Central Java As The Hub of Sustainable Rice Production in Indonesia

What will people in Indonesia eat tomorrow? It will definitely be rice. Indonesia is the world’s third largest rice grower, and the demand for rice consumption increases. However, rice production is gradually dropping. Due to rice shortages and fluctuating prices since late 2017, the Indonesian government has recently imported 500,000 tons of medium-grade rice from Thailand and Vietnam to stabilise the commodity's price.

Indonesia has some of the rice-producing islands such as Sumatera, Sulawesi, and Java. However, the main rice-producing island is Java, particularly Central Java. As Central Java is surrounded by volcanic mountains and abundant water sources, it makes it a fertile agriculture land and full of potentials to increase national rice supply. Since 2007, Rikolto in collaboration with DGD (Directorate-General for Development Cooperation and Humanitarian Aid) has been working continuously to assist and support smallholder farmer organisations; APOB and APPOLI in Boyolali regency. Rikolto along with ICCO, Yayasan Jateng Berdikari, PT. UNS, PT. SMB, Bank Jateng and the Provincial Department of Food Security work together under the FDOV (Facility for Sustainable Entrepreneurship and Food Security) programme that support “Akur” and other 57 farmer organisations in producing high premium rice in Central Java.

With the constant support of Rikolto, APOB is certified to SNI (Indonesian National Standard) organic standard, and APPOLI has successfully obtained national organic certification and international organic certification with EU and NOP/USDA organic standards. Prior to Rikolto’s support, farmers in Boyolali and Sukoharjo regencies mainly sold their commodities to intermediaries. Intermediaries, also referred to as wholesale purchasers, generally come from the same area as farmers and deliver commodities from the production area to wholesale markets.

APPOLI stands for Aliansi Petani Padi Organik Boyolali (Alliance of Boyolali Organic Rice Farmers), and is a farmer organisation established in 2007. APPOLI’s main producing commodity is organic rice, however, it also cultivates mung beans, ground peanuts and soybeans. APPOLI has 4,426 members (3,708 male and 718 female). Over the years, APPOLI became not only a strong farmer organisation, but they also established a commercial business cooperative, that processes and sells the rice of their members.

After years of intensive trainings on organic farming, setting up internal control systems, and other trainings such as record and bookkeeping, APPOLI obtained the national organic certification (for domestic markets) and EU and NOP/USDA organic certifications (for international markets). As a result, APPOLI sold 138.9 tons of organic rice in 2016, which surged to 162.9 tons in 2017 in the domestic market. Since obtaining international certification, APPOLI, in collaboration with PT. Bloom Agro (an exporter), exported its organic rice to international markets including 19 tons to Belgium and 16 to Germany in 2015. In 2017, APPOLI exported 10 tons of organic rice to Australia independently without collaborating with any export company. By April 2018, APPOLI will export 14 ton of organic rice to the United States.

APPOLI’s success story to export its product independently has encouraged and attracted many farmers to do the same, which led a nutmeg farmer organization in Sangir, North Sulawesi to contact APPOLI to train and assist them to reach standard application for international organic certification.

APOB stands for Asosiasi Petani Organik Boyolali (Association of Boyolali Organic Farmers), is another successful example of a farmer organisation supported by Rikolto. Despite its young age, APOB has a total of 1,907 members s. About 33 tons of organic rice is produced and different types of beans are also cultivated by APOB annually. Upon obtaining a national organic certification in 2015, APOB started to spread its wings to larger markets in Indonesia, and secured big companies as regular buyers on a monthly basis. This year, APOB plans to set up its own cooperative just like APPOLI to motivate members to produce more rice, expand market reach and secure funding support from the private and civil sectors.

Wartini who works as a farmer and administration staff of APOB, has been a member of this farmer organisation since its inception in the hope of generating a better income and contributing to sustainable farming. Wartini started her farming career back in 2007, where she only cultivated 2,500 square meters of her land.

Before joining APOB, Wartini only produced conventional rice, which is the least profitable of all rice products. She earned roughly 4 million per harvest because she mainly sold her crop to intermediaries. Oftentimes, intermediaries set lower prices particularly during the rainy season as rice quality decreased. Meanwhile, she had to incur high cultivation costs, as she had to buy expensive chemical pesticides and fertilisers. Thus, the largest profit margin went to intermediaries.

Upon joining APOB and switching to organic farming, she gets to enjoy many benefits that organic products offer. Firstly, her income increased to 7-8 million per harvest because APOB offers a better rate for her paddy than the middlemen. The organic rice chain is shorter than others, but generates the largest income. Due to the short chain in the organic farming, it has helped Wartini to expand her scope of work by renting 1,500 square meters of land that increases her income by 3 to 4 million per harvest time.

In addition, it improves her land’s fertility, enabling her to grow her rice and other crops faster. “Farmers get price transparency when selling unhulled rice to APOB because the unhulled rice is picked up then taken to the collection point where it is weighed in front of the farmers and the collection point manager. The farmer is then paid on the spot. The payment rate is higher than other rice markets with a difference of 300-500/kg” said Wartini.

As the Indonesian middle class has expanded in recent years, most of these middle-class consumers are more concerned about the quality of their food. They are willing to spend more money by choosing premium quality rice known as “healthy” rice. Healthy or premium rice is mainly produced and processed organically with minimal or no use of chemical pesticides and fertilisers. Market research shows that the sale of premium rice is growing by 20-25% per year in Indonesia, while the sale of conventional rice increases only by 5% per year.

In this healthy rice chain, Akur (to get on well together), as one of the 58 farmer organisations in Central Java plays an essential role supplying the national demand for premium rice in major urban markets. In late 2015, Akur started to produce premium rice since its involvement in the FDOV (Facility for Sustainable Entrepreneurship and Food Security) programme. FDOV programme is aimed to encourage public-private partnerships (PPP) by training 1,000 farmers to use certified seeds, organic pesticides and fertilisers in order to increase marketing and production of high premium rice. Akur does not only act as a rice producer but also act as a commercial business cooperative buying unhulled rice from farmers and selling to big companies. In 2016, Akur sold 105 tons of dry unhulled rice to PT.SMB at Rp. 3,800 – 4,000 (Rp. 200/kg higher than the average price in Sukoharjo). In the following year, Akur had 47 farmers and its members owned a total of 20 hectares. Akur was also able to secure two big buyers that bought its product - PT. SMB and CV. Inti Sari Bumi. The success of Akur initiative to produce premium rice has increased farmers’ incomes by approximately 20-30%.

In summary, Central Java’s success in creating and developing organic and healthy rice supply chains should be continuously supported to motivate farmers in establishing a sustainable business cooperative, which in turn help farmers to earn more while preserving the nature.