The Partnership Model of Horticultural Area Development for Indonesian Agriculture

Based on Statistics Indonesia (BPS) data, in the first quarter of 2021 the agricultural sector contributed 13.17% to national GDP, the second largest after the manufacturing sector which made 19.84%. Meanwhile, in terms of exports, the export value of the agricultural sector in April 2021 increased by 18.98% compared to the same period of the previous year. 

This shows that the agricultural sector makes a significant contribution to the Indonesian economy and has proven its resilience during the Covid-19 pandemic. 

During the pandemic in 2020, the export value of fresh and processed fruits hit a quite high level at US$389.9 million. In detail, the exports of fresh fruits amounted to 96.3 million dollars, soared by 30.31% compared to the previous year. 

Of the total exports of fresh and processed fruits in 2020, the exports of processed pineapple products made the largest contribution, of 70.30%, compared to other fresh and processed fruits. As for fresh fruits, the exports of bananas contributed 6% to total fresh fruit exports. 

The five countries which become the main export destinations for Indonesian fruit products are China, Hong Kong, Malaysia, United Arab Emirates, and Pakistan. This indicates that Indonesia’s fruit products are in great demand overseas. 

Export Potential for Agricultural Commodities

In view of the export potential for agricultural commodities, especially the horticulture sub-sector, the government should strive to increase product competitiveness and the contribution of horticultural exports to the nation’s foreign exchange. 

In a press release of April 3, 2021, Secretary of the Coordinating Ministry for Economic Affairs Susiwijono Moegiarso said that the development of horticulture in Indonesia is still dealing with problems and challenges such as a lack of Human Resources (HR) and farmer institutions, limited capital, lack of assistance and technological innovation, low competitiveness, and lack of market access. 

For that reason, the partnerships with farmers need to be promoted so that they are able to design production patterns, do the marketing, and become independent and resilient. The assistance includes how to use quality fertilizers to boost agricultural productivity. 

As a priority program, the Coordinating Ministry will coordinate through the integration of agricultural policies, with the provision of lands by optimizing social forestry land use policies, increasing production, product quality and competitiveness, and improving farmers’ financing access through people’s business loans (KUR). 

Market access needs also to be increased through e-commerce, logistic support, construction of infrastructure/transportation facilities, as well as tariff policy support and international trade as the priorities of the Coordinating Ministry. 

To accelerate the implementation of the export-oriented horticultural area development program, the government carries out initiation and cooperation for partnerships with the local government, the private sector, and farmers. 

“The initiation and cooperation for partnerships are carried out as an effort to promote economic equity in regions and increase the availability of quality food sources,” Susiwijono said. 

This program, he added, will be a model for better agribusiness management through partnerships with business players who already have the competence to export. 

According to Assistant Deputy for Horticultural Agribusiness Development at the Coordinating Ministry for Economic Affairs Yuli Sri Wilanti, the partnership enhancement is intended to assist farmers in the design of production patterns as well as the marketing, so they can become more independent and resilient. 

“The success of policies and programs in the agricultural sector is not only seen from its contribution to the GDP, but must also be followed by export performance,” Yuli said, as quoted from Antaranews.com. 

The partnership program has been implemented in seven locations namely Tanggamus, Jembrana, Blitar, Bener Meriah, Bondowoso, Ponorogo, and Garut in collaboration with PT Great Giant Pineapple (GGP). 

In addition to the government’s program, the Coordinating Ministry for Economic Affairs has also identified partnership patterns in the agricultural sector run by private parties including PT Cipta Agri Pratama (CAP). 

CAP has been running its business since 2016 and has entered into a partnership on more than 500 hectare production area spread across Bandung, Purwakarta, Cianjur, Cipanas, and Probolinggo.

At present, CAP is in preparation for the use of 1.300 hectares of land area in Jatilihur granted by the Ministry of Environment and Forestry (KLHK). The commodities produced are Kirana bananas, Cavendish bananas, Barangan bananas, California lemons, Dekopon oranges, Gerga oranges, Siamese oranges, Chokun oranges, and mangosteen.

The yield is supplied to several modern markets and supermarket chains in Indonesia such as Ranch market, Transmart, Total Buah Segar, Tanihub, Sayurbox, Superindo, Farmers Market, Rezeki, Maxim, and Lottemart.

Not only that, on May 24, 2021, the first harvest of Cavendish bananas was carried out through a partnership by optimizing 35 hectares of idle land area, the property of PT Gistex Chewon Shynthetic in Purwakarta, which were cultivated by local farmers. 

The production has also been made based on the requests of offtaker companies, PT Laris Manis Utama (LMU) and PT Sewu Segar Nusantara (SSN). 

“In planning the planting, farmers need to know market needs and partner with off-takers so that farmers should not worry about price declines because they already have a clear market,” said Yuli.

Furthermore, after controlling the downstream side, the government also gives attention to the intensive assistance to farmers, especially the application of technology that can support integrated and modern agribusiness. 

Partnership Pattern Boosts Banana Exports

Tanggamus Regency of Lampung Province is one of the national banana centers which is currently being used as a pilot model for the development of horticultural areas. 

Banana plant development in Tanggamus Regency has also partnered with PT Great Giant Pineapple (GGP) as an offtaker and farmer groups join in the Koperasi Tani Hijau Makmur. 

The cooperation pattern is a corporate-based regional development model, in which a cooperative functions as a corporation that partners with a company. 

Currently, the partnership in Tanggamus Regency continues to increase until it reaches more than 200 hectares of pisang mas (golden bananas) area involving 234 farmers from 7 farmer groups in eight sub-districts. 

Since 2018, pisang mas developed from a partnership program with farmers in Tanggamus Regency have been successfully exported to Singapore, the Middle East, and China. 

Through this pattern, the marketing of bananas shows a large export potential. In fact, the need for the fruit has not been entirely met due to a high demand. Only one-fifth of the demand for pisang mas exports to Singapore can be met by farmers. 

In 2020, the Directorate of Fruits and Floriculture at the Directorate General of Horticulture, Ministry of Agriculture, has allocated a banana area development program in Tanggamus district covering a 200 hectare land area which will function as the location for export-based commercial area. 

Pisang mas Tanggamus begins to produce an average of 9 months of planting and can be harvested eight times. The next harvest is carried out every 4 months. A bunch of bananas can weigh 10 kg at the early phase of harvest. The next harvest can increase the weight of around 11-16 kg. 

“Currently, one hectare of planting area has 1300 trees. In the future, it will be increased to reach 2,000 trees,” said the Chair of Kelompok Tani Hijau Makmur, M. Nur Sholeh, as quoted from Pertanian.go.id. 

According to him, if a bunch of bananas is valued at Rp2,500 per kg, then the productivity value of bananas will reach Rp160 million per hectare. Imagine if the cooperative sets the value at Rp6,500 per kg in packaging. 

“This value is certainly more profitable for farmers. If there are 2,000 trees in one hectare land area, farmers can get approximately Rp160 million per hectare. This is better than planting cassava,” Sholeh added. 

The cooperation between a company and a cooperative is carried out by contractual agreements. Under the scheme, farmers sell their products to the cooperative which will sell them to companies. 

That scheme benefits the farmers of pisang mas in Tanggamus Regency. In addition to price certainty, guidance in cultivation and quality control of production, farmers also get benefits from a wider market reach that is able to penetrate the export market. 

This is in line with the direction of the Minister of Agriculture, Syahrul Yasin Limpo, to always give a total commitment in boosting the exports of horticultural products, especially fruits through a partnership pattern. 

Director of Fruits and Floriculture Liferdi Lukman appreciated the Tanggamus farmers for being able to produce quality pisang mas through a partnership pattern. 

“We will continue to encourage and remind farmers to have a continuous partnership pattern with the private sector so that the marketing scope of bananas becomes wider and more profitable,” Liferdi said. 

Further he explained that the development of fruits and floriculture is directed at establishing large-scale gardens, as well as being integrated with the private sector in the form of partnerships. Even though the people’s land ownership is small, when managed professionally it can produce products that can be marketed to the export market. 

“Hopefully in the future, this partnership model will be able to become a driving force for sustainable exports of horticultural commodities, which will have an impact on improving Indonesia’s economy through the increase of export balance,” he concluded.