Revitalising existing business cases increases both quantity and quality of yield.
Access to markets via self-organisation
SNV supported 350 rubber farmers in the Mendis village in South Sumatra to create a community trading post. This partnership allowed them to sell their products in markets that would otherwise be closed to them because of the dominance of large production companies. They are the first batch of farmers who were trained by SNV as part of the South Sumatra Partnership for Landscape Management Support Project (funded by DFID). The farmers are now able to directly negotiate with the processing company, and are able to provide rubber in a timely manner with consistent quality.
Farmers prepare shipments of dried latex cubes
SNV helped facilitate the rubber company and the farmers to discuss and find a middle ground on the wants and needs of both. Obviously, farmers want a good price for their produce while companies want guaranteed quality and quantity of supplies.
In partnership with one of Indonesia’s largest rubber processing companies, PT Kirana Megatara, SNV developed a business model to include smallholder rubber farmers in their supply chain. One of Kirana’s subsidiaries in South Sumatra, is PT Djambi Waras now purchasing rubber products directly from this group of farmers.
The Mendis Village chief, Sugianto, said that SNV’s training programme, establishment of a community trading post, and securing trading from PT DJambi Waras – combined with the commitment of the local farmers – will help to improve the livelihood of the community.
Crates of dried latex cubes at the community trading post in Mendis Village
Training increases both yield and price per kilogram!
To ensure rubber products continues to meet the standards required by large-size companies, famers were encouraged to monitor the quality and yield of rubber produced through pre-sale checks. After providing trainings to improve the skills of smallholders, the farmers’ latex yield from the rubber trees and the quality of the latex improved. Before the training, the average latex yield from 100 rubber trees was 25 kilograms per week. After the training, the yield increased to 36-45kgs per week. The latex’ Dry Rubber Contents (DRC) increased from 52% to 62%-68%.
As a result, the price that the farmers receive for their latex increased. Farmers would receive on average IDR 5,500 - 6,500/Kg (32 to 38 Euro cents per kilogram) before the training. Now they get paid 9,000 – 10,700 per kilogram (53 to 63 eurocents per kilogram). Until March 2018, farmers have collectively sold 113.3 tons of rubber worth IDR 1,314,722,620 (€77,000) through the trading post.
Our approach to revitalise existing business models, which combines training for farmers, institutional strengthening (cooperative development), and market access development, can be replicated to other villages in the Sembilang-Dangku landscape.