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How a rice co-op serves a community in Indonesia

By Opportunity International Australia

Green shoots of hope

Entrepreneurs are an extraordinary breed: a combination of hope – vision for the future – and the willingness to take action can make great things happen.

In the countries in which Opportunity works, COVID-19 has curtailed people’s ability to earn a living. For remote-area farmers, lockdowns have meant few customers can come to them, and they can no longer travel to markets further afield.

During the pandemic’s first wave, Opportunity partner TLM contacted every one of its 5,000 client groups, discovering what they needed, then provided assistance in a wide variety of ways.

Extending that wraparound care, support and understanding placed the microfinance institution (MFI) in a position  to generate innovative, workable ways for clients to enhance their livelihoods. It established a business unit – Kuan TLM – (meaning a ‘well’) to explore new opportunities. Kuan TLM assessed the market, identifying producers who were being paid below market rates and inviting them into new ventures.

Indonesian farmers on a field

New markets become highways to success

Initially, TLM approached 137 rice farmers in West Timor – active clients who were struggling to find markets. Funded by Opportunity supporters, TLM purchased six tonnes of rice per month for around A$5,500.

Because TLM was selling direct to kiosks, it could afford to pay each farmer IDR9,000 (A$0.85) plus transport costs instead of just IDR6,500 (A$0.62) per kilo. The farmers gained access to new markets and earned 38 per cent more for their produce. When initial monthly sales didn’t reach six tonnes, TLM head office staff bought the remainder for their own personal use.

The scheme grew quickly and TLM engaged new farmers to act as rice collection agents. After initial reluctance (due to fear of angering existing agents who had controlled the trade for many years) local farmers saw the benefits – and the higher prices – and jumped on board. The seven agents recruited another 33 farmers.

Higher prices meant higher expectations, so TLM provided farmers with quality control training; the farmers are now proud to be recognised as high-quality crop producers. TLM also eased farmers into digital transactions. After early troubles with farmers whose preference for cash led to them being extorted by truck drivers for ‘unexpected shipping costs’, the entire group has moved to cashless payments, delighted to receive full price for their produce.

Expanded ranges = expanded profits

It’s not just the farmers who are benefiting. By creating a network of 108 active kiosks (99 of which owners are active TLM clients), in and around West Timor’s major city, Kupang, they were able to facilitate the increased purchase and on-selling of the rice. Yuliana (pictured below), a returning TLM client since being widowed, is expanding her kiosk. She has now become a Kuan TLM sales agent, first buying rice, wheat and noodles, and now expanding into vegetables with shallots and garlic. She’s happy to buy so many items from one supplier, that TLM delivers direct to her shop and, importantly, that her orders are helping local farmers.

With the success of the program with rice farmers, TLM is also looking at expanding this program to include other crops including candlenut, tamarind and horticultural products.

Yuliana, an Indonesian Microfinance client

Exploring new retail markets

TLM has established a shop at its Kupang head office, selling rice and other goods direct to the public. The shop also sells textiles from clients whose businesses have been decimated by the shut-down of tourism during the pandemic.

Working with the provincial government, TLM is also invigorating a fledgling market at Kupang’s stunning Lasiana Beach. The aim is to create outlets for clients’ products and handicrafts by selling to domestic tourists and, hopefully in the future, international tourists, too. All these programs cover their own operating expenses, ensuring sustainability and safe paths to expansion.

Looking to a digital future, TLM developed data collection and reporting software. Currently, about half the information is collected electronically; as more farmers and kiosk owners gain access to smart phones, the process will become fully automated.

“These projects show the value of the relationships our partners build with clients. It's not only about trusting women living in poverty with financial support to develop a business but walking alongside them and their families to understand how we can help them overcome any other obstacles keeping them from escaping poverty," says Simon Lynch, Indonesia Program Director.

Zesly Pah with Simon Lynch in Indonesia

Partner profile

Zesly Pah has worked for TLM in Indonesia for 20 years and had led it through a period of significant growth over the past decade. TLM began as a development foundation and has now expanded to include a cooperative and a rural bank. Tanaoba Lais Manekat, from the Timor language, means ‘serving with love’. During the pandemic TLM was swift to arrange repayment moratoriums, help rural people to access government relief, and provide food packages as well as information about COVID-19-prevention.

“I watched how hard the people we serve worked to overcome the obstacles the pandemic threw against them. It was hard, but we found ourselves gaining strength from them. I am so proud of our staff. They are courageous and inspiring, often putting their own time and money into helping our clients and their communities.” - Zesly Pah, CEO of TLM

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