MARKETING OF VEGETABLE UNDER AGROFORESTRY (VAF) SYSTEM IN INDONESIA Understanding the Market Demand Indonesia Marketing Team: Iwan Kurniawan James Roshetko.

MARKETING OF VEGETABLE UNDER AGROFORESTRY (VAF) SYSTEM IN

INDONESIAUnderstanding the Market Demand

Indonesia Marketing Team:

Iwan KurniawanJames Roshetko

Denta AnggakusumaLia Dahlia

Bogor, 29 May 2008

SUSTAINABLE AGRICULTURE AND NATURAL RESOURCE MANAGEMENT COLLABORATIVE RESEARCH SUPPORT PROGRAM (SANREM CRSP)

Outlines

• Selection of existing VAF products• RMA Survey• Progress on Development of Nanggung Agro-

enterprise• Problem and Opportunities

Background

• The common problems faced by the small-scale farmers are lack of market information, remote location and poor accessibility to production resources.

• In Nanggung, most of farmers are not market-oriented in their decision on agriculture activities.

• To enter in a competitive market, the farmers have to hold reliable market information to minimize their risk.

• Obtaining good market information will guide farmers to make decision on what vegetable has to be planted, when, where and how to sell the VAF products.

Selection of Existing VAF Products

• The marketing study is generally conducted in two stages: first, market opportunity evaluation leading to the selection of a product(s) and second, in-depth market chain analysis.

• Selection process of existing VAF products in Nanggung was conducted through FGD, field observation and discuss with key market agents.

• Concern to the existing VAF products is lower risk than introducing new product to the market.

• Farmers can learn how to evaluate market for products that are already well known.

• Criteria: give highest income, low capital, could be regular and short term source of income, and potential to be planted under AF.

The Existing VAF Products

• Katuk leave (Sauropus androgynus).• Kucai (Allium odorum).• Trubuk/Tebu Telor (Saccharum officinarum).• Honje/Ginger bud (Etlingera spp).

Characteristics and Current Condition of VAF Products

SPECIES USAGE CURRENT CONDITION* POTENCY TO IMPROVE

Honje (Etlingera spp.)/ Ginger bud (English)

Spice, fruit, vegetable, medicinal, textile, tanning, perfume

* Planted under the tree and open area

* Demand of honje at Jakarta & Tangerang were good

* Irregular yields & small quantity * The demand was higher than the supply

* Can be consumed until 7-14 days after harvest

* production & the quality as well as the marketing issue.

* Most of farmers know, grow and use the species

* There is chance to increase the price.

* it under Pine trees on Perhutani land

* Suitable packaging/storage method & material

* The market is already exist. There are 3 local collectors

Katuk (Sauropus androgynus)

Vegetable, medicine, dyeing, ornamental

* Planted in small & open area as hedge at garden

* High demand on local market

* Mostly for household need (subsistence)

* Cultivation is relative easy

* There was no information about the village production

* It can be grow under AF

* Perishable (2 day after harvest) * Low capital

Characteristics and Current Condition of VAF Products

SPECIES USAGE CURRENT CONDITION POTENCY TO IMPROVE

Kucai (Allium tuberosum)

Vegetable, spice, medicine

* Planted under AF * Sustainability of production

* The price was good & the market was already exist

* Potential VAF and main source of income

* It could be as attractive short term income

* Long term market linkages

* Irregular yields * Packaging/storage method & material

* Need to assistance on production technology

Tebu Telor (Saccharum officinarum)

Vegetable, fodder, hedge, ornamental

* Planted by a few farmers * It has high market demand at regional market

* Can be grown under AF * Mapping the supply chain

* Can be consumed until 7-14 days after harvest

* Improve quantity & quality (grading, packaging etc)

* Low price and small production * Develop market linkages

* Mostly not for commercial use * The leaf can be used as feed cow (side product)

RMA Survey

• RMA: Iterative and interactive research methodology which is used to better understand complex market system in the short time

• Objectives:

1. To assist farmers in obtaining and using accurate market information.

2. To facilitate the farmers group in selecting and producing the most marketable VAF.

3. To link the farmers with potential traders and enter the market.

• Hypothesis Obtaining good market information will guide farmers to make decision on what vegetables to be planted, how many, how to sell the products and estimate the income.

Why RMA is a Good Tool?

• Identify market outlets for surplus produce,• Change the production orientation to market demand

(quantity, quality, processing, packaging),• Identify niche products for which an area has comparative

advantages,• Reorient production to respond to changing demand,• Facilitate a change in thinking from “production minded” to

“market minded”,• Facilitate a mental change from “middle-men are the

bloodsuckers of the poor” to a different perception, in which each stakeholder has a role in the market chain.

Benefit of Using RMA Method

• Improves farmer understanding of their marketing environment.

• Empowers farmers to negotiate for better prices.• Reduces farmer’s risk.• Indicates which crops are fetching a better price and

why.• Provides information on reason for premium prices.• Indicates new market options.• Informs producers and traders about new market

options.• Provides real market signals.

Steps in RMA

1. Planning the Market Opportunity Survey by Selection of Existing Products.

2. Developing of Survey Plan

3. Literature review/desk study to create criteria of product selection (Technical, investment, risk).

4. Identify, select and conduct semi-structured interview with key market agents.

5. Visit best practice farm management.

6. Share and discuss finding with farmer’s group.

7. Development of marketing plan.

Survey Finding

• Recommended the farmers to develop Katuk (Sauropus androgynus) and Kucai (Allium odorum) as prospective and marketable vegetables.

• These vegetables require low capital investment, can be grow under the shading (20-25% for Katuk), promise good return for the farmers, good & stable market demand and price for the last 12 months.

• The yield of Katuk about 4-5 tons/ha and can be harvested 5-6 times per year (intercropping with cassava and produce 8-10 tons of cassava per year).

• The yield from Kucai is 7.6 tons/ha and can be harvested 7-8 times per year (planted in open area).

• The Katuk and Kucai can be harvested for 5 years before replanted the new seeds.

• The cost-benefit analysis showed these farming systems will contribute to household income about USD 1,093/ha/year from Katuk and USD 2,867/ha/year from Kucai.

• There is opportunity for women group to earn US$ 2 per day in sorting, grading and packing Katuk and Kucai.

Development Nanggung Agro-Enterprise

• Farmers agreed to establish Katuk and Kucai’s Demonstration Plots in Nanggung to produce commercially.

• Production demonstration plots have been established in three selected villages.

• The project has distributed 60.000 of Katuk’s seedling (cutting stem) and about 150 kg of Kucai’s seeds to farmer partners and to be planted in 5000 m2.

• For now, farmers will follow existing marketing channel as a strategy to penetrate the market and collect in-depth market information to improve and innovate the marketing strategy in the future.

• Farmer’s groups are facilitated by World Agroforestry Centre have deal with trader to harvest and pick up the production at the farmer’s gate at an agreed quantity and quality, and the price will follow the market.

Problems & Opportunities

• The farmers have no experience in planting Katuk and Kucai.• Limited capital, man power and access to soft loan credit scheme.• Passive farmer group need to be strengthened the local/marketing

institution.• Limited facilitation from extension agent.

• The land for Katuk & Kucai garden are more available by optimizing and planting the bare land under AF.

• Farmers in three selected village show their strong enthusiasm and interest to develop the vegetables, especially Katuk.

• Farmer’s awareness on benefit of Katuk farming has been increase (ex. Bupati of Bogor District has encourage the farmers in Nanggung to develop Katuk, some of farmers in other village have been planted Katuk in commercially scale 2 Ha.

• There is opportunity to supply medical factory about 3 tons of Katuk/week.

T h a n k s Y o uT h a n k s Y o u

Please your comments, inputs and suggestion . . .