Information Role In Agribusiness

For work related project, recently me along with my colleagues were exploring the business potential of developing mobile services in Indonesian agriculture sector. Our early hypothesis was delivering relevant information could give benefits to farmers.

To prove our hypothesis and start our research, We went to Institute Pertanian Bogor and have a discussion with two academias from agriculture business faculty, ibu Etriya and pak Firman. Ibu Etriya has been doing research on vegetable farming in West Java while pak Firman is an expert in Coffee and Cocoa plantation. Both of them are very passionate about their subjects and the discussion really opened up my mind about the role of information in Indonesian agriculture business and how big the opportunities in these space.

In this blog post, i will share some of the insights gained from the discussion. Lets start with how good information could bring positive impact to the farmer’s livelihood.

Impact of Informed Decision in Agribusiness

First questions which came up in the discussion is whether having the right amount of information could have significant impact to the stakeholders, in this case farmers. Also what are the most important information needed by them.

Heres the answers from Ibu Etriya.

Vegetables is perishable goods. It cannot be stored for a long time hence once cultivated, the farmers need to sell it as soon as possible in order for to get maximum revenue. For vegetable farmers, the most important information they needed is what kind of vegetable should they plant. The price of specific vegetables fluctuates depends on the supply in his surrounding area. Oversupply could lower the vegetable price hence farmers usually check with their seed supplier which vegetables were bought the most.

Pak Firman gave different views.

Different from short-term plants such as vegetables, farmers of long term vegetation (cocoa or coffee) concerned more about where should they sell their products. Cocoa or coffee products can be stored up to a year hence farmers have ample time to choose the best vendor to sold their product. Sometimes, when commodity price are declining, farmers also decided to store their products to be sold on the next cycle. Hopefully, the price would be higher by then.

From both of these views, i can conclude that information plays crucial role in maximizing farmer’s revenue. It is an important factor which directly impact farmer’s livelihood.

Another thing that can be concluded from the discussion is :  different types of plantation drive different needs of information.

Information Delivery to Increase Farmer’s Productivity

Another insight which pop up in the discussion was : Delivering relevant and on point information regarding the farming process could increase crop yield and make the farming process more efficient.

For most of the regular crops, there are many scientifically proven ways to boost productivity using improved plantation method (Sistem Budidaya in Indonesian) or plantation best practice. On the government level, this was the job of Badan Litbang Pertanian (Department of Agriculture Research). Apart from government, Universities, NGOs and private sector which related to agriculture sometimes also involved in this development and actively socialize it to the farmers. Examples for these are SRI (Systems of Rice Intensification) method in rice farming and Verticulture in organic vegetables.

Another options to gain better revenue is to get certification such as Indonesia Organic Farming Certification, Rainforest Alliance or ISPO for Palm Oil. By gaining certification, farmers can sell their products at premium price. However this kind of certification usually will be costly for low-end farmers.

To implement both of these method (best practice or certification), farmers usually will have to follow step by step guideline. Some farmers especially the senior ones will have problem to change their habit for years and adapt into new ways of farming. Constant reminder, easy access for consultation and easy to digest reference material are needed in order for farmers to apply the methods properly.

I imagine mobile apps or mobile services could address this issues. Reference materials in a graphic or video format could easily fit in into smartphone apps. The apps could include reminder on what is the next step that farmers should take. It could also have expert consultation feature via text, instant messaging or call. If smartphone or 3G signal availability become an issue, the content could be simplified and delivered via sms (e.g using SMS subscription services)

In Conclusion

In this country, Agriculture contributed almost 15% of total GDP (around USD 133 Bio ). This sector also contributed 40% of labor force, second only to service Industry. Agriculture also used 30% of Indonesia land purpose. Considering this huge scale, developing beneficial services in this sector could give significant boost to the economy apart from also solving real problems for the farmers.

However in the midst of growing trend of Indonesia startup scene and digital economy, there are still only a few startups or even established companies which jump in into this sector. Low technology adoption in farmers and also lack of internet/3G access could be the hindering factor. One successful example which i can mention on top of my head is eFishery, even though it is not directly in Agriculture.

The direct beneficial impact of having more information, the lack of technology adoption coupled with the huge economic value in the sector, Agriculture business in Indonesia is probably one of the biggest greenfield areas which eagerly waited to be disrupted.

Photo Credit: agnipict via Compfight cc

Data source for agriculture metrics : Wikipedia