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Indonesian agtech partners with Rabo Foundation for innovative financing and more impact
Less dependent on pesticides
‘We developed our organic pesticides reductant – the first of its kind – in 2014, because we wanted to help smallholder farmers’, recalls Kukuh Roxa, CEO and co-founder of Pandawa Agri. ‘Farmers often experienced failed harvests because they used too much synthetic pesticide. We wanted to make them less dependent on those kinds of chemicals. That helped them improve their harvests, while also staying healthier at work and putting less pressure on the environment. And all the while lowering costs.’
‘We quickly noticed that our reduction solution alone isn’t enough. To have a successful harvest and a good income, farmers also need good seeds and other inputs, so we help them get what they need. We train them to use water and pesticides properly and efficiently. On top of that, we assist rice processing companies to market the rice, which is now very high quality. After that, we ensure that farmers can sell their premium rice for a good price, without intermediaries taking all the profit. In short, we’re involved end-to-end.’
Higher-income and productivity
Word-of-mouth advertising is essential to Pandawa’s approach. Kukuh: ‘Farmers mainly trust other farmers from the same region. We built the relationship with the first 140 farmers by offering them all our attention and assistance. Now, other farmers witness how they’re improving their harvests and increase their income over time. They see how their children can stay in school longer, and even pursue higher education. How they can buy a new motorcycle, and how they’re expanding or diversifying their operations, for example by keeping livestock as well. So now more farmers are inclined to participate too.’
Farmers’ interests first
‘Pandawa Agri proved to be a perfect match for us’, explains Diva Tanzil, consultant for Rabo Foundation in Indonesia. ‘That’s because their main objective is to improve farmers’ lives. But they also perfectly complement the impact that we at Rabo Foundation aim to achieve: reducing post-harvest losses, promoting climate-smart agriculture and strengthening the value chain.’
Diva frequently travelled to the remote project site in Nagekeo, East Nusa Tenggara, where Pandawa partners with 140 rice farmers. ‘We literally go the extra mile for promising projects. It’s important to meet all the stakeholders involved in this project, especially the farmers. Understanding their challenges enables Rabo Foundation to deliver innovative financing and it builds up trust in us as a financier among farmers. It’s also the best way for us to keep an eye on whether our loans are achieving the desired goal, and if not, we can make timely corrections.’
What does Rabo Foundation add to Pandawa Agri’s successful approach? ‘We make financing possible for them and smallholder farmers. They have difficulty obtaining financing which normally leads them to obtain informal financing from loan sharks and middlemen that charge exorbitant interest rates and unfair trading conditions. Our partnership with Pandawa Agri make it possible for farmers to obtain working capital, technical assistance and guaranteed market access. This way they can focus on what they do best and Pandawa can scale up the approach to others like coffee and chili farmers, ‘ explains Diva.
Rabo Foundation partners with Pandawa Agri in the following ways:
- A long-term working capital loan which Pandawa Agri uses to provide access to financing for smallholder farmers. ‘Pandawa Agri assumes the risk for these loans. That shows us just how dedicated they are,’ Diva explains.
- A working capital loan for Pandawa Agri to purchase the rice produced to then distribute it.
- Rabo Foundation also connected Pandawa Agri to ACA Insurance. Their agriculture micro-insurance coverage protects farmers from the financial risks of a failed harvest.
Do you need more information about how you can scale up your sustainable initiative? Then contact Rabo Foundation and we’ll put you in touch with organizations like PAI, that have already done it.