AIP-Rural: Australia-Indonesia Partnership for Rural Economic Development

Project description / objective

AIP-Rural was a suite of market development programmes that aimed to improve smallholder farmers' competitiveness and access to new markets, better inputs, know-how and technology.

It consisted of four programmes covering different agricultural market system areas:

• PRISMA (value chains)
• SAFIRA (finance)
• TIRTA (irrigation)
• ARISA (research and innovation)

It worked to achieve a sustainable 30 per cent increase in the net income of 300,000 smallholder farmer households in eastern Indonesia by 2018. AIP-Rural operated in East Java, West Nusa Tenggara, East Nusa Tenggara, Papua and West Papua.

PRISMA Phase 2 (2019-2023) is the continuation of AIP-Rural.

Market systems focus
 

Promoting Rural Incomes through Support for Markets in Agriculture (PRISMA) Phase I adopted a market systems development approach, designed to improve market e­fficiency and achieve increase of economic returns in selected value chains. By addressing the root causes of agriculture under-performance, it worked to create systemic change which will sustain beyond the lifetime of the programme.

The programme focused on agriculture sectors that were the main source of incomes for a large number of smallholder farmers and have strong growth potential.

 Strengthening Agricultural Finance in Rural Areas (SAFIRA) focused on agricultural value chain ­financing (VCF) to increase the access of smallholder farming households to ­ finance. SAFIRA worked to develop and formalise VCF with selected partners to bene­fit smallholder farming households.

SAFIRA partnered with financial institutions, farmers and small- to medium-sized enterprises such as input suppliers, collectors, processors and traders, to equip them with the skills and capacity needed to engage in sustainable applications of VCF.

Tertiary Irrigation Technical Assistance (TIRTA) adopted a market system approach to catalyse private sector investment in tertiary irrigation (that is, irrigation schemes managed at local level and servicing less than 1,000 hectares of farm land) and to facilitate improvements in the technical and ­financial viability of irrigation schemes.

The programme partnered with public and private sector actors to bring about positive change in three key areas of tertiary irrigation system:

1. It facilitated technical improvements in the way irrigation schemes are designed and developed
2. It introduced good agriculture practices in the irrigation business model to minimise the risk of crop failure
3. It supported the capacity development of HIPPAs (water users’ associations) and BUMDes (village-based business enterprises) to enable better management of HIPPA-led irrigation schemes.

Applied Research & Innovation Systems in Agriculture (ARISA) disseminated applied and adaptive research in agriculture which would have practical and signi­ficant impact on farmers’ incomes. The programme focused on the commercial application of innovation in agriculture. It brought together agribusinesses with universities and research institutions to adapt existing innovations, making them applicable for smallholder farming households in eastern Indonesia.

The programme worked to identify constraints in on-farm production and the broader value chains and then seeks applied research solutions to address them to achieve systemic, lasting change.

Programme interventions

PRISMA

PRISMA helped spur growth along the value chain by reducing constraints and barriers to farm performance and market access. Up to December 2018, PRISMA portfolio consisted of 24 sectors and 148 interventions. Examples of the programme interventions:

Coffee

• Developed ICCRI franchise for specialty coffee
• Developed decentralised processing facilities for specialty coffee
• Improved market access and increasing the productivity of arabica coffee
• Promoted commercial fertiliser

Pigs

• Introduced improved breed of pigs and promotion of commercial pig rearing
• Supported the development and promotion of quality feed supply and distribution channel in Flores and Sumba
• Supported the promotion of quality feed, animal health product and distribution channel in Timor

Vegetables

• Promoted good agri-inputs, extension services, and GAP
• Promoted pest and disease management

SAFIRA

SAFIRA focused on agricultural value chain financing to expand smallholder farmers' access to formal finance.

Up to December 2018 the SAFIRA portfolio consisted of five sectors and eight interventions. Examples of the programme interventions:

Beef (institutional strengthening of Bank Sinarmas)

• Supported the development of a loan product for cattle fattening. The loan was provided ‘in-kind’ in the form of quality calves and feed
• Facilitated the collaboration between Bank Sinarmas and feedlots and feed producers

Maize (Bank NTB, PT BISI International Tbk)

• Strengthened and improved loan system of Bank NTB
• Developed VCF on maize using KUR lending
• Developed VCF on maize with PT BISI through YARO financing scheme
• Supported PT BISI capacity on management and marketing
• Supported PT BISI to develop an inclusive business model

Vegetables and other potential commodities in Kupang, NTT (Institutional Strengthening BPR Central Pitoby)

• Developed the VCF business model and provided training and technical assistance of VCF to BPR Central Pitoby’s staffs
• Conducted agricultural market assessments to assist in VCF development
• Provided linkage to intermediary service providers, third-party agricultural buyer or agricultural input company, and other possible actors which can potentially enhance the business model

TIRTA

TIRTA increased irrigated area to support farmers productivity by encouraging private sector investment in irrigation services.

Up to December 2018 the TIRTA portfolio consisted of one sector and 21 interventions. Examples of the programme interventions:

Development and promotion of irrigation consulting services Mesindo
Partnered with CV Multi Mesindo Jaya, a pump retailer of reputed pump brands, to support expansion and diversification of their business through: i) technical capacity development, and ii) marketing and promotion of their business offers to the irrigation providers and other relevant stakeholders'

Irrigation expansion management capacity building pilot and productivity enhancement in Malo

• Facilitated access to irrigation technical assistance to improve the system and reach full potential, and access to an irrigation management capacity building training for the G-HIPPA
• Facilitated Syngenta to conduct demo plots and GAP training to farmers in the area

Irrigation expansion and integrated productivity enhancement in Kemiri

• Facilitated access to irrigation technical assistance which allowed a local irrigation provider in the area to expand his business
• Facilitated Syngenta to promote improved GAP to the irrigation users to de-risk the investment and increase returns from irrigation

ARISA

ARISA facilitated collaboration between industry and research and development to improve competitiveness in agriculture.

Up to December 2018 the ARISA portfolio consisted of seven sectors and seven interventions. Below are examples of the programme interventions.

Cassava
Introduced an integrated production and processing approach that creates new opportunities for smallholder cassava farmers to generate incomes.

Dairy
Developed a commercial model for improved fodder farming to boost quantity and quality of milk of smallholder farmers.

Shallot
Developed Integrated Pest Management (IPM) solution for smallholder producer of shallots.

Notable results (systemic change, poverty impact)

AIP-Rural

• Total additional incomes of IDR 1.94 trillion (USD 129.5 million) for 345,001 smallholder farming households
• Total increased turnover of IDR 682 billion (USD 45.5 million) for more than 9,746 small and medium enterprises

PRISMA

• Total additional incomes of IDR 1.63 trillion (USD 108 million) for 320,833 smallholder farming households
• Total increased turnover of IDR 574.3 billion (USD 38 million) for more than 9,499 small and medium enterprises

SAFIRA

• Total additional incomes of IDR 48.9 billion (USD 3.3 million) for 3,906 smallholder farming households
• Total increased turnover of IDR 41.9 billion (USD 2.8 million) for more than 83 small and medium enterprises

TIRTA

• Total additional incomes of IDR 47 billion (USD 3.1 million) for 11,394 smallholder farming households
• Total increased turnover of IDR 26.6 billion (USD 1.8 million) for more than 89 small and medium enterprises

ARISA

• Total additional incomes of IDR 219 billion (USD 14.6 million) for 8,868 smallholder farming households
• Total increased turnover of IDR 40.5 billion (USD 2.7 million) for more than 75 small and medium enterprises

[uploaded January 2020]