Indonesia | Smallholder farmers
The Indonesian rice farmers of CIKI invest in their own cooperative
More than 200 farmers in the Citra Kina Raya (CIKI) cooperative on Java gained access to seeds, processing plants, a new sustainable storage facility for their rice - and buyers willing to pay a good price. The members are also unique because they are gradually buying shares into their cooperative to invest on cooperative’s factory. In the process, they actively promote CIKI’s growth, and with it their own profits.
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member farmers in total now
loan from Rabo Foundation received in 2021
higher production since the start in 2020
tons of rice per month
higher income for member farmers in 2021 compared to 2020
CIKI’s cooperative farmers made great strides in 2021. By buying into CIKI and investing part of their profits back into the cooperative, they’ve been able to grow faster together. And the results are easy to see. CIKI converted a former cattle barn into a huge warehouse with a silo for 190 tons of rice. With a customized bed dryer, the cooperative can now dry three times as much rice for its members. The new polishing and vibrating machines also help process the rice faster. And the packaging facility was recently cleared of dust, so the vacuum-packed bales of rice now meet the highest standards for health and food quality. These are the most important visible changes CIKI has been able to make thanks to recent investments.
Strong in the market
“CIKI’s 233 member farmers managed to increase their production five-fold in 2021, and their incomes grew by 42%”, recalls Retno Dwi Jayanti with pride. She guides CIKI as a Rabo Foundation consultant in Indonesia. “Thanks to the planting schedule CIKI has drawn up, the participating farmers can supply rice all year long. Before, they could only deliver rice eight months per year. And now, they can also dry, process, package and store the rice themselves. They always get a good price for their product too, thanks to agreements the cooperative makes with buyers. They’re also the producers of red, black and jasmine rice in Indonesia: special varieties that earn more money.”
Farmers also benefit from CIKI because they own shares in the cooperative. “Their shares guarantee that the cooperative will pay a good price to farmers”, Retno explains. “They’re obliged to supply more rice, but they also have the right for a larger advance payment to start the new planting season. A larger share for a farmer means they earn a higher income, but also that they contribute more to the growth and effectiveness of CIKI.” Participating in CIKI is so attractive to farmers that the members’ share doubled in 2021, and it’s projected to double again in 2022.
“I paid all of my share of 1,500 euros for my two hectares of land in full. So the cooperative buys my rice for a good price, and CIKI also provides me with agricultural supplies from the start of the planting season until harvest. I’m so proud to be a part of the Citra Kina Raya cooperative!”
- Mr. Safah, rice farmer in Demak -
To keep the cooperative future-proof, CIKI receives technical assistance from Rabo Foundation partner Agriterra. This Dutch NGO teaches farmers how to organize and work together in a cooperative. The board also learns how to improve CIKI’s financial and administrative activities. With the help of loans by Rabo Foundation and more professional bookkeeping, the cooperative is building a reliable track record that will make it eligible for loans from a local commercial bank in the future. Retno: “And that’s the real revolution that’s taking place within CIKI right now.”
“We’ve seen an increase in sales of our rice and confidence from the local bank. And maybe most importantly, farmers are confident enough to become members and invest in the cooperative through a shareholder scheme. That way, we can keep growing together.”
- Mr. Kuswinaryo, CIKI chairperson -
CIKI’s three most important insights
- The Dutch model gives farmers a share in CIKI , and with it access to the cooperative’s services.
- The benefits of participating in an agricultural cooperative like CIKI are:
- The certainty of high-quality agricultural resources
- A guaranteed good price for produce
- Access to routine training courses on growing techniques and pest control
- Technical assistance gives the members greater insight into the cooperative model. That helps potential members understand the benefits, which will hopefully increase the number of members in the cooperative. The training also makes farmers more future-proof, because they learn how to draw up an annual report in accordance with the new Indonesian tax law and submit their own tax statements.
Why and how Rabo Foundation supports CIKI
CIKI has received financial support to grow sustainably, because you need capital to grow. Unfortunately, standard banks and the government feel that the cooperative is still too great a risk to finance. So Rabo Foundation became their first lender, offering CIKI with warehouse receipt financing in 2020 and working capital loan in 2021 to buy rice and build a storage facility. As the cooperative grows, so do the farmers’ incomes.
For Rabo Foundation, it’s also important that the cooperative reinforces the value chain, which is one of our strategic goals. CIKI does that by processing, packaging storing and selling high-quality rice for a good price. CIKI is the first program eligible for the Indonesian government’s Corporation Program for Farmer Cooperatives, which shares the same goal. In this program, the government supports farmers’ cooperatives that do as much as they can in-house, from growing crops to selling produce.
CIKI also contributes to another of Rabo Foundation’s goals: climate-smart agriculture. The cooperative informs farmers about environmentally friendly fertilizers and brings them into contact with other farmers who can supply the fertilizer. That reduces their impact on the environment.
Rabo Foundation believes that this cooperative way of working contributes to improving access to financing, network and knowledge for smallholder farmers. CIKI brings these opportunities to the member farmers in Indonesia. With our support CIKI can continue to grow and the livelihoods of smallholder farmers can improve.