1. PROGRESS ACTIVITIES ON MARKETING ASPECT Evaluate Collective Action Strategy to Enhance Market Access for VAF’s Farmers in Nanggung Subdistrict, West Java: A case study on Banana Marketing SANREM Project – Indonesia TMPEGS Meeting 2007 Agroforestry and Sustainable Vegetable Production in Southeast Asian Watersheds By Iwan Kurniawan

2. OUTLINE  Progress on marketing practice  Banana’s survey results  Marketing strategy  Evaluate benefit from collective marketing  Planning & recommendations Marketing Background

3. In the past, most of farmers sold their banana to local collectors individually in bunch by ignoring the grade/quality and received lower prices. Farmers have limited or no access to reliable market information, marketing skills and bargaining power. Producing bananas in severe varieties, lower quality, irregular harvest and small quantity. By supporting ICRAF’s projects, currently a farmer group is selling their bananas as market specifications and collectively to a big fresh fruits wholesaler in Tangerang. Price depends on grade and quality of the bananas and there is minimum quantity in each transaction. Based on first transaction evaluation, farmers can increase their income about 50% in average. In the future, the company was offering Nanggung’s farmers to supply about 4 tons/week of bananas (could be mixed among Ambon, Raja Bulu and Pisang Mas varieties). At the moment, farmers have no full capacity to provide the quantity and the buyer allowed the farmers to supply as step by step according to their production capacity. Banana’s Potency

4. Tree (stump) Average Yield

5. Average YieldEstimation Average Yield Estimation Based on bananas potency survey in three villages with number of respondents less than 5% of population, in 2007 Nanggung farmers can produce 638-1378 bunches/month in average for 5 varieties (or 6 to 26 tons of bananas/month). To fulfill minimum requirement of quantity, the FG have to increase their production capacity and encourage others farmers/FG to join collective marketing while improving technical cultivation and quality also should be done. Farm’s Gate

6. Previous Price at Farm’s Gate VillageAverage Price (Rp/bunch) AmbonRaja BuluRaja SerehTanduk*Uli P. Muncang 10,8808,3626,1118396.685 Hambaro11,41412,0008,00081910,448 Sukaluyu10,4009,2127.6807406,963 Average10,9458,3367,1527997,935 Trader Profit Margin

7. Average Gross Profit Margin by Local Collectors Business Concept

8. Using high quality germplasm of banana. Apply proper cultivation technique and appropriate post-harvest handling. Improve farmers/FG knowledge on market information and marketing skills. Organize production, harvesting and selling the product collectively. Take win-win solution when dealing with buyer and keep trust and transparency among the Farmer Enterprise’s members. Provide and satisfy customer’s demand through quantity, quality, time delivery and continuity as required. Keep trust and transparency among members and to customers/buyers. Consider and maintain environmental services as long as production and marketing activities of the products. Competition

9. Competetion Nanggung’s farmers have to compete with banana’s farmers from Lampung, Sukabumi and Lumajang (East Java) to supply to the company. Nanggung’s farmers have comparative advantages on the good quality of Ambon that is demanded by the buyer. Land characteristic and climate are suitable factors to grow bananas in this area. The location of Nanggung relatively near to company’s warehouse that can be reduce cost of transportation than other suppliers. Evaluate

10. Improving Selling Price GradeNo of handsWeight (kg)Price (Rp/kg)Total (Rp) Big36.01,70010,200 Medium34.51,4006,300 Small22.51,1002,750 Total19,250 Grading Cost1,000 Net Income18,250 (66%) Assumptions: Current price of Ambon Rp 11,000/bunch (at collectors level). 1 bunch = 20 kg, consist of 9 hands (3 hands grade A, 3 hands grade B, 2 hands grade C and 1 hand reject). The bananas are sold based on their quality and packed in wooden- case. Cost of cutting, washing and packing are estimated Rp 50/kg. The buyer cover cost of wooden-case, plastic pack and pick up the bananas at the village points. Maintaining the Income

11. Establish Nanggung farmers enterprise through activated and revitalized the existing farmers groups. Increase quality and quantity of bananas by applying good cultivation and post-harvest handling practices. Fulfill ‘the customer’ orders in 2 years: –Provide 1 tons/week in first 6 month –Increase the supply up to 2 tons/week in 12 month of the project –Complete the order in year 2 by supply 4 tons/week of bananas (Ambon, Raja Bulu and Pisang Mas) Production Plan

12. Assume one bunch of banana has weight 12 kg and reject 30% Net weight 8 kg/bunch (grade A, B, C) Supply target is 1 tons/week Has to harvest 125 trees of bananas/week Currently assume one farmer can produce 3 bunches/week so need to participate ± 42 farmers in a week Scenario of production supply (month 6th to 12th): –In 1st week, farmers in village A will provide 1 tons –In 2nd week, farmers in village B will provide 1 tons –In 3rd week, farmers in village C will provide 1 tons –In 4th week, farmers in village A will provide 1 tons (supply plan will continue as the scenario respectively) Each farmer will re-plan 2 stumps when they harvest 1 tree of banana (preparing for sustainable production and fulfill production target in month 13th to 23rd) Specified variety on Ambon (80%) and Raja Bulu (20%)

13. Production Plan Bananas supply in month 13th-23rd will achieve by multiple production in first 6 month by 2 times Bananas supply in month 24th and next will achieve by multiple production in year 1 by 2 times –It can extend the banana’s kebun area; and/or –Scale up the project/business by encourage more farmers to participate in production plan. Notes: Expansion on banana production should not result in conversion of existing tree gardens to banana monoculture Facilitators help farmers to improve their banana production towards customer orders Action Plan

14. Action Plan Recomendations Near term –Activating existing farmers group –Up dating banana’s potency & list of farmers who interested to join the project –Create harvesting schedule & targets –Hired field workers to monitor & encourage farmers/FG to make the plan realized Long term –Improving & maintaining the quality & quantity of bananas. –Building capacity for potential/talented farmers as a leader of farmers enterprise. Seeking external funding to support the enterprises or opportunities to create partnership between FG and the traders or create proposal to get credit from financial institutions. Publications

15. Project Outputs Kurniawan, I. J. M. Roshetko, G. Manurung, L. Dahlia and S. Budidarsono. 2007. Developing Smallholder Farmer Business Culture In Competitive Markets: Lesson Learned From Nanggung Project, West Java, Indonesia. Abstract. Submitted to International Congress on a Global Vision of Forestry in the 21st Century, Toronto, Canada, Sept 30 – Oct 3. Kurniawan, I. and J.M. Roshetko. 2007. Collective Action: Making Market Work for Smallholder Agroforestry Farmer. Power point presentation. Presented in ICRAF Monthly Presentation at Forest Research and Development Agency (FORDA), Department of Forestry, Bogor on Mar 15, 2007. Kurniawan, I., J.M. Roshetko and S. Budidarsono. 2007. Collective Marketing Group: Improving Efficiency and Enhance Market Linkages for Smallholder Agroforestry Farmers. Poster Presentation. ICRAF Science Meeting 2007, Nairobi, Kenya.

16. Thanks