MARKETING OF VEGETABLE UNDER AGROFORESTRY (VAF) SYSTEM IN INDONESIA Understanding the Market Demand

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MARKETING OF VEGETABLE UNDER AGROFORESTRY (VAF)
SYSTEM IN INDONESIAUnderstanding the Market
Demand

• Indonesia Marketing Team
• Iwan Kurniawan
• James Roshetko
• Denta Anggakusuma
• Lia Dahlia

Bogor, 29 May 2008
SUSTAINABLE AGRICULTURE AND NATURAL RESOURCE
MANAGEMENT COLLABORATIVE RESEARCH SUPPORT PROGRAM
(SANREM CRSP)
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Outlines

• Selection of existing VAF products
• RMA Survey
• Progress on Development of Nanggung
  Agro-enterprise
• Problem and Opportunities

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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.

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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.

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The Existing VAF Products

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

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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
Honje (Etlingera spp.)/ Ginger bud (English) Spice, fruit, vegetable, medicinal, textile, tanning, perfume Irregular yields small quantity The demand was higher than the supply
Honje (Etlingera spp.)/ Ginger bud (English) Spice, fruit, vegetable, medicinal, textile, tanning, perfume Can be consumed until 7-14 days after harvest production the quality as well as the marketing issue.
Honje (Etlingera spp.)/ Ginger bud (English) Spice, fruit, vegetable, medicinal, textile, tanning, perfume Most of farmers know, grow and use the species There is chance to increase the price.
Honje (Etlingera spp.)/ Ginger bud (English) Spice, fruit, vegetable, medicinal, textile, tanning, perfume it under Pine trees on Perhutani land Suitable packaging/storage method material
Honje (Etlingera spp.)/ Ginger bud (English) Spice, fruit, vegetable, medicinal, textile, tanning, perfume 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
Katuk (Sauropus androgynus) Vegetable, medicine, dyeing, ornamental Mostly for household need (subsistence) Cultivation is relative easy
Katuk (Sauropus androgynus) Vegetable, medicine, dyeing, ornamental There was no information about the village production It can be grow under AF
Katuk (Sauropus androgynus) Vegetable, medicine, dyeing, ornamental Perishable (2 day after harvest) Low capital
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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
Kucai (Allium tuberosum) Vegetable, spice, medicine The price was good the market was already exist Potential VAF and main source of income
Kucai (Allium tuberosum) Vegetable, spice, medicine It could be as attractive short term income Long term market linkages
Kucai (Allium tuberosum) Vegetable, spice, medicine Irregular yields Packaging/storage method material
Kucai (Allium tuberosum) Vegetable, spice, medicine 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
Tebu Telor (Saccharum officinarum) Vegetable, fodder, hedge, ornamental Can be grown under AF Mapping the supply chain
Tebu Telor (Saccharum officinarum) Vegetable, fodder, hedge, ornamental Can be consumed until 7-14 days after harvest Improve quantity quality (grading, packaging etc)
Tebu Telor (Saccharum officinarum) Vegetable, fodder, hedge, ornamental Low price and small production Develop market linkages
Tebu Telor (Saccharum officinarum) Vegetable, fodder, hedge, ornamental Mostly not for commercial use The leaf can be used as feed cow (side product)
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RMA Survey

• RMA Iterative and interactive research
  methodology which is used to better understand
  complex market system in the short time
• Objectives
• To assist farmers in obtaining and using accurate
  market information.
• To facilitate the farmers group in selecting and
  producing the most marketable VAF.
• 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.

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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.

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Benefit of Using RMA Method

• Improves farmer understanding of their marketing
  environment.
• Empowers farmers to negotiate for better prices.
• Reduces farmers 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.

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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 farmers group.
7. Development of marketing plan.

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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.

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Development Nanggung Agro-Enterprise

• Farmers agreed to establish Katuk and Kucais
  Demonstration Plots in Nanggung to produce
  commercially.
• Production demonstration plots have been
  established in three selected villages.
• The project has distributed 60.000 of Katuks
  seedling (cutting stem) and about 150 kg of
  Kucais 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.
• Farmers groups are facilitated by World
  Agroforestry Centre have deal with trader to
  harvest and pick up the production at the
  farmers gate at an agreed quantity and quality,
  and the price will follow the market.

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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.
• Farmers 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.

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T h a n k s Y o u

• Please your comments, inputs and suggestion . . .