Farmers Gain Business Skills in Indonesia

Progress Blog
Farmers Gain Business Skills in Indonesia

By Rick van der Kamp, senior operations officer in agribusiness at IFC, a member of the World Bank Group - 04/19/17

Cocoa farming isn’t only about agriculture. Every stop along the supply chain is its own business. In Indonesia, Cocoa Life has partnered with IFC, a member of the World Bank Group focused exclusively on private sector development, to improve the business acumen of cocoa farmers and nursery managers and help them gain access to finance. Farmers and small service businesses often find this difficult because they lack business skills. In our partnership with Cocoa Life we will build their capacity and then link them to finance providers. Our ultimate goal is for them to be empowered to run their businesses independently.

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The timing couldn’t be more critical. Because cocoa farming was introduced on a large scale in Indonesia in the 1990s, the cocoa trees planted at that time are nearing the end of their productive lives. Over the next five years, many farmers will need to replace their trees. It’s critical that they use high-quality seedlings and fertilizer. This improves their cocoa yields, which translates to higher incomes for farmers.

To help cocoa farmers have easy and affordable access to these materials, Cocoa Life is working with Olam, another Cocoa Life partner, to build nurseries and fertilizer distribution centers. Communities or farmer cooperatives run these facilities. IFC’s role is to teach the managers to become good businesspeople. In addition to training in small business management, such as sales and marketing, we also plan on doing one-on-one coaching. Multiple times a year, we’re going to sit down with the managers and see how they’re doing according to their business plans. After this first phase, IFC will link up the owners to potential access to finance as well. A pilot program is now well on its way in Lampung in Sumatera and if successful, may be expanded to the rest of the Cocoa Life program in Indonesia after this.

"Good planting material and agricultural practices are the cornerstones of good cocoa production. Cocoa farmers can see firsthand the benefits at our demonstration plots. They can then attend one of our farmer training sessions to learn agricultural skills, and purchase high-quality seedlings at a fair price from one of the independent nurseries."

Ashish Agarwal, Olam Manager

One of the challenges that we face is helping cocoa farmers see the value of buying fertilizer. Spending $300 in fertilizer can result in $600 worth of cocoa, but it’s hard to get farmers to part with their hard-earned cash. To that end, we want to get the right, but also affordable fertilizer directly to the farmers and have them settle the bill once they produce the cocoa and are paid for it. It’s a stimulant to ensure future cocoa production.

It’s estimated that in this partnership with Olam as part of Cocoa Life, we’ll reach 3,000 farmers, create 35 new jobs in local communities, and distribute up to 505,000 seedlings and about 300 tons of fertilizer by 2017. If you think about that number of farmers, each becoming more productive because they now have access to the right materials, that adds up to a lot of improved income. I’m personally very enthusiastic about this program.

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