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Organic Rice: a route to self-reliance This parable is based on Oxfam’s experience of working with small-scale rice farmers in Indonesia. Here we investigate how a network of Indonesian rice producers developed a secure market for their product. Introducing Iwan Iwan is a small-scale rice farmer in Indonesia. For many years he and his sons have cultivated a plot of land near Yogyakarta, on the island of Java. They used to make a reasonable living from the land: the family had enough to eat and could afford to spend something on health care and education. Over the last five years, however, the price of locally grown rice has gone down as cheap imports have become available. Each season Iwan made less money from the rice he grew until he could no longer afford to feed his family and buy the seeds and fertilisers he needed for the next rice crop. Like so many farmers, he was forced to borrow money at high interest rates just to survive, and soon found himself spiralling into debt. “Growing rice is no longer profitable for Indonesian farmers, because the prices of locally produced rice are too low.” Riza Tjahjadi, Co-ordinator of Pesticide Action Network, Indonesia Organic Many organic rice farmers in Indonesia cultivate fish along with their rice crop – providing themselves with a valuable secondary income. The survival of fish in the paddy fields demonstrates the absence of agro-chemical fertilisers and provides verification that the crop is genuinely organic. Warning: conversion to organic production can be costly and time-consuming. Full conversion can take up to three years, during which time crop yields are usually reduced. Going organic By 1998, the situation had become so bad that Iwan considered giving up his traditional livelihood. But by talking to other farmers, he learned that there might be advantages in going organic. This would allow him to grow a higher-value rice crop and would reduce his reliance on the multi-national agro-chemical companies from which he had to buy seeds and fertilisers. He found out that he could get support from KMFT: a local network of non-governmental organisations (including Oxfam) which promotes organic agriculture. He could use its milling equipment to process his rice, and KMFT would then buy the processed product at a good price to sell through its shop, Sahani, paying him immediately on delivery. By working with the network, Iwan hoped he could develop a secure livelihood and start to pay off his debts. Business planning Careful planning is critical to the success of any business. Business plans need to be developed on an annual basis, identifying:
Although there are organisations that can help to develop a business plan for small-scale producers, it is essential that the producers are involved in this process. It will help them to understand their business and identify and allow for potential difficulties in meeting their targets. Learning the business When Iwan first joined the Sahani network, he and other local farmers found it difficult to develop the business approach they now needed in addition to their farming skills. They had to learn to meet the quality demands of the organic market; to estimate their production costs so they could ensure they were making a profit; and tell Sahani how much rice they would be harvesting, so that the shop could plan ahead effectively. Realising that the farmers needed help in these areas, Oxfam organised a series of workshops on costing and pricing, quality assurance, and business planning. These sessions helped to build their business knowledge and confidence. Sahani Sahani means ‘friend of trading’. The shop was started as a Fair Trade venture, selling a variety of craft products. Later it decided to specialise in organic local rice, which had always sold particularly well. Local rice market Organic farmers cultivate traditional rice varieties which attract much higher prices than high yielding varieties (HYV) on the local market. Consumers prefer them for their flavour and their longer shelf-life – to the extent that conventional HYVs are not sold in up-market shops. Developing the market Sahani initially had a specialist market for its rice: people who were already interested in organic products, including academics and development workers. But to build a viable business, and a sustainable livelihood for the farmers, the shop really needed to expand its customer base. Oxfam worked with Sahani to develop publicity materials advertising the benefits of its chemical-free organic rice. Workshops were also organised for policy-makers, the media, and consumer groups to discuss the issues around organic farming. Gradually Sahani was able to expand both its range and the number of its customers and build a viable and sustainable business. Learning about stakeholding Results of Oxfam’s Fair Trade Impact Assessment study show that producers benefit most when they have a stake in the organisation that markets their product. This enables producers to learn to manage all aspects of their business, and have a say in important decision-making processes, such as how to invest or distribute profits. Giving the farmers a stake The development of Sahani was still held back because those running the business were not ultimately responsible for its success and so had little interest in making it profitable. In October 2000, KMFT took the bold step of passing the ownership of Sahani over to the producers themselves, giving them a real stake in the business for the first time. Now the farmers had a direct link with their buyers, giving them a greater understanding of their market and of the need to meet quality standards and production deadlines. They also took over all the decision-making for the business and so had more incentive to ensure that the business was profitable. The members of the KMFT are still involved in the project as advisers, but the farmers of Sahani are now the driving force in its development. Iwan says “Moving to organic production has made all the difference. I don’t have to buy expensive chemicals any more, and yet I am able to produce a higher-value crop. And by working together to develop Sahani, we have ensured a secure market for what we produce. We have all benefited: me, my family, and all the other producers in the network.” Sahani today Sahani now works with 1000 farmers and their families. It still sells directly through the shop to families, food co-ops, and NGOs; but it has also developed a more profitable base of larger-scale customers, and the bulk of its rice is sold to local supermarkets. Farmers like Iwan now have much lower production costs, get a premium price for their rice, and gain a valuable additional income from the harvesting of fish. But perhaps the most important benefit is that the farmers are no longer depend on selling their rice to middlemen who take much of the profit. By working together to sell their rice directly via Sahani, the farmers have taken more control of the marketing process, and have been able to develop secure and sustainable livelihoods. Learning from the Sahani experience
Source Written by Annabel Southgate Oxfam’s series of Market Access Parables is a set of stories which show how gaining access to new markets has improved the livelihoods of poor producers. We hope that the series will illustrate how similar approaches might be used in your own programme work. If you have any queries about any of the parables, or would like further information, please contact Oxfam’s Market Access Team, based in Oxford, UK: Tel: 00 44 (0)1865 313166 E-mail: asouthgate@oxfam.org.uk Intranet: http://homepage.oxfam.org.uk/ mktacc/default.htm << country/story review |
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