Image: Grow Asia
By Jenny Costelloe, Director, Country Partnerships, Grow Asia
In late October I joined a site visit to a sustainable coffee project, which is part of the Partnership for Indonesia Sustainable Agriculture (PISAgro) partnership. It is no exaggeration to say that I was blown away by the project: impressed; inspired; and, most of all, convinced by the multi-stakeholder approach.
The coffee project is led by Nestlé, and involves different partners throughout the value chain, with Syngenta and Yara at the input stage, women from the local community in the plantlet nurseries, Rainforest Alliance in training smallholder farmers, Rabobank, and local farmer entrepreneurs who play a critical role as aggregators, trainers, quality controllers and financial administrators (more later).
It all started with Nestlé wanting to ensure that smallholders in the region were producing coffee that met their international quality standards and which could be procured for use in their factory in nearby Bandur Lampung. Nestlé realised that the smallholders needed training and guidance on the best agricultural practices and in return they offered to correlate the price they paid to the quality of the coffee beans.
Nestlé hired a team of agronomists and set up a demo farm, where different seeds, fertilizers and farming techniques are trialled, in partnership with Syngenta and Yara. The nursery at the demo farm employs local women in light labour, such as planting seedlings or filling bags of compost to generate a supplemental income. The successful trials are then rolled out to local smallholdings.
The next stage was to train the smallholders in the new techniques and Nestlé partnered with the NGO Rainforest Alliance to train and certify the smallholders. On our visit we saw farmers being taught how to make an organic fertilizer using local vegetation and a small amount of starter liquid. The farmers who attended the training said that they were learning about the importance of preparing the land before planting, how to balance the use of chemical and organic fertilizers, and the techniques for re-planting and soil management.
Interestingly, Rainforest Alliance is also responsible for the measurement and evaluation of the whole project and they gather data for all the partners.
Nestlé has also worked with local farmer entrepreneurs who act as community leaders and aggregate the local smallholders’ produce. Nestlé has trained them to sort and grade the coffee beans by quality, so that farmers with high quality, well-harvested and properly dried beans will get a better price than that given to farmers who sell less-well produced coffee. I was impressed by the simple, yet effective, methods of sorting and the transparency of the pricing. This fair and transparent process undoubtedly builds trust between the seller and the buyer/aggregator. This trust is strengthened further because the aggregator is also a farmer.
And the final piece to this multi-stakeholder puzzle again involves the aggregators. One of the aggregators whom we met was acting as a loan administrator for Rabobank. The loans are being given to carefully selected borrowers and the aggregator receives a 2% administration fee for his part because he is one of the few farmers with a bank account. A second aggregator has given a loan to one smallholder to help him build a drying platform for the coffee beans. The first borrower repays the loan to the next farmer in line, who in turn can build his drying platform before repaying the loan to the third farmer, and so on. Both aggregators are taking significant personal risk in fulfilling these roles but it was clear to me that they can see the benefit in growing the local agricultural economy.
I was impressed by the value chain approach adopted in this project; I was inspired by willingness of each stakeholder to change their ‘business as usual’ in order to be more inclusive, to trust one another and to work together; and I remain convinced that multi-stakeholder approaches to value chains can be commercially viable and create shared value.
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