Underlying business model
VECO’s goal is to promote the development of sustainable agricultural market chains, preferably at local and regional level, in which organized family farmers, male and female, are successfully influencing trade relationships and improving their net incomes. Specific program objectives and targets are:
- Better farming practices, which lead to greater productivity and quality improvement and hence, increased income from higher yields: the target for this program is a 68% increase in the net income of family farmers in the cocoa chain supported by the program between 2010 and 2013
- An increase in the degree of influence of organized family farmers (male and female) in trade relations in the chain between 2010 and 2013
Around 2008, together with Wasiat and AMANAH, VECO began developing and implementing strategies to facilitate market linkages between smallholder cocoa farmer groups in Polman and companies like Armajaro and, Mars. VECO designed and launched a more formal program in collaboration with Armajaro, to further strengthen sustainable cocoa chain development in Polman. VECO has been funding this program since early 2010. We provide direct support to Wasiat and AMANAH in their efforts to improve cocoa quality and production, through:
- Capacity building on sustainable farming practices and post-harvest handling
- Facilitation, together with Armajaro, of Wasiat’s work on cocoa farmer field schools
- Monthly trainings on group management and marketing management, and training on gender
- Liaising with Gernas, a national government program to revitalize Indonesian cocoa production, and the Cocoa Sustainability Partnership
Wasiat (Wahana Sukses Pertanian Terpandang = Centre of Success for Excellent Agriculture) continued the work of ACDI-VOCA, organizing trainings and farmer learning visits to improve production techniques and address farm management issues. Additionally, it worked with farmer groups in five sub-districts of Polman – now under the umbrella of AMANAH – on organizational strengthening to build their collective purchasing and selling capacities.
AMANAH was officially registered as a farmer-owned multi-business cooperative on 12 February 2007. Its membership has grown quickly – from 11 farmer groups to 84 farmer groups by mid-2011. Because of its broad program area, AMANAH developed cooperative clusters in each subdistrict. In mid-2009 AMANAH became a secondary cooperative, assisted in this task by Wasiat, and also by VECO in the registration process. The activities of the sub-district cooperatives are similar, covering production, postharvest management and collective marketing as well as housing. They have introduced a variety of innovations in these areas. For example, regarding post-harvest management: in the past, farmers simply spread their cocoa out on the roadside to dry, but now they use roofless racks, or in some cases, solar dryers with plastic roofs.
Today, AMANAH is a professionally-run agribusiness organisation which implements innovative and ecologically sustainable farming practices based on clear work programs and business plans. Because of the high quality of the membership services AMANAH provides, it is trusted by both its own members as well as other actors in the Sulawesi cocoa chain.
With Armajaro as a leading global supplier of cocoa to the chocolate industry, Armajaro has a strong interest in resolving the problems of the cocoa supply chain in Indonesia. Armajaro is committed to sustainability since this is a priority issue for its clients. It is also committed to the inclusion of organized smallholder farmers, since they by far supply the largest portion of cocoa production in Indonesia, and it must compete with local traders who can source from individual farmers. Armajaro is establishing rural and hinterland warehouses in several locations in Indonesia as an initial step to get closer to its suppliers, in order to develop traceability, quality and certified cocoa bean procurement. Armajaro only handles certified product when it has a buyer for it, in which case a memorandum of understanding is drawn up with the confectionery.
Armajaro has one pilot in the region of Polman, West Sulawesi together with VECO and another on Sumatra with Swiss Contact. Armajaro wants to engage and establish longterm relations with as many farmer groups as possible. Since Armajaro cannot buy from individual farmers because of low volumes, several modes of cooperation and support have been developed to ensure farmers get more profit through collective marketing and prices are more stable.