POPULAR REPORT 2013

Foreword

About VECO Indonesia

Important changes

Increase and (more) secure income

Improved influence of family farmers

Reduced vulnerability

Improved food sovereignty

Food sovereignty hero from village

Increase in sales of healthy rice

Learning and knowledge sharing

Lessons learned

Finance

Contents

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Economic growth in Indonesia is on a

positive note since the last 5 years with

rates between 5-8 per cent per year. Most

of this growth is based on extractive

industries and a growing domestic

consumption. Specifically for the food

sector this significant domestic

consumption growth offers good

opportunies for small-holder farmers as

consumers are buying increased quantities

and demand better quality food products.

At the same time there is also a growing

awareness of the importance of

healthy/safe food among the expanding

Indonesian middle class.

These growing markets offer opportunities

for small-holder farmers to enjoy better

prices and sell larger volumes of their

products. However this is far from

automatically achieved since both direct

market access and capacity of organized

farmers are often limited which suppresses

prices for farmers. We need to develop

inclusive market models along with fair

agriculture value chains for farmers and at

the same time strengthen the (business)

capacities of farmer organizations. On the

other hand we also need to think about an

enabling environment in which the

different Value Chain actors/facilitators

(farmers, private sector, service providers,

banks, government, etc.) can build these

inclusive markets and where farmer

organizations can develop themselves. We

should think about good certification

standards, agri-finance, government

collaboration, etc. supporting small-holder

farmers.

The new 6-year VECO Indonesia programme

that officially started in 2014 largely

builds on the activities, results and

networks already being implemented by

VECO Indonesia and its partners for the

last 30 years. This new programme focuses

its strategies and activities exactly on

what is described above in the second

paragraph and is a direct result of

extensive consultations with both internal

and external stakeholders in Indonesia and

at the Southeast Asian level during 2013.

In 2013 we worked in the Rice, Cocoa,

Coffee and Cinnamon sub sectors in 19

districts with 29 partner organizations,

including 11 Farmer Organizations. A

selection of the results of our work during

2013 is presented in this publication. If

you are interested more detailed

information can be found on our web site

or in our “Lontar” newsletter

http://www.veco-ngo.org/veco-indonesia

I hope you like our writings and please do

send us your feedback.

Rogier Eijkens

Regional Representative

VECO Indonesia

Foreword

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About Us

VECO Indonesia is as part of Vredeseilanden, an international NGO

headquartered in Leuven, Belgium. For more than 25 years, we have

worked continuously to achieve one goal: a better deal for farmers.

Vredeseilanden also has regional offices in West Africa, East Africa,

South America, Cental America, and Southeast Asia.

Our Mission

Improving livelihoods of small-holder farmers in Indonesia through

agriculture value chain development and inclusive business

development.

Where We Work

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

provinces.

2. East Nusa Tenggara in East Flores, Sikka, Ende, Nagekeo, Ngada,

Manggarai and East Manggarai for rice, coffee, and cacao

commodity.

3. Jambi in Kerinci for cinnamon commodity.

4. West Sulawesi in Polewali Mandar for cacao commodity.

5. South Sulawesi in Toraja, Enrekang, East Luwu Timur and North

Luwu Utara for coffee and cacao commodity.

6. Central Sulawesi in Parigi Moutong for cacao commodity.

7. West Java in Tasikmalaya for organic rice.

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

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

10. Great Jakarta for healthy food campaign and government

purchasing price (HPP) of multiquality rice.

About VECO Indonesia

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2013 is a very important year for VECO Indonesia because this

year, VECO Indonesia ended programme phase 2010-2013. In 2014,

VECO Indonesia will start new phase for 2014-2020 period.

There were some important changes in the programme during

2013.

Cinnamon-Kerinci

Private company (Cassia Coop) and IDH from the Netherlands

requested that VECO Indonesia facilitate development of Rainforest

Alliance organic cinnamon in Kerinci, and initiate the

establishment of a cinnamon farmer organisation in order to

change the cinnamon trading system in favour of cinnamon

farmers.

Food Sovereignty (DMP DS Programme)

The DMP-DS program has been adopted by the NTT government and

replicated in several districts, such as TTU, Belu and Sumba Timur.

Sumba Timur district government has provided additional support

for the DMP-DS program for 2014 of IDR 90 million, and in TTU,

IDR 40 million per village has been allocated for the community

food stock program. A formal, legal framework is still required to

ensure the sustainability of this program in the coming years.

This Popular Report 2013 explains more about VECO Indonesia

achievements in 2013.

Important changes

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The results of the analysis of the incomes of 2013

program participants using 20 sample farmers for each

chain indicate that as of the end of 2013, farmer

incomes in several commodity chains had exceeded

the program target. These chains were: (1) Sulawesi

cocoa, (2) Manggarai/Ngada Robusta coffee, and (3)

Manggarai/Ngada Arabica coffee.

The increase in farmer incomes in certain commodity

chains, such as Sulawesi cocoa, and Robusta and

Arabica coffee in Manggarai, was due to increased

production volumes and good prices in 2013 (Sulawesi

cocoa sold at premium prices) . For coffee in Flores,

the income increase was more due to a rise in

production volumes, as prices remained much the same

as in 2012 (IDR 20,000 – IDR 21,000/kg) for Robusta,

and were very low for Arabica (average IDR 19,400/kg

in 2013 compared with IDR 28,100 – IDR 33,400 in

2012).

The impact of program interventions were evident in

Sulawesi, notably in the improved cocoa cultivation

system thanks to the adoption of good agricultural

practices (GAP) for sustainable cocoa, and the

premium prices secured as a result of lobbying private

companies (PT Mars, PT Armajaro, Petrafood).

Increased and (more)

secure income

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The collective marketing created a shorter chain and

the high volume of sales of good quality cocoa beans

through collective marketing made farmers receiving

prices above the normal price.

Good cooperation has been established with major

exporters who are committed to develop cocoa as a

sustainable commodity. Apart from the better price,

farmers also received facilitation related to sustainable

cocoa farming practices and quality control. There is an

increased number of certified farmer groups and groups

applying ICS.

In addition, cacao farmers have better access to

information (about price, sustainable farming

practices) and can use the information to negotiate

with the traders to get a good price.

The program enables Amanah and Masagena farmer

organisation conducting collective marketing of quality

cocoa beans. This is done at all levels from the farmers

(better cocoa farming practices, harvest and

processing, and introducing quality control) , farmer

organisations (setting up the structure and improving

the capacity to facilitate collective marketing including

ICS and to conduct other businesses) , and exporters

(lobbying for good terms for all parties) .

Improved influence

of family farmers

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Farmers have applied sustainable coffee farming practices that

helped to reduce (not fully) the production loss brought about

by the infestation of crop diseases and pests and the natural

shocks/trends.

Farmers have increased the coffee yield and received a higher

price from the collective marketing. It has enabled them to

receive a higher income and helped them to better cope with

the economic shocks/trends (that lead to increased living

costs and production costs) . More farmers have been able to

access more reliable sources of finance.

Because of their good work, members of Asosiasi Petani Kopi

Manggarai (Asnikom) and Perhimpunan Petani Watu Ata

(Permata) have started to gain recognition and trust from

other parties (government, private actors and farmers) .

In Kerinci, Jambi, 25% of farmers who have been intensively

facilitated by the program have started to adopt sustainable

agriculture practices with intercropping. This has led to

improved soil fertility and capacity to absorb water and

reduced air pollution brought about by chemical inputs.

The increased production as shown by these farmers has

attracted the interest of other farmers to learn about

sustainable agriculture practices and to apply organic

fertilizers, as shown from their high demand for the organic

fertilizers produced by TAKTIK farmers.

Reduced vulnerability

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A major change happened to the APPOLI farmers

whose farms are certified. This allows them to

receive prices above the market price. The adoption

of organic farming practices has increased the

production and reduced the costs, and therefore

farmers receive higher incomes and as a result, food

is more secured.

Farmers also benefit from consuming organic rice

every day and some claimed to get healthier, and

less people suffer from diabetes and gout.

The improved access to the government makes the

farmer groups receive more support such as

livestock, irrigation, machinery and working

equipment, financial support for the application of

System of Rice Intensification (SRI), vegetable

garden, etc. All these have increased the security of

the rice farming as the main source of income.

Farmers are more self reliant for growing their own

food, and livestock raising provides a backup during

harvest failure.

The success of the program in Boyolali, Central Java

has proven that farmers can increase income,

securing their source of food, as well as enabling

the support of the government to the farmers.

Improved food

sovereignty

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Jacob Tanda received a "Heroes for Indonesia" award on

Heroes’ Day, 10 November 2013. Head of Mbatakapidu

Village, Kota Waingapu District, East Sumba, East Nusa

Tenggara, Jacob was one of ten winners of this award,

according to MNC, Indonesia’s largest TV network.

These heroes received awards from MNC for their dedication

in their respective field. Jacob Tanda won his for fighting

for food sovereignty in his village. This award was presented

by a panel of judges including sociologist Imam Prasodjo

and former Muhammadiyah chair, Ahmad Syafi’i Ma’arif.

"Heroes for Indonesia" are awards presented by MNC group,

owner of RCTI, MNC TV and Gobal TV television stations and

other broadcast media. The awards committee selected

people from across Indonesia whose dedication is an

inspiration to others. The awards include economics, social

affairs and culture categories.

This achievement would not have been possible without the

support of Koalisi Rakyat untuk Kedaulatan Pangan, VECO

Indonesia advocacy partner. For the past five years, KRKP

has been running the Desa Mandiri Pangan Desa Sejahtera

(DMPDS) program, including in Mbatakapidu. Thanks to the

hard work of Jacob and the villagers, Mbatakapidu now has

food stores at three levels: in the fields, in the hamlets and

in the village.

Food sovereignty

hero from a village

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As of the end of 2013, total healthy rice sales

of our partners amounted to 100.8 tons.

Konsorsium Solo Raya sold 95.2 tons, Yayasan

Pangan Sehat Indonesia (Yapsi) sold 0.31

tons, Perhimpunan Indonesia Berseru (PIB)

sold 5 tons, and Yayasan Lembaga Konsumen

Indonesia (YLKI) sold 0.25 tons.

This figure was lower than in 2012, when

healthy rice sales amounted to 142.2 tons.

However, this volume of sales is far larger

than in 2011, when only 40 tons of rice was

sold to consumers in Solo and Bali, as the

graph below shows:

The number of consumers buying healthy rice

products as of the end of 2013 was 1,635, as

follows:

1,484 consumers bought rice through KSR, 56

through YAPSI, 55 through PIB, and 40

through YLKI.

This is larger than the number of consumers

who bought healthy rice products in 2012

(1,571) and 2011 (1,500). So, in the three-

year period, there has been a slight increase

in the number of consumers buying healthy

rice products, as shown in the graph below:

Increase in sales of healthy rice

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Progress of healthy rice saleduring 3 years

160

140

120

100

80

60

40

20

0

Saleston/year

2011 2012 2013

1,650

1,600

1,550

1,500

1,450

1,400

Number

ofCustomer

Progress of consumer who purchasedhealthy rice during 3 years

2011 2012 2013

40

142,2

100,8

1,500

1,635

1,571

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Sharing about strengthening farmer

organisations as business organisations

(APPOLI’s experience of exporting organic rice to

Belgium)

Sharing lessons learned about farmer

organisations as certificate holders (Masagena’s

experience of securing sustainable cocoa

certification from Rainforest Alliance)

Annual Farmer Meeting, with the theme

“Indonesian Coffee Farmers Business” with a

specialty coffee exhibition in Surabaya.

All learning activities are integrated in the year

calendar, such as Knowledge Café, staff team

meetings (Home week, B3), VECO program

steering meetings (mid-year & end-of-year) and

Regional Learning initiative.

Workshop and experiments using the Farmer

Business School modules by VECO Indonesia staff

(Field Coordinators and Field Officers)

Learning and

knowledge sharing

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Achievments in several programme areas serving as

lessons learned for VECO Indonesia.

Sustainable Supply and Eco Friendly Products

The private sector and local government have a major

role to play to ensure the sustainability of the program

in the long term, because these two actors will work

with farmer organisations over a long period of time.

The production and product quality are crucial to

providing good products, thereby ensuring the

sustainability of supply.

The application of Good Agricultural Practices (GAP)

such as low external input sustainable agriculture

(LEISA) and agroforestry systems, SRI, Organic

agriculture are very beneficial to maintaining soil

fertility and availability of water, and reduce erosion,

thereby improving the environmental sustainability of

production.

VECO as chain facilitator

VECO Indonesia staff have developed capacity and

expertise as commodity chain development

facilitators, particularly in sustainable cocoa, coffee

and organic rice. VECO Indonesia is becoming an

increasingly important actor in value chain

development in Indonesia.

Cooperation with farmer organisations

The greatest challenge working with farmer

organisations, in particular those that are still

developing, is pursueing common aim of making

business organisations out of the farmer organisations.

The limited capacity of rural farmers to manage

business organisations is another challenge in

strengthening farmer organisations, while many young

people are not interested in working in the agricultural

sector, which they consider unprofitable.

Cooperation with private-actors

To find new opportunities to convince private

companies to work with farmer organisations, VECO

Indonesia needs to be more involved in business

meetings organised by the private sector in Jakarta

and at provincial level. These opportunities could be

used to invite them to come and see for themselves

the results of the programs in the field, and to invite

them to the VECO Indonesia meetings. This has been a

quite effective strategy so far.

Upscaling

Positive results, such as with cocoa in Polman, where

Wasiat and Amanah have been able to build

partnerships with private companies and their

members are able to produce cocoa with sustainable

certification, has supported replication of the program

in other regions. This success is also evident from the

response from PT Mars Symbioscience, which has asked

VECO to develop cocoa programs in North Luwu, East

Luwu and Palopo, which are important cocoa

producing areas.For 2014 new cocoa programs are

started in Parigi and Tinombo districts of Central

Sulawesi.

Lessons learned

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FinanceIn 2012, VECO Indonesia managed program funding of EUR 1,389,690 or around

IDR 19.73 billion.

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Use of funds, VECO Indonesia 2013

EUR Rp %TOTAL

MISEREOR 100,000 1,262,503,100 6.4%

DGOS 813,378 11,345,777,290 57.5%

IDH 37,500 470,250,000 2.4%

CORDAID 178,558 2,915,240,000 14.8%

ZUIDDAG 46,105 583,971,677 3.0%

HO - Inov Fund 44,948 564,101,512 2.9%

NOVIB 55,539 848,855,392 4.3%

AUSAID 32,865 453,457,750 2.3%

RA 39,128 612,763,906 3.1%

SNV 28,668 477,614,575 2.4%

CORDAID CINNAMON 13,000 203,190,000 1.0%

TOTAL 1,389,690 19,737,725,202 100%

EUR IDR %TOTAL

Source of Funds, VECO Indonesia 2013

VECO Indonesia (648,207) (9,206,478,021) 48.0%

Partners (701,851) (9,968,380,986) 52.0%

Total (19,174,859,00) 100%

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VECO Indonesia

Jl Kerta Dalem No 7 Sidakarya

Denpasar, Bali 80024 Indonesia

Telp: +62 361- 7808264, 727378

Fax: +62 0361- 723217

Email: admin@veco-indonesia.net

Website www.vecoindonesia.org