Increasing coconut farmers' incomes in Java, Indonesia
Agriculture, Food & Beverage
Region of Initiative
Asia & Pacific
SDG 1: No poverty, SDG 2: Zero hunger
Indonesian sugar producer Big Tree Farms has joined the Business Call to Action (BCtA) with a pledge to sustainable raise the incomes of 5,000 coconut sugar farmers in the country’s Java region by mid-2017 through fair trade practices, while integrating 15,000 new farmers into its value chain.
The BCtA is a global initiative that aims to support private sector efforts to fight poverty through its core business. It is supported by several international organizations and hosted by the United Nations Development Programme (UNDP).
Agriculture plays a crucial role in the Indonesian economy, and the production of coconut sugar for export has tremendous potential to improve poor smallholder farmers’ lives. Although there are already several coconut sugar producers in West and Central Java, producers in East Java are poorly linked to export markets, and therefore cannot take advantage of this opportunity to climb out of poverty. However, this remote region has a major asset: coconut production in East Java’s mountainous areas is naturally organic. Since organic certification has become a prerequisite for export, cultivation in this area seen as a guarantee of quality.
Founded in 2006, Big Tree Farms produces high-quality organic foods for global export, with a focus on products derived from coconut, cacao and cashew. The company’s mission is to inspire positive change by creating innovative and healthy food products that benefit the local economy, environment, farmer-producers and customers.
The company’s Farmer Expansion Program was launched to build an efficient and sustainable value chain for coconut sugar by connecting small farmers with the lucrative export market. With training and microfinancing support, this initiative is enabling small coconut growers to increase their household incomes by up to 40 percent.
Big Tree Farms’ inclusive business model hinges on: support with organic and Good Manufacturing Practice (GAP) certification; the establishment of sugar collection points to improve the supply of processed sugar; and the provision of credit for processing equipment. While this strategy enables farmers to secure a lucrative market for their produce, it has also turned Big Tree Farms into the country’s largest organic food company, with Southeast Asia’s most extensive organic supply chain.
The key to Big Tree Farms’ model is working through intermediaries – local traders who provide farmers with microcredit and build producer groups’ capacity to assist their members with organic certification. These intermediaries also help producer groups to develop sugar collection points, establish efficient supply systems and pay farmers for their produce. Since Big Tree Farms is committed to Fair Trade, it monitors intermediaries’ business practices and allows farmers to switch traders if they do not receive reasonable prices.
To ensure that it maintains a close connection with farmers, Big Tree Farms has begun constructing a new facility closer to the area of coconut cultivation; this minimizes transport costs, which translates into greater returns for the company and higher incomes for farmers.
In addition to increasing small producers’ incomes, the company aims to create more than 50 jobs internally and over 500 indirect jobs within the coconut sugar production value chain. There is also significant potential for scaling up the initiative through intensification of production and expansion to other areas. Approximately 15,000 producers stand to benefit by 2017.