Indonesia’s Agritech to Develop Progressively
Indonesia has similar problems with the other Asian countries
Prayogo Ryza - 31 October 2020
One of the things that is quite encouraging in the development of Indonesia’s digital economy is the creation of solutions to various problems in various sectors, as well as creating new opportunities that can actually impact many people. Online motorcycle taxis, food delivery merchants, and the transformation of stalls to digital are some of them.
What has not been widely heard is how the agritech industry has grown in Indonesia. The story has not yet reached the surface. Actually, several names have focused on this sector, TaniHub, SayurBox, KedaiSayur, iGrow, Crowde, Etanee, EdenFarm, Freshbox, and other names are a series of startups trying to transform the agritech industry in Indonesia with their own solutions.
Over the past few years they have tried to validate the idea as well as educate the market that there are technological solutions that can solve existing conventional problems, such as farmer loans, low prices, and the distribution of their crops.
In 2020, since entering the pandemic period, several names in this sector have started to show significant growth. Especially those who focus on delivering their produce directly to customers. This potential also makes KedaiSayur a pivot and focus on order delivery services for food ingredients. Sayurbox, Etanee, EdenFarm, and Freshbox also compactly stated that there was a growth in retail customers during the pandemic.
Meanwhile, in terms of capital services, Crowde shared stories with DailySocial at the beginning of the pandemic, their operational businesses were also affected. This condition is due to the large number of POs with their horeka businesses that have to be canceled due to force majeure as well as travel restrictions from one area to another.
Many parties are surprised by the various new policies and gray plans, for example, such as many investors who have not dared to make capital again after repayments or new policies to limit the types of businesses they capitalize.
“We have also made adjustments to the system so that capital will still have relevant risk mitigation during this pandemic, such as credit insurance options for capital, diversification offtakers for the absorption of crop yields, to options for purchasing crops in tonnage. To simplify the capital distribution assistance system, we We also work more with local men as farmers consultants and field agents, “said Crowde Head of Impact Investment Afifa Urfani.
Crowde’s performance during the pandemic is quite promising. In the period March to August they claim to continue to distribute funds up to more than Rp. 60 billion. This figure is higher than normal conditions, considering that the peak planting period is from September to October each year. The funds are channeled to more than 18,000 farmers and more than 300 small and micro businesses in the agricultural sector.
“During the pandemic, we continued to cooperate with> 10 institutional investors who were not afraid to channel their capital even in pandemic conditions with uncertainty over credit. agricultural capital, “said Afifa.
Supply chain and farmer’s capital loan
If you look further about the problems that technology startups are solving in the agritech sector, it will focus on two things of the supply chain or distribution and also farmer capital loans. For the supply chain, these startups will usually go directly to the area to meet with farmers or farmer groups and work together to accommodate their crops.
Then the crops will be accommodated in a kind of processing center to be sorted and packaged before being passed on to customers. With a short distribution chain like this, the quality of vegetables and fruit will be better maintained, prices will remain competitive, and customers will have an interesting shopping experience.
Meanwhile, for agricultural capital loans, the outline of the process is that farmers open projects on the platform provided, complete with information on the crops they will plant with the amount of profit offered. Then the owner of the capital will choose the project and finance it.
Of these two fundamental problems, there is one thing that makes it a positive impact on farmers. All of them are competing to make farmers harvest maximally and with quality. The goal is to produce the best quality for their respective services. Quality fruit or vegetables in abundance, or good yields for those who invest. This synergy is expected to be able to elevate farmers to a better, more measurable, and more documented level.
Agritech in other countries
China as a country with fast technology adoption in the past decade has made transformation in the agritech sector a national priority. They launched a development plan and digitization of the agricultural sector from 2019 to 2025. Cutting-edge technologies such as AI robots for sensor-based automation and monitoring, blockchain, supply chain, and 5G networks are expected to create solutions in the agricultural sector. From a report published last March, investment in Chinese e-Grocery grew 25% from 2018. Touching the $ 2.1 billion mark.
Meanwhile in India, the supply chain is also a challenge for the agritech industry. Linking farmers directly to customers appears to be an important homework of agritech in many countries.
A report, titled Agritech – toward transforming Indian Agriculture issued by EY in August, stated that the potential supply chain for the Indian market reached $ 12 billion, while for financial services it reached $ 4.1 billion. These two sectors provide space for startup players to grow and at the same time contribute to national agriculture.
Indonesia is an agrarian country where every year there is news about farmers who have failed crops or farmers whose harvest prices have plummeted. When talking about potential, clearly empowering farmer groups to reduce these risks is one of the most important.
Furthermore, in a more mature stage of IoT-specific sensor technology, predictions based on data typical of big data and machine learning can take farmers to the next level. Determine which planting period and variants are the most profitable to reduce the risk of crop failure.
Indonesia is on its way. The investment obtained by companies in the agritech sector is expected to be able to provide solutions for a better future for Indonesian farmers.
Original article is in Indonesian, translated by Kristin Siagian