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Improving Access to Markets Market Facilitation Pilot in Indonesia

Improving Access to Markets Market Facilitation Pilot in Indonesia. Jock Noble Manager Social Entrepreneurship Unit & Chris Rowlands, Markets Analyst. NTT, Indonesia . Geography of Program. Surabaya. Flottim ADP. Sikka ADP. Kupang. Rote ADP. NTT Context.

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Improving Access to Markets Market Facilitation Pilot in Indonesia

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  1. Improving Access to MarketsMarket Facilitation Pilot in Indonesia Jock Noble Manager Social Entrepreneurship Unit & Chris Rowlands, Markets Analyst

  2. NTT, Indonesia

  3. Geography of Program Surabaya Flottim ADP Sikka ADP Kupang Rote ADP

  4. NTT Context • Combined, three ADPs with 700,000 people, with over 50% earning less than US$1 per day • Mostly primary producers for consumption • Rice, corn, vegetables, coconuts, livestock, fishing • Some cash crops > coffee, cocoa, cashew, candlenuts • Poor rainfall • High child mortality and malnutrition • High inflation, unemployment, interest rates • Remote communities

  5. Producer Challenges • Traditional harvest practices and rudimentary processing • Information regarding technology that may increase processes or make products more attractive to buyers, is unavailable or withheld • The prices ‘end buyers’ are prepared to pay, remains secret thus reducing the bargaining power producers have in negotiating with middlemen • Few tangible goals, insufficient motivation for producers to take risks with micro finance or acquiring new technologies to meet market demands, or to band together to increase their bargaining power, or supply goods in commercial quantities • Middle men engage in collusive practises disempowering producers who are not sufficiently aware of viable alternative buyers • Remoteness

  6. Process of the Program 1. Recruitment of MF & Preparation within NO/ADP 2. Scoping Survey 3. Situational Analysis 4. Hypothesis Development & Evaluation of Product Opportunities 5. Market and Buyer Survey 6. Communicate Results with ADP and Community 7. Approach to Buyer/Propose Deal 8. Buyer – Producer Relationships

  7. Project Goal To increase the real* income of poor producers in target area by facilitating their engagement with buyers in a way that they receive more for their produce. * real income is a more useful indicator of well-being, since it is based on the amount of goods and services that can be purchased with the income.

  8. *real income is a more useful indicator of well-being, since it is based on the amount of goods and services that can be purchased with the income. Please see design document appendix 3 for more information

  9. Theory : 6 grades of cashew size 4 grades of cashew color Generally : Super 1 complete (big size & not break) Rp. 28.000 – Rp. 35.000 Super 2 complete (small size & not break) Rp. 25.000 – Rp. 30.000 Half (break being half) Rp. 12.000 – Rp. 17.000 Quarter (break being quarter) Rp. 5.000 – 8.000) Menir (break being crumbs) The price was under Rp. 5.000 GRADE OF QUALITY

  10. Complete cashew without break No black or brown spot because of disease Moisture max 5 % - 10 % Old cashew Color of cashew : white, slightly white, or bright grey Not mix with rotten cashew Not mix with dirt or strange things Other Term of Cashew

  11. Producers Price : Rp 8.000 – Rp 12.000 (May 09) Rp. 4.000 (July 09) No Grading of cashew quality Buyers : IMPACT

  12. Calculation (July 2009) • Producers price : Rp. 4.000 • Buyers price : Rp. 8.000 • Local transport + expedition : Rp. 2.000, → Rp. 8.000 – Rp. 2.000 = Rp. 6.000 • Min of total producers : 500 producers→ Min 5 kg/day/producer • → 500 x 5 = 2.500 kg/day = 30.000 kg/2 weeks

  13. Opportunities: Flottim ADP Total additional income of 6 Initial Potential Products Additional Income Cashew Rp 375,000,000 ($37,500) Copra Rp 300,000,000 ($30,000) Candle nut Rp 300,000,000 ($30,000) Cocoa Rp ? Tamarind Rp 18,000,000 ($1,800) Banana Rp 360,000,000 ($36,000) Total Rp 1,353,000,000 $ 135,300

  14. Project Outcomes • Value of real opportunities for ADP producers • Volume and diversity of communications to ADP • No Flaws - Real logistics, inputs and financing • Quick opportunistic connections with any existing producer groups • Orders from opportunities

  15. Questions??

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