Signing a Memorandum of Understanding in Indonesia


Jakarta, 27 November 2018

Agriterra and the Indonesian Ministry of Cooperatives & Small and Medium Enterprises (SMEs) have agreed to cooperate in developing farmers' corporations in Indonesia.

"The Memorandum of Understanding (MoU) is expected to increase the added value of farmers' products and their economic value. “Indonesian farmers will have to start entering the industrial sector" said Deputy of Production and Marketing Victoria  Simanungkalit at the signing of the MoU in Jakarta.

Simanungkalit added that this collaboration has been ongoing for some time already. In September 2017, the Ministry of Cooperatives and SMEs introduced Agriterra to the Central Java Provincial Cooperative Office and Puskud Central Java who wished to revitalise the agricultural KUDs (government initiated cooperatives) by establishing a cooperative model in which 100% of the rice processing is owned by farmers.

To set up this model rice factory, Agriterra partnered with KUD Pringgodani (Demak), KSU Citra Kinaraya (Demak) and KUD Bayan (Purworejo) and developed a business plan and loan proposal for rice mill investment and agricultural mechanisation.

According to Simanungkalit, strengthening institutional farmer cooperatives is very important. It can be a tool to improve the position of farmers who are members of cooperatives in rural areas. "Farmers can gather in a cooperative in order to have a strong bargaining position", added Simanungkalit.

Therefore, Simanungkalit invites and expects all parties to work together and build farmer cooperation. "That way, we can develop a lot of agricultural potential in each region and create a strong and independent farmer corporation. We cannot do it alone, but we strive for synergy of all parties including the local government."

At the same occasion, Managing Director of Agriterra Kees Blokland said that building a farmers’ corporation in the villages would guarantee food and job availability. "This can only take place if farmers realise that only farmers can make it happen," Blokland said.

Blokland also stressed that the government could help by not making it difficult to establish factories. "Although currently in all countries of the world the number of farmers continues to decrease, food production remains stable and maintained, due to the farmers' corporate programme." Blokland revealed that the model of raising internal capital (from farmers) through cooperatives, has been carried out by Agriterra before in several countries.

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