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Agri-ProFocus Indonesia
Agri-Hub
Report Inception Mission
April 2013
Angelica Senders
Consultant Fair & Sustainable Advisory Services
Utrecht, April 2013
2
Table of content
Executive summary
3
1. Introduction
5
2. Farmer entrepreneurship in Indonesia, facts and figures
7
3. Trends and issues that influence the agricultural sector in Indonesia
12
4. Current activities of potential Agri-Hub members
in Indonesia
15
5. Opportunity assessment
25
6. Agri-Hub features
28
7. Conclusion
30
Annexes (in separate document)

Annex 1 Terms of Reference

Annex 2 Overview of visits

Annex 3 Contact details

Annex 4 Background note to the food security program (by the Royal Netherlands
Embassy Indonesia)

Annex 5 The Dutch Food security program in Dutch political perspective
(by Antoon Blokland, BBO/ Indonesia Council)
3
Executive summary
In the past years Agri-ProFocus has successfully developed networks for the promotion of
farmer entrepreneurship in 12 African countries. Based on the success of these so-called
Agri-Hubs – which build on the energy and networks of Agri-ProFocus members - a core
group of members (notably HIVOS, CORDAID and ICCO) took the initiative to explore the
relevance and possibilities for setting up an Agri-hub in Indonesia.
Angelica Senders of Fair & Sustainable Advisory Services and Miranda, Programme Officer
of the Green Entrepreneurship Program of HIVOS, interviewed representatives of around
25 organizations (INGOs, Indonesian NGOs, and government agencies) during an
Inception Mission to test the water for an Indonesian Agri-Hub. Issues discussed
included: what are trends in Indonesian agriculture; what are the cross-cutting issues
and bottlenecks that hinder or encourage farmer entrepreneurship; and is their enough
common ground for network development?
Indonesian economy has a growth rate of 6.3%, but distribution of economic benefits has
been skewed, benefitting a few and imbalances between Western and Eastern Indonesia
are great. Social unrest exists over wages and labor conditions among laborers and over
unfair land seizures and corruption. Agriculture policy has been focused on rice and the
plantation sub-sectors, especially oil palm. Contribution of agriculture (inclusive forestry
and fisheries) to the GDP declined in the past years from 17% in 2000 to 14.7% in 2011.
Supportive, well-coordinated or effective policies are lacking to encourage farmers to
intensify cultivation to promote important crops that could have helped to promote
attainment of food security and greater value adding. (e.g. soybean, coconut, fruits,
horticulture). While food security remains a delicate issue and malnutrition is high, fertile
lands in Java have been rapidly converted into industrial, residential and commercial
lands.
The international organizations and their Indonesian partners visited are active in a large
variety of sub sectors (ranging from palm oil to palm sugar and from fishery to pigs.
They focus on different geographical areas; together they cover the whole Indonesia
archipelago.
There are many commonalities in their way of working. They all focus on small holder
agriculture (incl. fishery and forestry). Support to farmer entrepreneurship is key in their
way of working. A value chain approach is commonly applied. Cooperation between
farmers and the private sector is a strategy widely accepted, but also experienced as a
challenge; how to ensure real win-wins from business deals is the issue.
Opportunity assessment
From the inception mission (interviews and analysis of member activities) it became clear
that there is potential for an Agri-Hub Indonesia
1. Coordination and network development
This Agri-Hub concept comes very timely. NGOS in Indonesia have a history in advocacy
and strengthening of farmer groups, dealing with markets is relatively new for them.
There is a need to share and replicate success stories and lessons learned on the new
market oriented approach. From the mission is became clear that a shift is ongoing:
increasingly NGOs realize that farmers need to become entrepreneurs addressing
markets for higher value added products in order to be able to earn a living if they want
to live from their small plots.
2. Business and partnership brokering
Farmer entrepreneurship development is on the agenda of development organizations.
Cooperation with the private sector fits in this agenda: farmers want to work with
companies and companies are in need of supply from farmers. Companies are also
interested in cooperation with the Civil Society; they need them to reach farmer-
4
suppliers. Related CSR is even mandatory by law, 2% of the company’s profit is to be
spend on it. An Agri-Hub would be a place for Civil Society, companies and
entrepreneurial farmers to meet. There is not such an initiative yet.
3. Facilitation of innovation communities
Respondent agree that farmer entrepreneurship development is really a central issue at
the moment in Indonesia. The Agri-Hub should not so much organize itself around
commodities (there are already a number of sub-sector platforms) but rather with cross
cutting topics faced in developing farmer entrepreneurship in different sectors. The AgriHub should also not limit itself to certain regions/ islands as various stakeholders work
across the country. This does not mean that members can not cooperate in smaller group
around a specific sub sector, value chain or region.
4. Platform and network for debate and learning
The Agri-Hub idea is very much in line with the attention for food security from the
Indonesian government. The Agri-Hub might make lobby easier (e.g. on food security
related issues or on issues related to certification).
The Agri-Hub will flourish when it makes the work of its members easier. There is a need
for practical experience sharing. This can be at different levels field- strategy – policy
related, focused on different topics, for staff of NGOs, Government and businesses.
Agri-Hub features
Dutch APF members in Indonesia and their partners welcome the Agri-Hub concept. All
respondents agree that the Agri-hub should be explicitly inclusive (include organizations
from Indonesian, Dutch and other origin).
The Netherlands embassy has not committed itself to cooperation with a (to be
established) Agri-Hub, this will depend on the direction in which the network develops
and how it fits in their economic diplomacy strategy. But respondents mention that for
the cooperation with the business sector the Agri-Hub should link with INA (the
Indonesian Benelux Chamber of Commerce), INA is closely related to the Netherlands
Embassy. The two networks seem to have the potential to be highly complementary..
Most organizations interviewed are willing to contribute actively to the Agri-Hub, in
(staff) time and/ or in funding. An Agri-Hub potentially has added value to the more
(sector - or theme-) specific networks but it will have to prove this in practice! Link up
with these already existing networks in specific sectors as the Cocoa Sustainability
Partnership and other sector networks. Tap the energy, motivate, show vision this will
attract people.
Indonesia is a vast country which can make the functioning of a network complicated.
Most respondents suggest a centralized network, with the option of decentralized
activities by smaller groups of organizations addressing specific need of regions. The role
of a host which is well networked is very important for the Agri-Hub.
Conclusion and next steps
As a result of the Inception Mission, the discussion on the Agri-Hub Indonesia has moved
from the ‘If’ to the ‘how’ of the Agri-Hub. It has been agreed that HIVOS will formally
host the Agri-Hub supported by the Agri-ProFocus Netherlands support office. In the first
semester of 2013 the actual kick-off of the Agri-Hub will be organized.
This includes:

Co-creating a joint agenda for action and learning, The kick off will be expectedly
be organized with a Multi-Stakeholder Workshop in Indonesia in June.

Running up to the event an online platform will be launched

Additionally a light coordinating structure will be set-up. Agri-ProFocus partnership
members will be asked to share resources for coordination, activities and followup.
5
1.
Introduction
Background of the assignment
Agri-ProFocus founded in 2005, is a partnership of 35 Dutch development agencies,
credit institutions, training and knowledge institutions and private companies. AgriProFocus believes that worldwide primary producers are the key to local economic growth
and sustainable agri-food systems and food security for all. Agri-ProFocus envisages
empowered - men and women - entrepreneurial farmers, their families and organizations
accessing agri-businesses, markets and investment opportunities.
Experience from within the Agri-ProFocus network has shown that to promote farmer
entrepreneurship, multiple actors need to act and learn together around critical
intervention areas. In our network, individual member organizations move beyond
traditional boundaries to cooperate with others in new ventures and new dynamics of
organizing development cooperation more effectively.
To this purpose Agri-ProFocus has developed local action-oriented networks to promote
farmer entrepreneurship. These networks we call Agri-Hubs.
Agri-Hubs contribute to more and better deals between SME farmers and firms (including
banks), validation of food and business innovations; and better policies for
entrepreneurial farmers (see annex III Theory of Change). Each hub is resourced by its
members. They put up financial and human resources for running cost and collective
activities. Separately current Agri-Hubs receive a matching grant from DGIS.
Developing Agri-Hub Indonesia – intended process
Agri-Hubs are now in place in 12 African countries and function as multi-actor platforms
in support of farmer entrepreneurship. Over the previous years several Agri-ProFocus
members have indicated an interest in fostering more coordination in Indonesia, a core
group of members (notably HIVOS, CORDAID and ICCO) has taken the initiative to fire
up the process of exploring the possibility of setting up an Agri-Hub.
Such a hub should seek as its unique selling point:
 A focus on promoting farmer entrepreneurship for increased food security
 By addressing issues such as farming as a business / production / markets and access
to support systems and financial services and investments
 With the aim to stimulate:
o Innovation in services,
o Improved deals between SME agri-business and organized producers
o An enabling policy environment;
An Agri-Hub will support this through improved coordination and networking, brokering,
joint action and learning and by providing a neutral place for debate and policy dialogue.
The starting point for the Agri-Hub Indonesia is that it should be inclusive (Indonesian,
Dutch and non-Dutch), demand driven, and link to existing initiatives. The agenda of the
hub will need to be developed by stakeholders interested to engage, and should be
flexible to accommodate new emerging issues.
For the kickoff of the Agri-Hub it is essential to have a good overview of current and
upcoming (SME food and business related) developments in Indonesia; to know what
potential stakeholders and existing networks are doing; Have a first insight in key areas
that provide cooperation opportunities.
6
Objectives
The Inception Mission aims to lead to a paper with the following objectives and leading
questions
 Identification and analysis of trends, cross-cutting issues and bottlenecks in Indonesia
with regard to agriculture in general and farmer entrepreneurship in particular;
 Distinguishes scenarios / options for jointly promoting farmer entrepreneurship based
on what important stakeholders are aiming for and are currently doing;
 Serves to level the playing field among the stakeholders engaging with this process,
and helps to position the Agri-Hub Indonesia strategy within the wider arena of
agricultural development (networks) in the country.
Process
As this is the kickoff of network development, interaction with a wide variety of key
stakeholders is essential. For this reason a broad variety of actors was interviewed, both
in the Netherlands and in Indonesia, interviews took place face to face, through mail and
via Skype. Besides, available and accessible documents were collected. 1
During the visit to Indonesia around 25 organizations have been visited, including INGOs,
Indonesian NGOs, and government agencies. Included in the mission was a meeting
organized at the Netherlands Embassy at the occasion of the visit of the director of
Oxfam Novib, Ms Farah Karimi. The program of the visit in Indonesia was based on
suggestions from Agri-ProFocus and Indonesia Council members. In the Netherlands a
number of telephone interviews took place: with Mr Antoon Blokland (facilitator of the
Indonesia Council), Mr Wijnand van IJssel (DDE), Mr Fons Gribling DME, Ms Christa
Bouwhuis (CBI) and Ms Marianne van Dorp (CDI).
Table of Content
Executive summary
Chapter 1
Introduction
Chapter 2
Farmer entrepreneurship in Indonesian agriculture, facts and figures
Chapter 3
Trends and issues that influence the development of the agricultural sector
in Indonesia
Chapter 4
Current activities of potential Agri-Hub members in Indonesia
Chapter 5
Opportunity assessment
Chapter 6
Agri-Hub features
The following annexes are provided in a separate document:
Annex 1 Terms of Reference
Annex 2 Overview of visits
Annex 3 Contact details
Annex 4 Background note to the food security program (by the Royal Netherlands Embassy
Indonesia)
Annex 5 The Dutch Food security program in Dutch political perspective
(by Antoon Blokland, BBO/ Indonesia Council)
1
Background material will be made available to Agri-ProFocus in soft version.
7
2.
Farmer entrepreneurship in Indonesian, facts and figures
Introduction
Starting point for a substantiated decision on the establishment of an Agri-Hub is the
situation of the Indonesian agriculture. What trends and issues can be distinguished and
what are the cross-cutting issues and bottlenecks in general and farmer entrepreneurship
in particular. Given the fact that the Inception Mission took place in the short time span
of 20 days, the consultant has Agri-ProFocus members as main source of information.
Chapter 2 gives a global picture based on documents provided. A thorough and very
useful document was the one commissioned by ICCO in August 2012 and produced by
Okusi Associates, Indonesian Business & Management Services on “Fair and sustainable
economic development in agricultural sector in Indonesia”. Another document used is
produced by HIVOS Indonesia: “Trends in the external environment”. Special attention is
paid to agricultural extension & farmer organizations; this part is based on information
provided by HIVOS. In the next chapter (chapter 3) the image of the Indonesian
economy will be further elaborated on the basis of statements of interviewees.
Economic growth
While many countries around the world suffer from a global economic depression,
Indonesia is among the few countries that are expected to continue registering
reasonably healthy economic growth. For the whole year of 2012, Indonesia’s economic
growth is expected to arrive at 6.1 – 6.5% and estimated to be at 6.3 – 6.7% in 2013.
Three main sectors have a share of more than 50% in the national economy:
manufacturing industry sector (24.8%), agriculture sector (14.3%) and trade hotel and
restaurant sector (13.8%).2
Skewed distribution of economic benefits
While macroeconomic management seems to be in place, a lot of inefficiencies have
made Indonesian economic development processes a lot less optimal than it should.
Distribution of economic benefits has been skewed, benefitting a few, and imbalances
between Western and Eastern Indonesia are big.3
Poverty is still a complicated problem to solve in Indonesia. About 31.2 million
Indonesians are still living below the poverty line with another 29.38 million categorized
as just above that line. The face of poverty in Indonesia is still dominated by rural
poverty despite the fact that now almost half of the population reside in urban areas.
Further disaggregating by sector indicates that poverty in Indonesia is very much related
to agricultural sector. In terms of gender, female headed households have a higher level
of poverty than male headed households especially in rural areas. Women have a lower
average wage than men and more difficulty in accessing services and capital to start a
micro-enterprise in both the formal and informal sector.4
Agriculture in Indonesian economy
The contribution of agriculture (inclusive forestry and fisheries) to the GDP declined in
the past years from 17% in 2000 to 14.7% in 2011. At the same time it accounts for
43% of total employment. Agricultural policy focuses on plantation agriculture.
Commodities which are routinely exported are palm oil, rubber, cocoa, coffee, pepper,
and tea. Some of these commodities such palm oil, rubber, and cocoa are the primary
commodities generating most foreign exchange for the country. Indonesian cocoa is
exported as cocoa beans, cocoa butter, cocoa paste, cocoa husk and shells. Rubber is
exported as natural rubber and processed rubber. 5
2
HIVOS Indonesia, Trends in the external environment, page 1
Okusi Associates, Indonesian Business & Management Services, Fair and sustainable economic development in
agricultural sector in Indonesia small study on potential donor initiatives, august 2012, Report presented to
ICCO Denpasar Office, page 4
4
HIVOS pag 1
5
Centre for World Trade studies, Competitiveness Analysis of Indonesia Plantation Export Commodities,
http://cwts.ugm.ac.id/2012/04/analisis-daya-saing-komoditas-ekspor-perkebunan-indonesia/?lang=en
3
8
Despite the importance of agriculture for the national economy, national food production
is still insufficient to meet the food security needs of Indonesia’s citizens. As a result of
low production and a poor regulatory environment, Indonesia is not only a net importer
of rice, but also corn (food and feed), soya beans, beef, wheat and wheat products
(USAID- Indonesia). This quote illustrates the importance of the Indonesia agricultural
sector and the need for sustained investments in it. 6
Constraints in agriculture
Agriculture policy has been focused on rice and the major plantation sub-sector of oil
palm. Government support is characterized by many direct handouts, subsidized
fertilizers and localized development programs.
While Indonesia is endowed with fertile lands and a great variety of fruits and crops, the
country has been flooded with imported fruit products, while inadequate production, high
prices and inconsistent quality has discouraged customers away from domestic fruits. 7 8
Lack of supportive, well-coordinated or effective policies has not encouraged farmers and
growers to intensify cultivation of other important crops that could have helped promote
attainment of food security and greater value adding, including soybean, (high in protein)
made into tempe and tofu that the majority of Indonesians consume. coconut, fruits,
horticulture and melinjo, and alternative staples, such as sago and cassava. 9
While food security remains a delicate issue, fertile lands in Java have been rapidly
converted into industrial, residential and commercial lands. Even if Indonesia already has
Law No 41/2009 on Sustainable Food Crop Land Protection, which stipulates stringent
requirements for food crop land conversion, the law has proved to be toothless.
Agricultural land conversion is still occurring at an estimated rate of 100,000 hectares
per year. In Karawang, West Java, one of the national centers of rice production, some
800 hectares of paddy fields are being converted every year. Meanwhile, a lot of lands in
Sumatera, Kalimantan and Sulawesi have been utilized for or converted into oil palm
plantations and mining purposes. 10
Social unrest exists over wages and labor conditions among laborers and over unfair land
seizures and corruption. At the Indonesian level there are networks of CSOs advocating
towards the Indonesian government for inclusive and sustainable economic growth.
Box 1 Summary bottlenecks and constraints in Indonesian agriculture

Agriculture policy has been focused on plantation agriculture in general and the sub-sector of oil palm
in particular.

Despite the importance of agriculture for the national economy, national food production is still
insufficient to meet the food security needs of Indonesia’s citizens.

Contribution of agriculture (inclusive forestry and fisheries) to the GDP declined in the past years from
17% in 2000 to 14.7% in 2011.

Distribution of economic benefits has been skewed, benefitting a few, and imbalances between
Western and Eastern Indonesia are big

Poverty has a rural face; poverty in Indonesia is very much related to agricultural sector.

Government support to food security is characterized by direct handouts, subsidized fertilizers and
localized development programs and concentrates of the rice sector.

Lack of supportive, well-coordinated or effective policies has not encouraged farmers and growers to
intensify cultivation of other important crops that could have helped promote attainment of food
security and greater value adding.

While food security remains a delicate issue, fertile lands in Java have been rapidly converted into
industrial, residential and commercial lands.

Social unrest exists over wages and labor conditions among laborers and over unfair land seizures
and corruption
6
Agri-ProFocus, Terms of Reference Startup of the Agri-Hub Indonesia
Okusi, page 4
8
Effective Sept 28, 2012 Indonesia has implemented the full suite of new regulations for imports of horticulture
products which stipulate requirements to import of horticulture products into Indonesia: importer registration,
permit issuance, labelling requirements, verification procedures, and sufficient infrastructure for storage of
horticulture products
9
Okusi, page 4
10
Okusi page 5
7
9
Enterprise development
Micro and small enterprises play an important role in the development of the national
economy as they represent the largest number of business units (98.9% ), absorb 91%
of Indonesia’s labor force and have a significant contribution to the national GRDP
(36.3%). However, the micro-small enterprises still faces many obstacles in terms of
legality, human resources, low productivity, and access to capital. 11
In order to realize the vision as a developed and prosperous nation by 2025, Indonesia
has formulated The Master plan for Acceleration and Expansion of Indonesia Economic
Development (MP3EI) 2011 – 2025 that involves all stakeholders and focused on tangible
and measurable priorities. Indonesia aims to position itself as one of the world’s main
food suppliers, as a processing center for agricultural, fishery, and natural resources, as
well as a center for global logistics by 2025 or earlier. 12
The important role of private sector in economic development is set to be one of basic
principles in the implementation of Indonesia’s MP3EI.
Corporate Social Responsibility (CSR)
Recent developments show that the PPP concept is likely to get more attention in
Indonesia. There is a rising awareness about the PPP concept among government officers
in Indonesia. The government has more money to spend and often has difficulties to use
it in effective ways. Also, a new law issued by the Indonesian government in 2007
requiring companies to spend considerable amounts for CSR has also increased
awareness of the private sectors to engage in social responsibility. But so far CSR money
has not been used strategically or effectively by the private sector. This could be an
opportunity for NGOs to work with the private sector as well as combining the
investments from the private sector, NGO funds and local government budgets into one
program. 13
In this report the concept CSR will regularly be used, often in combination with the term
sustainability. For CSR we will use the definition of the Corporate Social Responsibility
Institute of Harvard Kennedy School of Government:
“We define corporate social responsibility strategically. Corporate social
responsibility encompasses not only what companies do with their profits, but also
how they make them. It goes beyond philanthropy and compliance and addresses
how companies manage their economic, social, and environmental impacts, as
well as their relationships in all key spheres of influence: the workplace, the
marketplace, the supply chain, the community, and the public policy realm.
The term "corporate social responsibility" is often used interchangeably with
corporate responsibility, corporate citizenship, social enterprise, sustainability,
sustainable development, triple-bottom line, corporate ethics, and in some cases
corporate governance. Though these terms are different, they all point in the
same direction: throughout the industrialized world and in many developing
countries there has been a sharp escalation in the social roles corporations are
expected to play. Companies are facing new demands to engage in public-private
partnerships and are under growing pressure to be accountable not only to
shareholders, but also to stakeholders such as employees, consumers, suppliers,
local communities, policymakers, and society-at-large.14
11
HIVOS page 1-2
HIVOS page 1-2
13
HIVOS page 1-2
14
Okusi page 13
12
10
Potential for farmer entrepreneurship
Indonesia is a land of opportunities but with formidable constraints standing on the way.
The country has recorded the largest and fastest growing middle class in Southeast Asia
which puts demands on access to quality – value added agricultural produce.
These strong market demands for various products, both domestic and export,
underscore the potential viability of development programs that could lift farmers out of
poverty over the medium to long term on a sustainable fashion. 15
For instance many farmers earn a decent living and incomes through proper cultivation
and processing. Cases of coconut sugar and melinjo farmers demonstrate the potential
welfare gains agriculture and agro product processing can generate.
There are potential funding support programs available from several sources, including
the government, foreign donors, NGOs, as well as state-owned enterprises and private
companies (who are mandated by law to have a CSR program). In fact, there have
indeed been many programs made available to assist farmers from all of these sources.
However as a whole, despite individual successes and failures, these programs have not
made any fundamental changes to the landscape. 16
In order to make use of the available potential (at least some of) the bottlenecks and
constraints as described in box 1 above, which have led to sub-optimal agricultural
development will have to be tackled.
Box 2 Opportunities

Micro and small enterprises play an important role in the development of the national economy as they
represent the largest number of business units. However, the micro-small enterprises still faces many
obstacles in terms of legality, human resources, low productivity, and access to capital.

The important role of private sector in economic development is set to be one of basic principles in the
implementation of Indonesia’s MP3EI.

Recent developments show that the Public Private Partnership (PPP) concept is likely to get more
attention in Indonesia.

In 2007 a new law was issued by the Indonesian government requiring companies to spend
considerable amounts for CSR. This has increased awareness of the private sectors to engage in social
responsibility. So far CSR money has not been used strategically or effectively by the private sector.

The country has recorded the largest and fastest growing middle class in Southeast Asia.

Many farmers earn a decent living and incomes through proper cultivation and processing. Cases of
coconut sugar and melinjo farmers demonstrate the potential welfare gains agriculture and agro
product processing can generate.

Potential funding is available from several sources, including the government, foreign donors, NGOs,
as well as state-owned enterprises and private companies (who are mandated by law to have a CSR
program).
Agricultural Extension & Farmer Organizations
During the Suharto regime, the New Order Era, BIMAS or Mass Guidance was the
government’s main approach in agricultural development. Besides extension services, the
government provided credit, and low-price agricultural inputs (seeds, fertilizers, and
pesticides). The government also established cooperatives to help farmers obtain
agricultural inputs and market their products. 17
During that time, extension workers were recruited from all over Indonesia. Around
35.000 agricultural extension workers were placed all over Indonesia via a strong
agricultural extension organization with structures from central government to village
level. In this period Farmers were not allowed to form their own organizations but had to
join ‘farmer organizations’ created by the Government. The only farmer organization
allowed in the nation was the HKTI (Indonesian Farmers Union) and its KTNA (National
Outstanding Farmers and Fishermen Association) which are still exist nowadays.
15
Okusi page 8-9
Okusi pag 8-9
17
Agricultural Extension in Indonesia: Current Status and Possible Ways to Meeting Emerging Challenges,
Djuara P. Lubis , PhD, Bogor Agricultural University.
16
11
“Kelompok Tani” (specific name for the farmer groups in Indonesia) refers specifically to
the groups induced by the government during New Order Era. Many of them are still
active.
With the decentralization approach, introduce after Suharto stepped-down in 1998, lcal
governments became the main decision makers and executors of agricultural
development, 18especially in regency level. Only few local governments perceived the
agricultural sector as main engine of economic development, as a result agricultural
development was neglected and agricultural extension stagnated. In many local
governments, agricultural extension institutions were abandoned.
After having been neglected agricultural extension for many years, on June 11, 2005 the
Government of Republic of Indonesia launched a program called Revitalization of
Agriculture, Fisheries, and Forestry which included a revitalization of agricultural
extension. This system recognizes three types of extension workers: (1) government
employee extension workers, (2) private extension workers, and (3) farmer-supportingextension workers. Under this law, Indonesia provides opportunities for private sector
and non-government organizations to serve agricultural development. Private sector and
NGOs are also allowed to establish their own agricultural extension institutions. As a fact,
in addition to 28,000 government extension workers, Indonesia has private extension
workers. They are hired by business entities, i.e. agricultural supplier companies. 19
In recent times, new forms of organization have appeared. Sometimes founded on the
old forms of interdependence at the local level, they have grown quickly and assumed
increasingly complex functions, which have sometimes implied specialization. They are a
response to the increasingly greater demands of their members, and are therefore often
organized above the local level. They have different origins and operate in various
contexts like organisations working in commodity channels (cacao, rubber, and coffee),
advocacy and land tenure, water users associations or organisations related to the local
authorities and agricultural services. More advanced Rural Producers’ Organizations
(RPOs) can be found, though in very limited number. They have developed a variety of
services to their members and the capacities to raise and defend their members’ opinions
and a vision. 20
Based on the existing as well as rapidly evolving legal framework, farmers organisations
must choose a formal status among cooperative, mass organization, association,
foundation (which is regulated by a new law dating from 2001). With a general history of
distrust towards former government-induced organizations such as “kelompok tani” or
KUD (village unit cooperatives), some farmer organisations tend to remain informal.
Many INGO and NGOs play a role in empowering farmer groups and make them become
genuine farmers - or rural producers organizations.
Box 3 Examples of farmers organization in Indonesia:
IPPHTI (Network of Integrated Pest Management Farmer)
a network of farmers, starting from farmers’ groups at local level working together with specific objectives
(training, research, marketing)from sub -district level, district level, provincial level and national level.
Activities are ranging from technical aspects to social awareness and marketing
APTR (Association of Sugarcane Producer)
243.000 members. The objective is to get the best price conditions from the factories and the government
(as factory owner)
API (Indonesian Farmers Alliance)
Aims to improve bargaining position of farmers in the value chain
SPPQT (Qaryah Thayyibah Farmers Union)
Working on organic farming, farmer empowerment and advocacy. Total member : 6,500
18
Revitalization of Agricultural Extension was launched in December 3, 2005. Based on Law No 16 2006,
System of Agricultural, Fishery, and Forestry Extension on November 15, 2006,
19
Agricultural Extension in Indonesia: Current Status and Possible Ways to Meeting Emerging Challenges,
Djuara P. Lubis , PhD, Bogor Agricultural University
20
Empowering Rural Producers Organizatiion, CIRAD
12
Some private stakeholders also consider farmer groups as commercial partners. They
regard the farmer organization/ farmer group as partners in organizing and ensuring the
regular supply and respect of the product quality standard. On the other side, many
private corporations consider Rural Producers’ Organizations (RPOs) merely as a means
for obtaining products in large quantity with a lower price. They adopt opportunistic
behavior and tend to take advantage of the weaknesses of the farmers groups they are
dealing with. This is one of the challenges faced by farmer organizations.
13
3.
Trends and issues that influence the agricultural sector
Introduction
This chapter summarizes trends and issues hindering or encouraging the development of
the Indonesian agricultural sector in general and farmer entrepreneurship development in
particular as experienced by organizations working with farmers in a variety of subsectors and geographic settings. This chapter is based on interviews with
representatives of over 25 organizations active in Indonesia: Agri-ProFocus members,
their Indonesian partner organizations, other Dutch organizations (Embassy of the
Kingdom of the Netherlands and INA (the Dutch Belgium Chamber of Commerce),
Indonesian Government agencies, and other international organizations active in the field
of farmer entrepreneurship development. The issues are formulated as statements; most
of them have been mentioned by several interviewees. If there is a divergence of opinion
amongst interviewees, this is mentioned. Annex 2 of the report gives per organisation
summaries of the interviews. The next chapter (Chapter 4) is dedicated to a description
of the programs and activities of the different organizations.
Plantation agriculture
The dominant form of agriculture in Indonesia in terms of output is large scale, plantation
type of agriculture. From the sub sectors development organizations are involved in
Palm, tea and coffee are dominantly produced on large- scale plantations partly owned
by large companies, partly own by the Indonesian government. Especially palm oil, is a
highly politicized sector in which limited number of companies earns a lot of money.
 The plantation sector is a sector dominated by bad labor condition of workers (up
to violation of human rights), disputes about confiscation of land and exploitation
of small holders producing for the plantation as contract farmers. (see box 4)
Box 4 Plantation issues
Labor Issues mentioned:
•
Contract only one year, daily workers only for harvest period.
•
Salary under minimum wage
•
Social security policy not implemented
•
Houses are provided as long as workers work for the plantation
•
30% are women workers. They do not get women right (maternity, menstruation right).
•
Women are afraid if they ask maternity leave they will be dismissed.
•
Employer is afraid of independent unions; establish own union, in some plantation this exists.
•
Other occupational safety and health issues
Other issues mentioned:
•
Small farmers access to natural resources threatened by increasing commercial pressures for these
resources
•
Indonesian government traditionally favoring large scale development schemes and issuing of big
concessions
•
rate of deforestation is still high
•
Legislations for land lease and land use are unclear and overlapping
•
Decentralization of power to local government has increased corruption
•
Unclear requirements of social and environmental impact assessments before plantations are started
•
Unfair forms of contract farming for smallholders, etc.
Food security
Though an agricultural land, with huge agricultural potential, agriculture only contributes
15% to the Indonesian GNP. The other 85% come from: gas, oil, mining, manufacturing,
migrant workers.
Because of this Indonesia relies heavily on food import, the government wants this to
change and aims at food security for the country but applies a strategies not considered
effective by many persons interviewed.
14
 To achieve food security the government puts in place programs based on free hand
outs not encouraging to farmer entrepreneurship development but merely creating an
attitude of dependence. Meanwhile no structural farmer support system is developed.
 To increase agricultural/ food production the government has put in place a system of
subsidized fertilizers. This system is very sensitive to corruption and black markets,
benefiting big enterprises hunting for cheap fertilizers, leaving the small farmers
without the cheap inputs.
 A factor hindering the development of an internal food market not dealt with is the
pricing issue; farm gate prices are low and consumer prizes high. This makes that
imported goods (e.g. fruits) are often cheaper. This is especially a problem given the
fact that their quality is often better.
 Recently the Indonesian government has passed the Food Bill; this law tries to bridge
the gap between the corporate sector and the scattered, small holder agriculture in
order to secure food for the Indonesian population. Many organizations do not agree
with this law. Organizations protest against the food bill as it does not recognize the
situation of the small holder farmers, the main producers of food crops.
Farm size
Farms are very small, especially in Java, farmers on average have only 0.2 ha.
Something needs to change in order to feed the Indonesian population. But the opposite
is true, agrarian land owned by small holders is still transformed (sometimes confiscated)
into plantations.
 Agrarian reform is necessary, allowing give land from state owned companies to
farmers. The discussion on this Agrarian reform is ongoing for years, and a continued
issue for lobby by NGOs, but does not come to a conclusion.
 Small sizes of plots hinder individual farmers to produce large quantities.
 Volumes can also be achieved by groups of farmers but strong farmer organizations
are often lacking.
Needs of farmers
With only limited land, farmers can only improve their livelihood through better farming
practices and better business skills. Farmers lack many things to become successful
entrepreneur:
 Lack of capital/ access to suitable loans or other financial products (farmers lack
collateral);
 Lack of capacities and technologies to add value to their produce (they only sell fresh
products);
 Lack of markets intelligence and access to (national and international) markets and
information (farmers have only access to local markets);
 Lack of strong organizations (farmer organizations are weak and not entrepreneurial
and lack managerial and organizational capacities)
Lack of Farmer Support systems
 In the 70-ies of the last centuries the Indonesian extension services system was
good, but the decentralization has made districts responsible for it. This has led to a
breakdown of the extension system.
 Farmers in government supported sectors e.g. rice, are used to getting assistance
and input for free this does not contribute to entrepreneurship development
15
 Other sectors (e.g. fruit and vegetables) have more entrepreneurial farmers (often
also younger ones), these farmers lack appropriate Business Development Services, if
available they would pay for it.
 Inputs are needed, but the subsidized fertilizer distorts markets
Certification
Access to premium markets for high value added products is interesting for farmers.
 Farmers lack assistance to cope with the demand for a continued supply of a stable
quality.
 Farmer (organizations) need (and lack) assistance in certification related issues (e.g.
internal control systems).
 Lobby on standards and labels is needed at regulatory Indonesian level.
Farmer entrepreneurship
 In order to achieve food security small holder farmers need to be taken seriously as
entrepreneurs, but farmers are perceived as producer, not as manager of their farm,
or entrepreneur, this should change.
 For farmer entrepreneurship development the wide range of bottleneck described
above are to be solved.
 On top of this farmers need to develop business mind-set and market awareness.
Cooperation between farmers and companies
Linking farmers and business could also provide opportunities for farmer
entrepreneurship development. But:
 How to establish (long term) relations with companies; how to ensure that deals are
mutually beneficial for company and farmers?
 How to create synergy between a company and development organizations. How to
make a business more than a buyer? How to influence the agenda of companies?
 Companies are happy to work with NGOs to organize farmers, but they do not pay for
this. How to get farmers interested to invest in establishing long term relations?
 The discussion on farmer entrepreneurship and cooperation with the private sector is
still challenging in Indonesia. Some CSOs are eager to establish linkages between
farmers and companies; others do not want to cooperate with business at all. In
Oxfam terminology these are called ‘outsiders”, while the ones willing to dialogue with
the private sector are called ‘insiders’. This is of course influenced by the history of
Indonesia in development of large scale privately owned plantations and schemes,
which led to very uneven income distributions in the country.
Corporate Social Responsibility (CSR)
CSR is increasingly in the agenda of companies. CSR in this case can be social as well as
related to the core business of companies. (see also definition on page 9) (I)NGOs are
approached by companies to assist them in developing CSR policies and strategies.
 Both NGOs and companies are still learning on sustainability management.
16
4.
Current activities of (potential) Agri-Hub members
This chapter describes the activities and programs of the organization of the
interviewees. Subsequently the programs and activities of Dutch and non-Dutch
organizations involved in farmer entrepreneurship development will be presented
together with their partners, governmental as well as governmental. In annex 2 of this
report the details of the interviews are presented per organization21.
Royal Netherlands Embassy (RNE)
For the RNE Indonesia is a (low) middle-income country, this influences the type of
support given to Indonesia by The Netherlands. It explains why the emphasis is very
much on economic diplomacy of the Dutch companies in combination with support to the
development of the Indonesian business sector.
The Multi Annual Strategic Plan of the RNE specifies the following priorities for the period
2012 – 2015: (1) economic relationship (2) synergy development cooperation and
economic diplomacy; (3) leverage Dutch expertise.
Focal areas for the cooperation program are: security and rule of law; food security;
water. The following cross-cutting topics are specified: environment and climate change;
good governance and gender.
CSR is an important theme involving networking, match making and advocacy by the
RNE. This is translated in the following activities: (1) dialogue with companies, (2)
incorporate CSR into ODA program (3) social and environmental issues through anchors
within the value chain through Public Private Partnerships PPPs. Examples of initiatives:
labor rights (with FNV, CNV), environment (horticulture program), Corruption (EITI),
Human Rights (HR program, VPs), sustainability reporting (INA), IDH program, other
PPPs: Frisian Flag, DSM nutrition. (Read annex 4 for more information on the food
security programme of the Royal Netherlands Embassy).
For more information read also Annex 4 Background note to the food security program
(by the Royal Netherlands Embassy Indonesia)and Annex 5 The Dutch Food security
program in Dutch political perspective (by Antoon Blokland, BBO/ Indonesia Council)
Dutch Members of the Agri-ProFocus partnership and their partners
HIVOS (Regional Office South East Asia)
HIVOS' main strategic choices and goals for country are: Strengthening small producers
position in the value chain by producer organization development, improved access to
markets (and inputs), and improved productivity (in quality and quantity), access to
finance, access to energy and to information and services. Hivos support initiative that
make use of natural resources in a sustainable manner and at the same time provide a
better income for rural communities.
Current programs:
 Rice- based farming systems, horticulture (Java),
 Palm Oil (Jambi,),
 Traditional handicraft and food processing (Kalimantan, Central Java, West
Sumatra),
 Palm and Coconut Sugar (Java),
 Biogas (currently 7 Provinces),
 Renewable Energy (Sumba, Java),
 Microfinance (Bali, Java)
 Foreseen to get involved in the cocoa sector.
21
Potentially interested in the Agri-Hub, but not interviewed are MDF (Bali office), plays an
important role in the Indonesian Niche Program of NUFFIC and Aidenvironment (Bogor office)
17
HIVOS was actively involved in the Gender in Certified Chain Project carried out in 20102012 with KIT, OxfamNovib and contributed cases for Challenging Chains to Chains
publication a joint publication from the -Agri-ProFocus gender in value chain network
The HIVOS programs are funded through MFSII, applications with EU and the PPP facility.
Its partners are: LESMAN. SPPQT, Setara Jambi, LPPSLH, KSU Jatirogo, ASPPUK, KSPQT,KSU MUK, KOMIDA, IBEKA, AOI (Organic Alliance Indonesia). Several partners of
HIVOS, but also of ICCO and other organizations visited are member of this Organic
Alliance (see box 5). The Inception Mission Team had the opportunity to interview the
board of the Organic Alliance.
Box 5 Organic Alliance Indonesia
The Organic Alliance Indonesia (OAI), the national umbrella for organizations involved in organic and Fair
Trade since 2002, OA has 70 members (organizations en professionals) Active in 4 areas:
1. Improving quality of production of small holder farmers: IOA has developed a participatory, group based
guarantee system to assist small farmers, who cannot pay for the other types of certification. OA provides
training and consultancy to farmer organizations and companies scheme related
2. Market access: OAI facilitates members to participate in national international exhibitions (e.g. for coffee,
cinnamon, cashew, palm - and coconut sugar, nutmeg. Each year OAI organizes its own exhibition, Bogor
organic Fair. 3000 visitor, 60 exhibitors to open wider markets for our members.
3. Awareness raising: Organic Alliance Indonesia is also involved in awareness raising on organic and FT
agriculture. OA has regular public campaigns (using radio and televison) and is also OA is active in lobby
and advocacy towards the Indonesian government, e.g on agricultural budgeting
4. IOA as an organization: Internal strengthening of OAI is a continuous point of attention. In order to
increase their self-reliance IOA established a Certification body, Bio Cert Indonesia, certifying for several
ecological and social standards e.g Rainforest Alliance, 4C, Ethical Tea Partnership). Bio Cert it is a
private company with 6 full time staff and a pool of consultant also working abroad, e.g Vietnam. Profit of
the company is used for OA
OAI is active in several national networks on organic food sovereignty network, indigenous people network,
farmers’ movement agrarian reform, social entrepreneurial network (ACCI) and IFOAM, OA works with e.g. the
British Council on CSR related activities.
In box 6 the case description of an organic palm sugar project which illustrates HIVOS
way of working. The Inception Mission Team interviewed representatives of the farmer
organization involved, the Jatirogo farmer organization and talked to several others
engaged in the project: the consultant Caecilia Widyastuti, Ms Sri Sulasmi (Deputy
Director, Directorate of Quality and Standardization of the ministry of Agriculture) and
Ms Intan Darmawati, gender consultant for HIVOS.
Box 6 Example HIVOS Using an ‘ethical agent’ to reach high-value markets: the case of organic palm
sugar *
In 2007, the Indonesian record Museum added a new human achievement: Indonesia’s largest mound of
melded palm sugar, a five-ton pile three metres high and three wide. When TV news showed sugiyo, the farmer
who built the great sugar lump in the Kulon Progo area of Central Java, an exporter in Bali took notice. The Big
tree Farm company bought samples of sugiyo’s sugar, tested them in European, Us and Japanese markets, and
soon had orders for 30 times the volume sugiyo could provide. To help secure more supply, Big tree Farm
turned to Caecilia Widyastuti. Widyastuti’s learning network case study documents how she facilitated the
metamorphosis of a small-scale producers’ organization, the network of Farmer groups in Kulon Progo, or
Jatirogo. Primarily a political advocacy group before 2008, Jatirogo developed a palm sugar marketing
cooperative — an economic structure enabling them to meet quality standards for export. Big tree Farm knew
Widyastuti as the consultant to a group of cashew growers that was the first in Indonesia to gain organic
certification. Jatirogo’s palm sugar — made by boiling down sap collected from coconut palms — would also
need to be certified organic for export, as this was the simplest way to demonstrate it was free from additives
prohibited in the United states. As a facilitator, Widyastuti brought together actors who could help Jatirogo
reach the high-priced organic export market, including HIVOS as an international donor supporting the venture,
Dutch and Swiss institutions promoting imports from the developing world, local NGOs, and multiple buyers
including Big tree farm. (read more annex 4)
* this palm is not the same as the one used for palm oil
Besides an interesting business venture palm sugar turns out to also have potential for
women empowerment. Sugar palm production is really a family business, men climb the
trees to tap the sap from the tree, the women boil it down to sugar. Women play an
important role in quality control; they clean the jars, the level of hygiene determines the
Ph level. For crystallized, high quality sugar a high Ph level is required. Recognition of
18
this improves the position of women. Combining gender with business makes gender
issues less sensitive to discuss. The coconut sugar provides cash the year round. The
women decide on how the money is spent, often food, clothes, schooling. “We discuss
how the sharing of the benefit depends on the contribution to the quality of the produce”.
The Inception Mission team also interviewed Mr Ronnie S. Natawidjaja Director of the
Center for Agrifood Policy and Agribusiness Studies University of Padjadjaran, Bandung.
He was active in Global Learning Network, project of the HIVOS Knowledge Program,
small producer agency in the globalized market’. The learning project resulted end of
2012 in a publication. He does a lot of research related to agriculture and value chains,
often with students.
OXFAM NOVIB
There are 4 Oxfam’s active in Indonesia: Oxfam New Zealand, Oxfam Australia, Oxfam
Great Britain, OxfamNovib. Goal of the Economic justice and private sector program is:
”Protected and secured livelihoods of poor and vulnerable women and men through more
equitable access to and control over natural resources and creating fair markets”
Goals of the private sector program is to maximize the contribution that business can
make towards poverty reduction by challenging some practices and building a model for
ethical trade. The private sector program of Oxfam applies a 3 level approach:
 Use, but also improve various global frameworks (ISO, OECD, Right to Food
guidelines, FAO, or UN guidelines), and/or commodity specific (through multi
stakeholder initiatives, e.g. Roundtable on Sustainable Palm oil (RSPO), Aquaculture
Stewardship Council (ASC))
 Advocacy: combining various ways of “insider” (dialogue with private sector) and
“outsider” (critical and on bad policies and practices of private sector public
campaigning involving consumers
 Partnerships with private sector: joint lobby (e.g around national agricultural
guidelines/standards), joint analysis (e.g poverty footprint); joint work on pro-poor
and sustainable value chains,
Oxfam activities in Indonesia:
 Women Enterprise and empowerment programs Papua and Sulawesi
 Multi stakeholder initiatives: example commodities palm oil, aquaculture, tea and
cocoa: focus on social aspects: community decision making through Free Prior and
Informed Consent principles, labor, inclusiveness of resource-poor farmers, gender,
small holder based
 Translate experiences in these value chains to national, regional (ASEAN) and global
(UN, certification bodies, WB, etc.) policy development; link with global MSIs: RSPO,
ASC
 Indonesian Fair Wiser guide: public comparative scoring of banks on responsible
investment policies
 Participation in global Oxfam GROW campaign: “Food Justice in a resource
constrained World”: this GROW campaign is a global campaign, which focuses on
consumer awareness (Positive Food campaign, Land and Power campaign, and
“Behind the brands” campaign (ranking of policies of 10 biggest food companies,
including Unilever, Nestle, MARS)
 Advocacy on the Indonesian Food Bill, the legislation that regulates food systems, it
deals with ways in which Indonesia will feed itself in the future. (quite some) Oxfam
partners want food sovereignty; while the government talks about food security (can
be imported). The bill as passed in 96, recently an amendment accepted October
2012. There will be a national agency for food matters; Oxfam would like to influence
the direction of this agency, e.g to ensure that the need and role of women are
considered.
Partners:
 in palm oil with Sawit Watch, JKPP, SPKS;
 in aquaculture with Telapak, WWF Indonesia and KIARA;
19



in cocoa and tea with Business Watch Indonesia (BWI), VECO, Ethical Tea Partnership
(ETP);
Fair Wiser guide: lead Prakarsa;
GROW campaign: various partners
The Inception Mission Team had the opportunity to interview representatives of WWF
Indonesia, Business Watch Indonesia (BWI), Telapak, Sawit Watch and Ethical Tea
Partnership (ETP).
Box 7 Example Oxfam: Sustainable Palm Oil Program
In the past 20 years, palm oil has become one of the fastest growing agricultural commodities in the world.
Indonesia and Malaysia are the largest producers of palm oil. Nowadays, it is the world’s most consumed edible
oil. Up to half of the packaged food and hygiene products in retail are estimated to contain palm oil ingredients.
Palm oil is increasingly used as a feedstock for biodiesel.
Nonetheless, because of the current ways of production, the oil palm sector often negatively affects the
livelihoods of millions of families. Some of the most persistent social issues are:
o
Unbalanced economic development of smallholders;
o
Land right conflicts between local communities and oil palm plantation companies;
o
The lack of decent labor conditions for plantation workers (both male and female).
Already for several years Oxfam is active in the palm oil sector with a variety of allies and partners. At this
moment the main partner in this program is Sawit Watch. Ford Foundation, RSPO, Foreign and Common Wealth
Office and Oxfam Novib have invested in this program
The goal of the program is scaling up the participation and benefits for smallholders and affected communities
in the palm oil production chain. The program has a multi-level approach: locally the program works with
smallholders and communities on the ground, mostly in Indonesia; the other level is to have worldwide impact
in the palm oil sector and further improve the systems of the Roundtable on Sustainable Palm Oil. Oxfam (and
until a few months Sawit Watch) are member of the Executive Board of the RSPO and various working groups.
The program has seven elements:
1. Improving social dimensions of RSPO
2. Strengthening RSPO Smallholders Working Group
3. Strengthening RSPO Dispute Settlement Facility
4. Support position of palm oil smallholders in Indonesia
5. Empowering affected communities in conflict resolution management
6. Sustainable land use planning
7. Learning from Multi Stakeholder Initiatives (MSI)
ICCO & Kerk in Actie
The aim of ICCO it to empower ethnic minorities and marginalized rural people to attain
access to and control over natural resources, to support sustainable food production and
to connect small producers to the market.
ICCO has been working in South East Asia & Pacific since the 1970s. The ICCO program
used to concentrate on people empowerment, and the re-distribution of land to small
farmers and indigenous people. ICCO: “These efforts for more social justice are the
strong foundations of our current program on Fair Economic Development which focuses
on connecting poor producers and farmers to value chains.”
Focus used to be on food security, agriculture on larger scale is new to ICCO in
Indonesia, ICCO makes use of ICCO experience in the Philippines to build its value chain
expertise in the Indonesian program. ICCO organizes and strengthens farmer and
producer cooperatives in their engagement in value chains.
ICCO works with the private sector and other partners. NGO Partners: Petrasa works in
North Sumatra on organic coffee and Trukaja works in organic rice in central Java. ICCO
is also involved in sustainable forest management in Indonesia and Papua New Guinea,
first only in timber now also involved in Non timber Forest Products (NTFP).
Women in South East Asian countries are often excluded from decision-making
structures: from household level until politics. ICCO empower organizations that focus on
female farmers, because it believes that investing in women benefits a whole family.
20
ICCO encourages female leadership, makes government officials aware of gender
equality, and stimulates microfinance.
ICCO intends to intensify its relations with the private sector. Companies already
approach ICCO for their CSR program, e.g. Achmea in Malang on financial services and
crop insurance) and BNI, one of the largest Indonesian banks. Discussion with Rainforest
and Utz on coffee and cocoa (Utz) and spices Rainforest Alliance are ongoing.
Box 12 Examples ICCO
ICCO is currently in process to develop a fishery program in East Java as part of the IMDI program
(Introduction of Market Development to Indonesia) carried out by Swiss Contact and funded by AUSAID. This
project is the preparatory phase of the larger program in the same field called PRISMA. The organizations in
this IMDI programs are already a group, they have been supported by Swiss contact on value chain
development they are all contacted as part of this mission except for Mercy corps (also a potential member of
the Agri-Hub.
CORDAID
The Inception Mission consultant interviewed Harma Rademaker (from the Business Unit
DRR and Disaster Response from Cordaid, before she used to be member of the Sector
Entrepreneurship. Till end of 2012 the focus of the CORDAID program in Indonesia was:
value chain development in combination with healthy farming systems & diversification;
capacity building and empowerment of farmer organizations; productive ecosystems
(non-timber forest products, biodiversity).
As per Jan. 2013 Cordaid’s Sector Entrepreneurship does not exist anymore, and the
‘Small producer’ program will be phased out by end of 2013. Only the spice program will
continue, because of our partnership with the IDH Sustainable Spice Initiative. The main
program of Cordaid in Indonesia is now on Disaster Risk Reduction (including food
security), Climate Change Adaptation and ecosystem management. The current
programs regarding farmer entrepreneurship focus on public private partnerships with a
focus on local markets (horticulture, rice) and international markets (spices).
Cordaid works together with local partners in rice, spices and Non timber forest products.
Partners and programs of Cordaid in Indonesia are:
 VECO Indonesia, East Nusa Tenggara and Eastern Java, Coffee value chain (Flores);
Healthy rice value chain (Flores and Java) in combination with farming systems and
food security; internal control systems by farmers for certification (Till end 2013).
 Swiss Contact, East Nusa Tenggara and Western Kalimantan, Cashew & Honey
(Flores); potential for Spices: black pepper value chain (Kalimantan); link with IDH
Sustainable Spices Initiative; focus on sustainable production, private sector
development (including BDS, appropriate technology); interested in integrating DRR.
(Till end 2015).
 Cassia Co-op SCE & VECO, Sumatra, Spices: cassia value chain; link with IDH
Sustainable Spices Initiative; it is a company initiative; certification and setting up
internal control system with farmers; capacity building of farmer groups (with VECO
support)(Till end 2013).
 Riak Bumi and Dian Niaga Kalimantan, Non Timber Forest Products, especially honey
value chain; national honey network; with groups of indigenous people and with
strong focus on biodiversity and natural resource management; interest in integrating
Disaster Risk Reduction and Climate Change Adaptation plans. Till 2015 (in the
Cordaid – BothENDS alliance)
 (Initial stage) Pilot project started Maluku Spices: nutmeg value chain (workshops
and contacts with local company-farmer groups-university-NGO, involvement of
Dutch migrant organization)Till end 2013; maybe beyond, depending on funding
 INA -Indonesia Netherlands Association Mainly Java; In 2013 focus on spices; either
Sumatra or Maluku Horticulture/Spices Partnership Support Program (under INA-Horti
Chain Centre): building partnerships between farmer groups and SMEs (local/dutch)
and strengthening farmer groups and access to BDS; financial support from Cordaid
Till end 2013
21
Box 13 Example Cordaid: Spices
Cordaid is heavily involved in the spices sector, many of the Cordaid projects in the above list address spices
value chains. Cordaid is member of the steering committee of the Sustainable Spice Initiative for sustainable
spice production, processing and marketing together with IDH, in Indonesia (and Vietnam, India). The program
has an investment fund for Spice Producer Support Pilot projects for partnerships with Dutch/international
companies and Indonesian partners (NGOs, farmer organizations, local companies). The program cooperates
with Rainforest Alliance on standard development for spices.
SNV
SNV started in Indonesia mid-2012, although SNV has provided TA to the biogas program
since 2009 managed by HIVOS. SNV is at the moment hosted by the Indonesian
domestic biogas program managed by HIVOS, in 2013 they will move to their own
building. SNV is in the process of getting registered and envisages growing up to about
20 staff (incl. a few expatriates) in 2013.
Focus so far on value chain development. The following value chains have been selected:
dairy, rattan, coffee, coconut, cassava, and aquaculture. SNV is implementing a feasibility
study in in conjunction with the ADB to establish a fund to support inclusive businesses.
This may be a regional fund including debt and equity with a technical assistance facility
attached.
Important donor for VCD/ food security related work is AusAID (they have a lot of funds),
Ford Foundation, USAID, working with Swiss contact is also important. SNV have
recently secured AusAID funds for some preliminary work in coconut and cassava. Noraid
and DFID are more in the REDD+/ forest management/ climate change.
SNV intends to develop 2 other sector programs: (1) renewable energy (without
duplicating what the Biogas program is doing (household level biogas), but medium level
biogas at community level also able to generate electricity) and (2) WASH. Climate
change is a cross cutting issue. SNV will have to secure funding from back donors as
from 2016 no core funding is available any more. At the moment they have some funds
to build up their track record.
No explicit gender strategy, although gender is mainstreamed in all projects, however it
does not always gain the necessary attention
Box 8 Example SNV: Coffee
One of SNV’s key approaches is inclusive business where we use companies as the entry point to develop the
value chain in a way that benefits to the companies and small holder farmers.
SNV has just starting a project which will develop a sustainable coffee platform where it can then work with
interested companies.
Solidaridad
Solidaridad works with small holders in palm oil, tea and coffee. Solidaridad trains small
holders (mostly the independent ones). Their work is all about empowerment of small
holders. Cooperation with the private sector is key in its way of working. CSR and codes
setting are central issues.
Box 9 Example Solidaridad: Indonesia launches first RSPO certified cooking oil
French retailer, Carrefour and leading Indonesian oil palm company, Musim Mas recently launched the first
Roundtable on Sustainable Palm Oil (RSPO) certified oil in the country for domestic market consumption.
…....Dr Piers Gillespie, Manager for Solidaridad Oil Palm program in Asia, describes the initiative as a great
step for the Indonesian market. “We really applaud this first positive step undertaken by Indonesian
companies, and are convinced that an eco-focused product of this nature will be well received by an
increasingly discerning Indonesian populace.” From the Solidaridad website
22
Solidaridad is is in process to establish an office in Jakarta, currently it works with
consultants and through partner organizations. Important partner organization is
Business Watch Indonesia. BWI is in charge of Solidaridad's support programs for tea,
coffee and cocoa producer organizations in Indonesia. The Ethical Tea Partnership is an
important partner in the Solidaridad tea program.
The Inception Mission Team has talked to both Business Watch Indonesia (BWI) (box 10)
and the Ethical Tea Partnership (ETP) (box 11).
Box 10 Business Watch Indonesia
BWI seeks to build accountability of businesses through CSR and promoting fair business practices. It has
been part of various global CSR initiatives in tea and supported code setting bodies like ETP and the Dutch
Coffee Coalition. BWI was established in 2002 and is funded by Solidaridad, IDH, Sara Lee, Oxfam.
Box 11 Ethical Tea partnership Indonesia
ETP is an international association of 30 large tea packers, incl the Dutch DE DE Masterblenders, who like to
monitor their tea in the production areas. Some tea is certified Rainforest Alliance, Utz of other, but all tea has
the ETP own standard according to 9 criteria. At the moment only 30% of the tea comes from small holders,
ETP foresees a larger role for them, that is why it works with small holders. For more details on the interviews
see annex 2. ETP is also a partner of Oxfam and IDH (the Sustainable Trade Initiative)
Both Ends
Both ENDS is cooperation partner within the Non Timber Forest Products Exchange
Programme. NTFP Indonesia is the NTFP-EP partner in Indonesia. Together with NTFP
Indonesia Both ENDS has worked on production of sustainable land management and
livelihoods through the production and marketing of NTFPs:




Sustainable production and local and regional marketing of forest honey
Partners: Forest Honey Network Indonesia (technical assistance to gathers) and Riak
Bumi (marketing)
Handicrafts from forest products in West Kalimantan
Partner: Borneo chic (processing and marketing of high end market products)
LP3M: land rights and local communities, East-Kalimantan;
Capacity building Cassia producers, development of value chain, marketing of cassia
Partner: Cassia Coop Training Center (training)
Other issues addressed by Both end and its partners:
 Participation of local communities/ farmers in land use planning
The current national policies on village forests and community forestry management
allow local communities to manage the forests around their villages. Both ENDS on these
issues Warsi, Samdhana, Telapak, Walhi

Participation of local communities/ farmers in integrated water resources
management
Both ENDS works within a network of advocates for participation of local water users, this
network includes farmers, in policies and decision-making over water resources. Both
ENDS works on these issues with Telapak.
 Palm oil influences local communities / farmers on land use - and spatial planning
In Sanggua district in West Kalimantan Both ENDS works with research institute ICRAF
and local CSOs PPSDAK, LBBT and YPSBK to integrate community maps in formal land
use planning/ spatial planning procedures.
 Resolving conflicts over land with RSPO members through Dispute Settlement
Facility
In 2003, the Roundtable on Sustainable Palm Oil (RSPO) was established and Both ENDS
has been a member of the RSPO since the beginning. Both ENDS has initiated together
with other NGO members, businesses and mediation experts, the development of a
facility for the settlement of disputes within the RSPO. Partner Sawit Watch.
23
Centre for Development Innovation (CDI) Wageningen University
The Inception Mission consultant interviewed Ms van Dorp of the Centre for Development
Innovation from Wageningen University. Ms van Dorp is specialized in linking agricultural
production and food security/ nutrition. In May 2012 she was involved in advising the
RNE on how the specific sectors (especially horticulture, fishery and aquaculture) can be
developed in such a way that also the availability of food in terms of quality (nutrition)
and quantity increases, especially for specific poorer segment of the Indonesia
population. CDI has been involved in projects in these sectors previously.
With regards to horticulture advice focused on the reduction of inputs (fertilizer and
pesticides) in order to reduce the production costs for farmers, while at the same time
contributing to the quality of produce and reducing environmental damage.
On fishery and aquaculture the advice focused on the handling of the fish (including
marketing and processing) in order to reduce losses and thus increase availability of fish
on the market without increasing (or even reducing) overfishing.
The mission worked closely together with relevant national research institutes and
ministries. No decision taken yet on the follow up of the advice given. (Read annex 4 for
more information on the proposed horticulture and fishery programs)
CBI (Centre for the Promotion of Imports from developing countries)
CBI is an Agency of the Netherlands Ministry of Foreign Affairs. Established in 1971
Objective CBI: measurably increasing exports from developing countries to the EU/EFTA
markets. This description is based on a Skype interview with Ms Christa Bouwhuis of CBI
CBI offers an integrated packages of services (isolated services are not enough to create
impact): (1) Capacity Development by providing expertise focusing on product
development and quality management required to enter the European market. (2)
Market intelligence (3) Human resources in companies (4) Development of an enabling
environment (sector development, Business Support Organization development,
Chamber of Commerce).
CBI focuses on a limited number of value chains, of which the bottlenecks are analyzed.
In Indonesia CBI focuses on food ingredients: (Essential) oils, carrageen (seaweed),
coffee. It is a Asia broad program; on value added products, not raw material; quality
improvement and sustainability are key issues, this includes standards, they are
necessary to enter the European market
Agriterra
Indonesia is one of the new focus countries for Agriterra’s agribusiness development
team. For that purpose Agriterra is interested in building up a client portfolio of farmerled businesses in the country. Also in view of the cooperation with Friesland Campina,
Agriterra will support strategic cooperatives providing milk to the factory in Jakarta.
Partners are KPBS Pangalengan and KPSBU Lembang. Additionally Agriterra has worked
with SPPQT within the Horticultural Partnership Support Program (HPSP) supported by
three Dutch development cooperation organisations: Cordaid, Agriterra and the Royal
Netherlands Embassy22.
MDF
MDF has for several years supported under a NUFFIC programme various Indonesian
Higher education institutes with the goal to upgrade services from universities for
farmers in particular teaching the teacher programmes, in cooperation with NGOs (local
and international). Focus was on improving farmers’ livelihoods, entrepreneurial skills
and agricultural practices. The programme (for partners in Timor (Kupang), Moluks, Irian
Jaya (west Papua) included:
22
Taken from Agro-Info net: www.agro-info.net/
24



Strengthening of institutional management at four Polytechnics in Eastern Indonesia
POLITANI Politeknik Pertanian Negeri, POLNAM Politeknik Negeri Ambo, PNK Politeknik
Negeri Kupang, POLIKANT Politeknik Perikanan Negeri Tual
Improving the quality of education, research and community services in the field of
Fisheries, Marine aquaculture and Marine sciences at UNKHAIR, UNDANA, UNPATTI,
and POLIKANT in eastern Indonesia
Improving the quality of education, research and community services in the field of
agriculture at UNIPA, UNDANA, UNPATTI, and POLITANI in eastern Indonesia
Other Dutch actors and their partners
INA, Indonesian-Netherlands Association/ Indonesian-Benelux Chamber of
Commerce
INA is Established in 1978, since 2003 including Belgian and Luxembourg companies. INA
aims to facilitate business cooperation between Indonesia, the Netherlands, Belgium and
Luxembourg, member companies. Members are Dutch/ Benelux companies as well as
Indonesian companies. It provides services to its members e.g. Establishing companies in
Indonesia, Information and Market Research, Business Mediation, Conferences,
Matchmaking, and Trade Fairs,
Since 2006 INA is an organizational stakeholder of the Global Reporting Initiative and
organizes annual Sustainability Reporting Awards (ISRA). 32 major Indonesian
companies have since then developed Sustainability Reports based on GRI (in 2005 only
1 company had a such report).
INA encourages its members to cooperate with NGOs for the implementation of its CSR
programs. For this purpose the platform Synergy4Life.org was established, a platform
where companies and NGOs can meet. The initiative is still young so no results are
available on successful matches made.
INA is the host of CBI – Center for the Promotion of Imports from Developing Countries
Information and Assistance programs in exporting to Europe.
IDH Sustainable Trade Initiative
“IDH accelerates and up-scales sustainable trade by building impact oriented coalitions of
front running multinationals, civil society organizations, governments and other
stakeholders” (from IDH website). IDH is a Public Private Partnership agent (funded by,
but at arm’s length of Dutch government). IDH aims to support business and government
in specific sectors to transition into the next phase of mainstream sustainable, higher
quality production of agro-commodities;
Indonesia is a key country for IDH. IDH is worldwide active in 16 commodities; in
Indonesia IDH is already active in cocoa, tea, timber, and spices with a variety of Private
Sector, government and NGOs. Scoping/starting in palm oil, coffee, and aquaculture
(shrimps).
Non Dutch international organizations and their partners
VECO (Vredeseilanden)
VECO has a long history in Indonesia (since 1959). It has a country office in Bali (with 12
staff) and 6 field offices all over the country (each with approximately 2 staff).
VECO Aims at sustainable agriculture, since 2007 it applies a market oriented, value
chain approach, linking farmers to markets, but also prepare them for this. Business
development of farmers and their organizations has a central place in the VECO strategy.
Local NGOs are service providers to farmer organizations (the ultimate clients). They
deliver training and value chain facilitation. This service delivery is fee based.
25
In Sulawesi VECO focuses on cocoa, it is one of the leading members in the Cocoa
sustainability Partnership (CSP). This partnership includes companies as Mars, Amajaro
trading. Also in Flores VECO is active in the cocoa sector. VECO has developed a training
approach for farmers combining Rainforest and Utz support modules.
In Flores coffee is the most important sector for VECO, on this island there is an
increased interest in niche market quality coffees, an underdeveloped market in
Indonesia. VECO has established field schools to improve productivity, an approach to be
expanded to Sulawesi.
With IDH VECO promotes the involved in the production of cinnamon in Sumatra with a
Dutch company. In mid- Java VECO supports organic/ healthy rice farming (different rice
varieties and standards). With SNV VECO will work in coffee (with Ford Foundation
funding). There are ideas to develop a similar sustainability platform as for cocoa.
Gender is mainstreamed in the VECO in the management cycle if VECO programs, a
toolkit was developed by a local consultant
Swisscontact (SC)
SC was established in 1959 in Switzerland. Private Sector Development has always been
its core business. SC works primarily in Asia, it has offices in Myanmar, Laos and
Bangladesh (its largest program). But SC worked also in Africa (e.g. Mali) to a more
limited extend. In Bangladesh SC was the initiator and has the lead of a platform similar
to an Agri-Hub (though not purely focusing on agriculture).
In Indonesia SC was involved vocational training. Between the 70ies and 90ies together
with the government over 130 poly-technical schools were established all over the
country. Later SME promotion and the development of BDS became important for SC,
now vocational training becomes more important again. Until 2012 SC was also involved
in economic revival after the Tsunami.
At the moment SC is involved in 2 massive programs in cocoa Sulawesi and Atjeh and
Tourism Flores. SC is also a major stakeholder in the SCP (Sustainable Cocoa
Partnership) a Multi stakeholder initiative aiming at good farmer practices in the
production of cocoa, involving Nestle, Mars and other large companies.
Mercy corps
Not interviewed, according to Swiss Contact and ICCO Mercy Corps is active in farmer
entrepreneurship support.
Donors in Food security
AusAID
AusAID is currently a sizeable donor for farmer entrepreneurship development. They are
currently active in 2 programs: IMDI (Introduction of Market Development to Indonesia)
in which HIVOS, ICCO SNV, Mercy Corps and VECO are involved. The program is
implemented by Swiss contact. The IMDI program is the pre- phase of a new programme
soon to be launched, called Prisma.
The goal of the Prisma program (full name: Australia Indonesia Partnership for Promoting
Rural Income through Support for Markets in Agriculture AIP – PRISMA) is to contribute
to a 30%, or more, increase in net incomes for 1,000,000 poor rural female and male
farmers. The Program will focus on three key outcomes; (1) farmers apply improved
farm practice; (2) farmers utilize improved access to inputs and output markets and (3)
improved business enabling environment at sub-national level.
USAID
ACDI/VOCA implements a large $20 million, five-year Agribusiness Productivity (AMARTA
II) program. Funded by USAID, the program will improve the competitiveness of the
26
horticulture, coffee and cocoa sectors in Indonesia. Throughout the program, the
ACDI/VOCA team will use gender-inclusive and natural resource management-sensitive
practices
Other donors
The EC is a fairly important donor with their: Switch Asia calls, Uprooted people calls
(phasing out) and Food security calls. Besides this and the Ford foundation no other
(potential) donors are mentioned by the persons interviewed accept for the usual back
donors in their home countries, including MFSII for the Dutch organizations. The
Inception Mission team has not interviewed any of these donors.
27
5.
Opportunity assessment
Introduction
This chapter gives a overview of commonalities in programs and activities of the
organizations visited and opinions on the issues and challenges mentioned by the
interviewees to see if there is enough common ground to start an Agri-Hub. The chapter
also gives an overview of the opinions on opportunities for joint action, innovation and
increased linkages.
Summary programs and activities
Indonesian
Telapak
Sawit Watch
WWF Ind.
BWI
Petrasa
Trukaja
Jatirogo
farmer
organisation
Horticultural
Partnership
Support
Program
(HPSP)
Horti Chain
Centre (HCC)
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Fishery
aquacult.
Seaweed
Cashew/
peanut
X
X
X
X
X
X
X
X
X
X
X
Horti
culture
X
X
X
X
X
X
X
NTFP
X
timber
X
spices
coffee
coconut
sugar
X
pigs
X
X
X
X
cocoa
rice
tea
X
dairy
Dutch
HIVOS
ICCO
Oxfam
Cordaid
Both Ends
SNV
Solidaridad
IDH
CBI
CDI
Agriterra
MDF
Other
international
VECO
Swisscontact
ETP
palm oil
Organisa
tions
At first sight the international organizations and their Indonesian partners visited are
active in a large variety of programs and activities and programs:
They are active in a large variety of sub sectors (see table below),
They focus on different geographical areas. Together they cover the whole Indonesia
archipelago.
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
28
Commonalities




They all focus on small holder agriculture (incl. fishery and forestry)
Support to farmer entrepreneurship is key in their way of working
They all apply a value chain approach
Cooperation with the private sector is part of this approach
Common issues
The interviewees mention many common issues or challenges. They are in general
related to developing entrepreneurship at the level of farmers and their organizations.
They mention the same bottlenecks in chapter 3 they are listed. At individual farmer
level, there is lack of nearly everything ranging from access to finance, - support services
and - technology to - market intelligence, but also the lack of a business mind-set and
market orientation.
An important role is foreseen for farmer organizations but according to most interviewees
strong farmer organizations with the managerial and organizational capacities to deal
with the demands (in terms of quality and quantity) of markets for high value adding
products are lacking.
Cooperation with the private sector is a strategy widely accepted, but also experienced as
a challenge; how to ensure real win-wins from business deals. On this topic opinions
differ, some prefer the change from within, through cooperation, others emphasis the
need for lobby and campaigning, or a combination of these strategies.
Most likely organizations have their strong points, but this Inception Mission was not the
way to find out. Some seem to have extensive experience in strengthening farmer
organizations, others have interesting experiences in gender. Again other organizations
are very much interested in focusing on financial services. Finding out who is strong in
what is part of getting to know each other in the network.
Potential for an Agri-Hub
During the interviews Agri-ProFocus was introduced and the concept of the national
networks, Agri-Hubs was explained based on the content focus as presented as in box
15. These service features will be used to discuss the opinions of the interviewees on the
potential of an Agri-Hub.
Box 15 Agri-Hubs
Agri-Hubs are now in place in 12 countries and function as multi-actor platforms in support of farmer
entrepreneurship. Service features include:




Coordination and network development for a joint agenda linking local, Dutch and international
stakeholders
Business and partnership brokering between local organizations / farmer enterprises and (Dutch)
agri-business as well as private sector investment (instruments)
Facilitation of innovation communities around topics such
 Organizing farmers for business
 Access to markets / rural business development services
 Access to financial services
 Sustainable food production (including natural resource management)
 Gender in value chains.
Platform and network for debate and learning to have policy dialogue with a wide area of policy
makers to strengthen the enabling environment for private sector development in agri-business,
with special emphasis on small- and medium enterprises
From The Terms of reference
1. Coordination and network development
This Agri-Hub concept comes very timely. There is a shift ongoing within NGOs.
Increasingly NGOs realize that farmers need to become entrepreneurs addressing
markets for higher value added products in order to be able to earn a living of they want
to live from their small plots.
29
In an Agri-hub resources can be joined and approaches developed to ensure fair and
inclusive value chain development. An Agri-Hub can play a role in developing the
entrepreneurial mind set of farmers, but also of NGOs. NGOS in Indonesia have a history
in advocacy and strengthening of farmer groups, dealing with markets is new for NGOs.
There is a need to share and replicate success stories and lessons learned. Universities
can be involved in this and are interested. Also advocacy will become easier
Box 16 Some critical question asked:
There are so many networks in Indonesia; isn’t there already something like an Agri-Hub?
There are indeed many networks, but they are sector - or topic specific: on cocoa, horticulture,
organic agriculture etc. The Agri-Hub will of course has to prove its added value to these sector of
topic networks.
Is there a demand for an Agri-Hub?
Yes there is a demand from Dutch organizations that have seen the positive impact of Agri-Hubs in
Africa. Explicit requests came from HIVOS and ICCO, but also from other members of the Indonesia
Council in the Netherland. During the Inception Mission the demand from Indonesian side was shown.
There might be a demand from the side of (Dutch) development organizations, but should an AgriHub not focus on the real need of Indonesia?
The development of the small holder sector seems to be a highly relevant sector in Indonesia both
from a national economic development and national food security perspective as from a poverty
alleviation and household food security perspective. It is high on the agenda of NGOs but also of the
Indonesian government, even though the applied strategies are not always aligned.
Why should the Netherlands take the lead in the establishment of this network?
No other country has so many development organizations active in the development of farmer
entrepreneurship. Also the Dutch business sector is well represented in Indonesia and interested in
linking with farmers.
Would an Agri have added value to business networks?
An Agri-Hub looks for synergy with businesses networks (e.g INA) and forms the counter force
against companies, who are very capable of defending their interests; an Agri-Hub safeguards the
green, inclusive, pro-poor development perspective and ensures that cooperation between farmers
and companies results in real win-wins.
2. Business and partnership brokering
Farmer entrepreneurship development is on their agenda and cooperation with the
private sector fits in this agenda, while not long ago they were very much against
cooperation with companies. Also farmers want to work with companies.
Companies are interested in cooperation with the Civil Society, they need them to reach
farmer-suppliers. CSR is even mandatory by law, 2% of the company’s profit is to be
spend on it. An Agri-Hub would be a place for Civil Society, companies and farmers to
meet. There is not such an initiative yet.
3. Facilitation of innovation communities
Respondent agree that farmer entrepreneurship development is really a central issue at
the moment in Indonesia. The Agri-Hub should not deal with commodities - there are
many different types of small holders active in different sectors on different islands all
with their own specific problem- but with cross cutting topics faced in developing farmer
entrepreneurship in different sectors (strengthening farmers groups, access to inputs,
inter action with plantations, establishing business linkages, CSR and certification related
issues).
For the same reason the Agri-Hub should not limit itself to certain regions/ islands. This
does not mean that members can not cooperate in smaller group around a specific sub
sector, value chain or region.
Gender is a shared issue given the feminization of agriculture in some areas. The fact
that women contribute to new value adding activities might create opportunities for
increased gender equality.
30
4. Platform and network for debate and learning
There are many organizations active in this field, government, companies, NGOs; there is
a need to learn from each other. Many organizations support farmer organizations,
improve technical production, but how to sell, how to access better markets for better
prices is still difficult for most of them. In an Agri-hub we can jointly deal with the
problems we face in capacity development of farmers and their organizations, in relations
of farmers with financial institutions and companies, especially in the establishment of
long term relations
The Agri-Hub concept is very much in line with the attention for food security from the
Indonesian government. The Agri-Hub might make lobby easier (e.g. on food security
related issues or on issues related to certification).
The Agri-Hub will flourish when it make the work of its members easier. There is a need
for practical experience sharing. This can be at different levels field- strategy – policy
related, focused on different topics, for staff of NGOs, Government and businesses.
6.
Agri-Hub features
Introduction
This chapter present the opinion of interviewees on practical matters related to the
establishment of the Agri-Hub: its members, the coordination, financial contributions and
risks.
Members
The Dutch APF members in Indonesia (Cordaid, ICCO, Oxfam Novib, HIVOS, SNV,
Solidaridad etc.) work in different geographic areas in Indonesia, which is not always an
advantage for cooperation or exchange of experiences. They have all welcomed the AgriHub concept.
All respondents agree that the Agri-hub should be explicitly inclusive (include
organizations from Indonesian, Dutch and other origin). Other non-Dutch organizations
can be important players for collaboration. Respondents from international organizations
are more than willing to link the Agri-Hub with their national partners (government as
well as non-government). The fact that the Agri-Hub idea is wider than NGOs and will
include a variety of international organizations and companies (large as well as medium
sized, Dutch, Indonesia and other origins) is welcomed.
Respondents mention that for the cooperation with the business sector the Agri-Hub
should link with INA (the Indonesian Benelux Chamber of Commerce) and the Horti
Chain Centre (HCC) a Business Development Service Providers under INA. The director of
INA has expressed interested in cooperation., he especially sees potential for cooperation
on the match making between companies and farmers. To be further elaborated.
Coordination of the Agri-Hub
Indonesia is a vast country this makes the functioning of a network complicated. It would
be very difficult to define a geographical focus for the Agri-Hub. Most respondents
suggest a centralized network, with the option of decentralized activities by smaller
groups of organizations addressing specific need of regions/ island, to address the need
to meet face to face. Communication technology (the internet based platforms, the
Nings) may help, but in Indonesia meeting in person (‘have dinner together’) is also very
important.
The role of host is very important in the Agri-Hub. In box 15 the criteria are listed for this
lead organization.
31
Box 17 Criteria for hosting the Agri-Hub
Content criteria
1. Duration of presence in Indonesia
2. Promoting entrepreneurship as part of the organization’s strategy
3. Program size (budget and partners) (esp. in economic devt)
4. Profile /expertise in farmer entrepreneurship / ambition
5. Open to business / entrepreneurial approach, innovative
6. membership of Agri-ProFocus
Process criteria
7. Access to wide variety of stakeholders (INGO's, NGO's, partners, donors, government, embassies)
8. Strong networking potential (capacity and location)
9. Strong relation with HO in NL, that will provide backup & expertise
10. Willingness to contribute financially
11. Capacity to physically host the Agri-Hub and provide administrative support
12. Proven (online) network facilitation competency
HIVOS and ICCO are interested in leading the Agri-Hub. This would influence from where
the coordination takes place Jakarta or Bali. The arguments for Bali as coordination
center for the Agri-Hub would be that it is more centrally located towards the less
developed Eastern part of Indonesia.
The advantage for coordination from Jakarta is the fact that most agencies have offices in
Jakarta; Jakarta is also more centrally located for contacts with government agencies (for
cooperation and/ or lobby), the Netherlands Embassy and the business sector in general.
It can be considered to establish sub-hubs, e.g on Bali, from which specific activities are
coordinated. Specific activities can be related to themes, e.g. gender or access to
finance, or specific sub sectors. As for the central coordination of the hub it seems logical
that the lead of a sub-hub or theme is recognized as expert on that particular theme.
Contributions
Most organizations interviewed are willing to contribute staff time to the Agri-Hub.
Finding time to actively contribute is the issue, but the more relevant the work of the
Agri-Hub is for the member organizations this becomes less a problem.
In order for people to invest in the network it will have to make their work easier. They
should not be in it for the network but for themselves. Tap the energy, motivate, show
vision this will attract people. Realize that people can only invest in a limit number of
networks, an Agri-Hub potentially has added value to the more specific networks but it
will have to prove this in practice! Link up with these already existing networks in specific
sectors as the Cocoa Sustainability Partnership and other sector networks.
At the start it will be difficult to attract people to a network which in itself does not
provide things for free. So you will have to start with a (maybe smaller) motivated group
willing to invest in the network; if the network shows results it will attract others.
Most organizations are not sure about their financial contribution as this is to be
discussed at higher levels in their organizations. The more concrete and focused the
activity plan of the Agri-Hub, the easier it will be to make financial reservations. Pledges
at the higher level will have to be followed up by the decentralized offices of these APF
members.
Especially Indonesian organization fear not to be able to contribute membership fees
payments in kind (e.g. transport and accommodation) are more likely options. In general
the costs of the Agri-Hub will have to be covered by a limited number of organizations
that consider the development of this type of network part of their mission.
32
7.
Conclusion
Risk analysis

The Inception Mission showed a great potential for the Agri-Hub, it depends on the
art of the leadership and facilitation whether this potential is translated in a
flourishing network to which members contribute both financially and in human
resources.

Is the Agri-Hub accepted in the Indonesian environment by the Indonesian
government, but also by other big players as the business sector and the Embassy of
the Netherlands.

The Inception Mission shows a lot of common ground justifying an Agri-Hub.
However it is inevitable that opinions will also sometime differ on best suitable
strategies to promote farmer entrepreneurship and on working with the private
sector (‘working with’, or ‘lobbying against’). The best way of dealing with this is
explicitly ‘agree to disagree’.

The Agri-Hub should not take over activities, roles and tasks of member. The role of
the Agri-Hub is to link to encourage members to take up activities together and to
learn from each other.

Just before finalizing this report the Indonesia Council was informed that
AgentschapNL has been asked to explore the possibilities on how to make Indonesia
part of the transition facility (of which Colombia, South Africa and Vietnam are
making use since 2010). This could mean a stop of the Development Cooperation
program before 2015 and a stop of the Food Security program (financed from the
development cooperation budget) of the Embassy. What will remain is an economical
program to support the Dutch business chances and the development of a private
sector and business environment in Indonesia. If so decided, this might limit the
possibilities of the RNE to support the Agri-Hub.
General points of attention
 Some organizations (including government agencies) asked about the formal status
of the network. In Africa Agri-Hubs are coordinated under the MOU of the lead
organizations, how this work in Indonesia is to be sorted out carefully.
 In general it is important to establish good relations with government agencies, the
government agencies visited (Home Affairs and Quality and Standards of the ministry
of Agriculture) were very positive about the initiative.
 Ensure that many Indonesian organizations become members.
 Look into ways to work together with environment oriented organizations (like IUCN)
 Involve at least one Indonesia organization in the steering of the Agri-Hub.
 The RNE has not committed itself to cooperation with a (to be established) Agri-Hub.
The development of a constructive relation with the RNE however remains of great
importance; which preconditions and ambitions can make an Agri-hub into an
interesting and reliable partner? How to make use of funding instruments of Dutch
government and Embassy for the Agri-Hub and for PPPs.
 Stay in contacts with the other departments of the Dutch government that have
expressed interest in an Agri-Hub in Indonesia (e.g. DDE and ELI)
 Develop linkages with donors from other origin (AusAID, USAID, Ford Foundation)
and with non-Dutch companies and business associations.
33