Agriterra Business advisor Tjandra Irawan wrote the following blog:
An email that made my day
“Thank you for the signed documents. We’ve just initiated the disbursement of the first tranche, and it should go through with our payment run later today.”
This is an email message I received from the Project Coordinator Asia of Rabo Foundation (RF) to the chairman of KSU Citra Kinaraya (CIKI), our rice cooperative client. This cc email really made my day.
With CIKI we are working together since December 2017 and this month they received a working capital loan of IDR 2.7 billion (about EUR 154,200) to buy 504 tons dry paddy from 50 members under warehouse receipt programme. The paddy is coming into the warehouse and next week the farmer will get paid.
As you may know, like many other agricultural products the price always drops during the harvest season. It also works the same way for paddy in Central Java. Even worse, maybe due to climate change, this week suddenly will rain! Many farmers have no place to dry their paddy, and they will accept any price! With this warehouse receipt programme, the farmer member will receive payment 70% of their produce with today price. They will sell to CIKI when the price is higher in November-December. With this warehouse programme, each farmer can get the additional benefit of EUR 71-253 per hectare (7-10 tons) depends on the variety of the paddy they produce. While sales of CIKI will increase, from IDR 2 billion (about EUR 114,285) in 2019, to at least IDR 4.5 billion (about EUR 257,143).
What is special about this loan? It is the loan process and approval! First, the process is very fast. Only 5 weeks since we submitted the loan application on 6 July 2020. But of course, sometimes we should work at 19.00-21.00 PM when the Project Coordinator Asia of RF in Utrecht needed additional information or documents. Second, this loan is approved and granted when no one from RF ever visited CIKI physically.
Due to the COVID-19, Project Officer of RF could not visit CIKI. They visited online via a video call. Rabo Foundation approved and granted the loan also because they knew that CIKI is a client of Agriterra and Agriterra visited them and have reliable information about CIKI, especially about the character of the Board of Members (Board of Director and Board of Supervisor) and the Manager. RF also knew that CIKI is appointed as a pilot project of Agricultural Cooperative by the Ministry of Cooperative and SME (MOCSME) and appointed as one of five Major Projects of Farmer Corporation by the Ministry of Agriculture (MOA). RF knew that Agriterra, MOCSME and MOA are assisting CIKI to invest in a modern integrated rice factory with an investment of IDR 40 billion (about EUR 2.3 million). So, RF also want to be part of this story! And this small loan of EUR 154,200 is the only test case for the bigger loan investment.
This is the first client of Agriterra that is financed by RF. RF will finance several other Agriterra clients this year. That is why we are very busy in the midst of this Covid-19.