatakapidu Village, Kota Waingapu District, East Sumba, East Nusa Tenggara, Jacob was one of ten winners of this award, according to MNC, Indonesia’s largest TV network.

These heroes received awards from MNC for their dedication in their respective field. Jacob Tanda won his for fighting for food sovereignty in his village. This award was presented by a panel of judges including sociologist Imam Prasodjo and former Muhammadiyah chair, Ahmad Syafi’i Ma’arif.

"Heroes for Indonesia" are awards presented by MNC group, owner of RCTI, MNC TV and Gobal TV television stations and other broadcast media. The awards committee selected people from across Indonesia whose dedication is an inspiration to others. The awards include economics, social affairs and culture categories.

This achievement would not have been possible without the support of Koalisi Rakyat untuk Kedaulatan Pangan, VECO Indonesia advocacy partner. For the past five years, KRKP has been running the Desa Mandiri Pangan Desa Sejahtera (DMPDS) program, including in Mbatakapidu. Thanks to the hard work of Jacob and the villagers, Mbatakapidu now has food stores at three levels: in the fields, in the hamlets and in the village.

19

Increase in sales of healthy rice As of the end of 2013, total healthy rice sales of our partners amounted to 100.8 tons.

Konsorsium Solo Raya sold 95.2 tons, Yayasan Pangan Sehat Indonesia (Yapsi) sold 0.31 tons, Perhimpunan Indonesia Berseru (PIB) sold 5 tons, and Yayasan Lembaga Konsumen Indonesia (YLKI) sold 0.25 tons.

Progress of healthy rice sale during 3 years 160 1 40

142, 2

This figure was lower than in 2012, when healthy rice sales amounted to 142.2 tons.

However, this volume of sales is far larger than in 2011, when only 40 tons of rice was sold to consumers in Solo and Bali, as the graph below shows:

Sales ton/year

120

20

60

40 20

0 2011

2012

2013

Progress of consumer who purchased healthy rice during 3 years 1,650 1, 635

Number of Customer

This is larger than the number of consumers who bought healthy rice products in 2012 (1,571) and 2011 (1,500). So, in the threeyear period, there has been a slight increase in the number of consumers buying healthy rice products, as shown in the graph below:

100, 8 80

40

The number of consumers buying healthy rice products as of the end of 2013 was 1,635, as follows: 1,484 consumers bought rice through KSR, 56 through YAPSI, 55 through PIB, and 40 through YLKI.

100

1, 600

1, 57 1

1, 550

1, 500

1, 500

1 , 45 0

1 , 40 0 2011

2012

2013

21

22

Learning and knowledge sharing Sharing about strengthening farmer organisations as business organisations (APPOLI’s experience of exporting organic rice to Belgium) Sharing lessons learned about farmer organisations as certificate holders (Masagena’s experience of securing sustainable cocoa certification from Rainforest Alliance) Annual Farmer Meeting, with the theme “Indonesian Coffee Farmers Business” with a specialty coffee exhibition in Surabaya.

All learning activities are integrated in the year calendar, such as Knowledge Café, staff team meetings (Home week, B3), VECO program steering meetings (mid-year & end-of-year) and Regional Learning initiative.

Workshop and experiments using the Farmer Business School modules by VECO Indonesia staff (Field Coordinators and Field Officers)

23

Lessons learned Achievments in several programme areas serving as lessons learned for VECO Indonesia.

Sustainable Supply and Eco Friendly Products

The private sector and local government have a major role to play to ensure the sustainability of the program in the long term, because these two actors will work with farmer organisations over a long period of time.

The production and product quality are crucial to providing good products, thereby ensuring the sustainability of supply.

The application of Good Agricultural Practices (GAP) such as low external input sustainable agriculture (LEISA) and agroforestry systems, SRI, Organic agriculture are very beneficial to maintaining soil fertility and availability of water, and reduce erosion, thereby improving the environmental sustainability of production.

VECO as chain facilitator

VECO Indonesia staff have developed capacity and expertise as commodity chain development facilitators, particularly in sustainable cocoa, coffee and organic rice. VECO Indonesia is becoming an increasingly important actor in value chain development in Indonesia.

Cooperation with farmer organisations

The greatest challenge working with farmer organisations, in particular those that are still developing, is pursueing common aim of making

24

business organisations out of the farmer organisations.

The limited capacity of rural farmers to manage business organisations is another challenge in strengthening farmer organisations, while many young people are not interested in working in the agricultural sector, which they consider unprofitable.

Cooperation with private-actors

To find new opportunities to convince private companies to work with farmer organisations, VECO Indonesia needs to be more involved in business meetings organised by the private sector in Jakarta and at provincial level. These opportunities could be used to invite them to come and see for themselves the results of the programs in the field, and to invite them to the VECO Indonesia meetings. This has been a quite effective strategy so far.

Upscaling

Positive results, such as with cocoa in Polman, where Wasiat and Amanah have been able to build partnerships with private companies and their members are able to produce cocoa with sustainable certification, has supported replication of the program in other regions. This success is also evident from the response from PT Mars Symbioscience, which has asked VECO to develop cocoa programs in North Luwu, East Luwu and Palopo, which are important cocoa producing areas.For 2014 new cocoa programs are started in Parigi and Tinombo districts of Central Sulawesi.

25

Finance

In 2012, VECO Indonesia managed program funding of EUR 1,389,690 or around IDR 19.73 billion.

Source of Funds, VECO Indonesia 2013 EUR

IDR

%TOTAL

MISEREOR

100,000

1,262,503,100

6.4%

DGOS

813,378

11,345,777,290

57.5%

IDH

37,500

470,250,000

2.4%

CORDAID

178,558

2,915,240,000

14.8%

ZUIDDAG

46,105

583,971,677

3.0%

HO - Inov Fund

44,948

564,101,512

2.9%

NOVIB

55,539

848,855,392

4.3%

AUSAID

32,865

453,457,750

2.3%

RA

39,128

612,763,906

3.1%

SNV

28,668

477,614,575

2.4%

CORDAID CINNAMON

13,000

203,190,000

1.0%

1,389,690

19,737,725,202

100%

Rp

%TOTAL

TOTAL

Use of funds, VECO Indonesia 2013 EUR VECO Indonesia

(648,207)

(9,206,478,021)

48.0%

Partners

(701,851)

(9,968,380,986)

52.0%

(19,174,859,00)

100%

Total

26

27

VECO Indonesia Jl Kerta Dalem No 7 Sidakarya Denpasar, Bali 80024 Indonesia Telp: +62 361- 7808264, 727378 Fax: +62 0361- 723217 Email: admin@veco-indonesia.net Website www.vecoindonesia.org