MORINGA: More Income Generated for Poor Families in Indonesia

Project description / objective

MORINGA is a 5-year project aiming to increase income for 4,000 farming households. It follows a hybrid inclusive market systems development approach (iMSD), working on systems change for marginalised groups and interventions to enhance their participation in economic markets.

It collaborates with market actors to improve access to new opportunities, resources, and services for farming households and entrepreneurs. Where there are no appropriate partners, it works to include the poor, especially women and persons with disabilities, through targeted activities to strengthen their productivity and address specific barriers such as women’s limited agency.

Market system focus

Maize

Maize is a source of income for many agricultural households in Central Sulawesi. In 2017, maize production involved 273 thousand farming households. Despite the reach of the farming area, productivity in Sulawesi (4 tons/ha) is well below the national average (6-8 tons/ha), mainly due poor uptake of Good Agricultural Practices (GAP) and unreliable access to quality seeds, fertilisers and pesticides. Historically farmers have relied on subsidised seeds and fertilisers distributed by the local government, which often arrive late and are only available in the first planting season.

Moringa leaf and seeds

Two different commodities sourced from the same Moringa tree (Moringa Oleifera), both the seeds and their leaves are harvested throughout East Nusa Tenggara (NTT) region for their nutritional value and, in some circumstances, are sold into the global superfood, pharmaceutical and cosmetic industries. Despite endorsement and significant investment by the provincial government, the market system surrounding both commodities remains nascent, with an insufficiently functioning aggregation and processing market, the growth of the sub-sector is not yet meeting its potential.

Kenari nut / pilinut    

Kenari nut or Pilinut is in demand on the national market as a substitute for walnuts. However, it is only grown in limited area in Indonesia. For example in the remote Alor island in East NTT province it is harvested from the forest by female farmers but has a low price and little demand in the local traditional market. This results in  the wood from pilinut trees being more valuable than pilinut itself for its use as a building material for houses. Long term this results in a loss of trees and erosion of water sources.

Nutmeg

The global nutmeg market is projected to grow at a compound annual growth rate (CAGR) of 3.6 per cent during the forecast period (2020-2025). Indonesia has become the global leader in nutmeg production, but produces less than Guatemala. Despite North Moluccas province being the highest nutmeg producing area in Indonesia, it has low productivity because of lack of good agriculture practice such as application of fertiliser and poor pest control. There is no private sector in the area providing quality agri-inputs for nutmeg.

Vegetables 

Vegetable demand is increasing nationally and locally (NTT) due to growing domestic consumption. Productivity in NTT is lower than nationally. Production outstrips local demand for some varieties of vegetable, and the surplus is exported to outside NTT. However,  some varieties still have low production in NTT, requiring imports from other areas of Indonesia.
70 per cent of vegetable production in NTT depends on water. However, NTT has a long dry season and limited water resources, impacting  the scale of production. Farmers produce 1-2 harvest seasons, whist other areas in Indonesia can produce more than 3 harvest seasons annually. The  farmers that do have water sources find it is not enough to cover all the seasons. They also need more time and workers for watering, leading to high production costs.  At the system level, there is no business supplier of water for agriculture purposes or any water technology for vegetable farmers.

Access to finance / financial literacy

There is low financial literacy and access to finance to support production of crops, and ability of households – women, men and children – to benefit from income. Smallholder farmers have limited skills to create budget plans, track expenses, or identify investment opportunities that can enhance their agricultural productivity and income. They also lack knowledge of appropriate insurance products or savings strategies to protect their income from unpredictable events such as natural disasters or market fluctuations. 

Indonesian women also face challenges around agency. They often manage the household money, but have limited decision-making power, especially relating to the purchase of quality inputs or technology. There has been limited attention given to how financial literacy can contribute to more equitable gender relations within a household (intra-household dynamics). 

Programme interventions

Maize (Central and West Sulawesi)

Access to maize hybrid quality seed
The supply chain of hybrid seed was improved by partnering with three large agri-input supply companies. The seed manufacturer and distributor (the project’s primary partners, such as Syngenta) agreed to alter its outreach approach to include improved engagement with the intermediary service providers (ISPs) like small retailers, agents and traders, as well as including technical and business training as a bundled service. This involved companies investing in agronomists to provide technical training to intermediaries. The strategy was combined with value chain finance, where farmers can buy hybrid quality seed from input agents on a credit scheme. 
The intermediaries are able to more effectively market improved seed to smallholder farmers, which, when combined with improved agricultural practices, saw a doubling of yields.

Uptake of maize good agricultural practices
Importantly, improved agricultural practice support has been embedded into the transaction between intermediary and farmer, most successfully when the intermediary doubles as a commodity trader. The project partner has upskilled the intermediaries in good agricultural practice and business skills and supported them to create demonstration plots that serve as examples to customers.

Moringa leaf and seeds (East Nusa Tenggara Province)

Processing & aggregation centres for moringa seed
Developed local purchasing system for moringa seeds by establishing production centres for seed processing and aggregation of raw seeds. Buyers (PT.Morifa) of unprocessed moringa seeds and seed oil are investing in the production process in partnership with local intermediary. This includes facilities for post-harvest management and agronomic support to cultivate the crops for seed production.

Local drying and processing facilities for moringa leaf
Facilitated investment from leaf powder buyers and local government in improved local processing facilities for moringa leaf drying, which were constructed under contract on local farmers’ land. As the quality of moringa leaf powder improved, as a result of the new drying facilities, new markets opened up for the finished product including the lucrative global health and beauty industries.

Kenari nut / pilinut (East Nusa Tenggara province)

Access to Pilinut national market
Developed local purchasing channel for pilinut by establishing semi-processing centres for collecting, drying, and pilinut shelling. Buyer of dry pilinut (PT.Timurasa) invested in drying facilities for female intermediate providers who largely hired female workers to do shelling and aggregation. In addition, the buyer also supported intermediate service providers on quality training for farmers include sharing market information.

Nutmeg (North Moluccas Province)

Access to bio-fertliser (Agriculture input)
Improved the supply of bio-fertiliser by partnering with large agri-input supply companies. Bio Konversi Indonesia (BKI), a private sector partner, produced bio-fertiliser offering three main benefits:

1. increases the productivity of nutmeg, a speciality commodity of the region, and vegetables, despite the limited availability of chemical fertilisers
2. promotes and preserves environment-friendly or natural cultivation practices
3. supports the circular economy -  the organic fertiliser (Bio Konversi) contains active living organisms that  provide soil nutrients and stimulate nutrients for plants. Bio Konversi is made from food waste such as fruit and vegetables, and produced organically using maggot to decompose it. It can be used for various crops such as nutmeg, vegetable, cacao. BKI agreed to alter its outreach approach to include improved engagement with ISPs such as small retailers, agents, and traders.

Vegetables (East Nusa Tenggara Province)

Access to drip irrigation system
Improved the supply of drip irrigation to increase productivity. PT Power Agro Indonesia agreed to establish their drip irrigation technology to rural vegetable farmers in NTT, including support to set up the technology and advice on good agriculture practices. 

Access to finance / financial literacy

Gender Inclusive Financial Literacy Training (GIFT)
Based on global good practices in financial literacy, behavioural economics and gender transformative programming, GIFT aims to increase a couple’s access to, and adoption of, financial literacy skills, while also promoting more gender equitable relationships or a ‘household approach’ where women and men are partners in the household with both having agency in decisions linked to their finances.
GIFT was first piloted in NTT province in partnership with credit unions. Based on the piloting phase, GIFT was later expanded to Central and West Sulawesi, an area without cooperatives, and implemented directly as part of a hybrid approach. 

Notable results (systemic change, poverty impact)

Maize (Central and West Sulawesi)

• The network of business partnerships (private sector-intermediate service provider (ISP)-farmers) in maize was strong and extensive in Central Sulawesi. Private sector partners and 110 ISPs succeeded in  promoting the adoption of  hybrid quality seed and good agriculture practice by 56,210 maize farmers and benefited 29,673 farmers with attributable increased income.  
• Syngenta sales of hybrid seed jumped from 4.6 tonnes in 2018 to more than 56 tonnes/year in 2022. 
• The increased adoption and sales of Syngenta resulted in crowding-in by other market actors such as input companies (PT. Pertiwi, PT Dupont), a fertiliser company (PT Saprotan Utama) and Maize off-takers (PT Jadfa Comfeed Indonesia, PT Havana)

Moringa leaf and seeds (East Nusa Tenggara Province)

• Unfortunately, the project had to drop the moringa leaf intervention focused on local drying and processing facilities because of limited availability of an affordable and effective drying facility that can produce import-standard quality of moringa powder. 
• Processing and aggregation centres for moringa seed generated additional income for 3,668 farmers in 2018 - 2019. However, Covid-19 impacted the performance of the moringa seed buyers who could not provide profitable prices from 2020 to the end of project. 

Kenari Nut / pilinut (East Nusa Tenggara province)

• The project partnership with the pilinut buyer succeeded in 995 pilinut farmers having attributable increased income on the small island of Alor in NTT. 
• 6589 kg of pilinut was collected by a private sector partner through 8 ISPs which created job opportunities in pililnut shelling for rural women.
• This motivated PT Timurasa  to continue the business model and expand their presence in the area. Export demand for pilinuts is growing, and PT Timurasa is eager to fill the demand. PT Timurasa engaged with the local government (Regional Development Planning Agency and District Agency for Natural Resources Conservation) to promote the value of pilinuts and help tree conservation in Alor.

Nutmeg (North Moluccas Province)

Initially, the intervention addressed a productivity issue in nutmeg cultivation by introducing Biokonversi, a biofertiliser product. Later, it naturally expanded to horticulture, as nutmeg farmers tested the product on their vegetable gardens and saw extraordinary improvements in plant vigour and yield. The team expects the intervention can grow quickly and massively as it has similar key success factors as the maize intervention: Superior product quality, quick and observable improvements, relatively cheap adoption costs, and full support by the local government.

• Until early 2022, the interventions led to increased attributable income for 507 nutmeg and horticulture farmers. 

Vegetables (East Nusa Tenggara Province)

Power Agro has promoted its drip irrigation system, however, it is still at the beginning of the ‘Adapt’ stage. The adoption of drip irrigation required a large upfront investment by horticulture farmers in the pilot area. Loans by formal financial institutions are generally difficult to obtain since they usually require collateral from farmers or a proven business model (value-chain finance), however, Monafen agreed to finance the farmers based on a demo plot which gave evidence of success. As a result, in March 2022, MORINGA, Power Agro, and Monafen signed an MoU on the collaboration, providing in-kind financing for the farmers.

Access to finance / financial literacy

Access to finance
MORINGA was successful in facilitating farmers’ access to finance from a formal financial institution in NTT and Central Sulawesi. This was a good achievement considering the project worked mostly in fragmented, isolated areas with high poverty levels. 

Gender Inclusive Financial Literacy Training (GIFT)

A separate GIFT impact assessment highlighted promising results:

• 58 per cent of women and men surveyed have improved financial management knowledge
• More than 60 per cent of GIFT participants increased their savings balance, some very significantly
• 66 per cent of women and men report more equal decision-making over financial decisions
• From the project monitoring, the strategy to engage credit unions on the business case for GIFT has been successful to date but requires more attention in the future. For example, credit unions have noted the value of GIFT in improving their brand linked to gender equality but business performance data is currently not being tracked. 
• In addition, the strategy to engage religious leaders has also proven effective to promote GIFT among target households, aligning with their incentives to reduce conflict between women and men and their work in marriage counselling. 

Impact of poverty

• By February 2022, MORINGA facilitated an increase in income for 9,640 farm households through participation in five value chains. 
• The project facilitated an average increase in net income of IDR 7,000,542 (USD $484.55) per household.
• Approximately 14 per cent were from extreme poor farming households (income below USD $1.25 PPP/day) 
• 35,667 people (13,554 men, 11,057 women) can now provide for 11,057 children (5,750 boys,5,307 girls) including food, education and health costs. 

Private sector investment / return on investment 

Private sector investment
Working with 12 private sector partners, as of February 2022, the project was able to leverage AUD $5.8 million (USD $3.83 million) from private sector partner and intermediary small enterprises.

Return on investment (ROI)
For every Australian dollar spent, MORINGA has generated A$2.80 in increased income for farm households. Against the total project spend of A$2.3 million, MORINGA generated A$6.3 million (USD $4.16 million) in increased net income for farm households, benefitting 35,667 farmers.

Cost per beneficiary
 AUD $237 (USD 156.7) per farm household at the time of the evaluation (March - April 2022). This compares well with PRISMA with its investment per farm household of A$241 (USD 159.4). 

Women's economic empowerment

Economic advancement 

• 46 per cent of participants, from 9,640 farming households reached, were women who benefitted from improved income and access to new opportunities 
• Women farmers and ISPs were more likely to participate and benefit from pilinut, nutmeg and vegetable value chains (mixed or women-led) compared to maize (more male-led)
• 21 per cent (35) of 126 ISPs were women and the total small enterprise turnover (as of January 2022) was AUD $1.2 million (USD 793.8)

Access 

• Women benefitted from adopted innovative agricultural practices, and used improved agriculture inputs for applying Good Agriculture Practices (GAP)
• 216 men and 221 women joined GIFT training to increase their financial literacy, including equitable financial decision making and management workload

Agency 

• Changes in agency for women varied depending on the value chain
• Women engaged in pilinut production were more likely (62 per cent) to report equitable decision-making power over income-generating activities, compared to those engaged in moringa (52 per cent) or maize (12 per cent)
• Similarly, a higher proportion (67 per cent) involved in pilinut production reported an equitable division of labour (on and off the farm), as compared to counterparts engaged in moringa (55 per cent) or maize (17 per cent).

Equitable systems 

There was no quantitative indicator on changes in community attitudes towards gender equality. However, the project engaged religious leaders as key allies to support the implementation of GIFT. The project sought to promote positive social norms to support women’s access and agency

[updated May 2023]