Yohanes Sugihtononugroho was a chilli farmer in the rural areas of Bogor regency, West Java, back in 2013. During his job as a farmer, he witnessed many difficulties of his fellow farmers, including the lack of access to financing. He remembered that some of his friends had to walk around 20 to 30 kilometers to find loan sharks who would lend them IDR2 million or IDR3 million.
In an interview with Indonesia Business Post on March 15, 2022, Sugihtononugroho said the collateral for the loan made no sense.
“I met someone who demanded a farmer to offer her daughter as a collateral. For me, it absolutely makes no sense,” he said.
The experience taught him a valuable lesson. Lack of financial access is the biggest problem for farmers. “This is a window to poverty, a chain that shackles farmers to poverty,” he said.
Sugihtononugroho began establishing CROWDE, a financial technology platform for the agricultural sector, in 2016 after graduating from Prasetya Mulia Business School. The peer-to-peer (P2P) lending company started in a small rented office in Jakarta.
“We at CROWDE focuses on providing end-to-end solutions. As an agritech company, we observe many problems among farmers. These include access to markets, the right way to grow plants and obtaining access to agricultural products and services like fertilizers, seeds and financing. These are the issues farmers encounter and those we strive to resolve for them,” he said.
To facilitate the transfer of agricultural credit to farmers, CROWDE collaborates with state-owned banks such as state-owned lender Bank Mandiri, West Java-owned Bank BJB and several other banks.
Helping farmers to access loans
To obtain a loan from CROWDE, farmers can call a hotline, send a text message or contact a WhatsApp number. The company’s customer service officers will explain that farmers can fill out a form if customers wish to plant particular plants. After the explanation, the farmers can decide whether or not they will join CROWDE.
If farmers agreed to join CROWDE, the officer would collect information about the farmer, the land, the quality of the soil, whether the social and environmental conditions are conducive, and the market price of the commodities. The company will analyze the data to determine whether the farmer is eligible to loan or not.
The amount of the loans vary depending on the commodities they will plant and the scale of their farming activities. CROWDE has channeled between IDR300 billion and IDR400 billion loans to 30,000 farmers. Java and Sumatra are home to the majority of Indonesia’s farmers.
Sugihtononugroho said his company aimed to channel agricultural loans to one million farmers throughout Indonesia in the next three years. “There are 28 million farmers in Indonesia, and the market is massive,” he said.
The agricultural technology company provided technical assistance and guidance to all farmers who became CROWDE partners in addition to channeling credits. A total of 100 field agents are available to assist farmers with their farming activities. Graduates from agricultural vocational schools, veteran farmers and faculty members at local universities are among the field agents with the necessary qualifications and experience in agriculture.
Along with direct consultation, CROWDE also provides a chatbox service for farmers who have questions about their farming activities, such as disease, pests, water shortages, irrigation and marketing issues.
Several exporters, modern markets, supermarket wholesalers, small and medium enterprises and other large customers have been contracted to market the products after harvest.
“High-quality products, such as chili, will be exported, while low-quality products will be made into chili paste and will be sold locally,” Sugihtononugroho explained.
Farmers can receive a higher price for their products when they sell directly to the market rather than through middlemen. The difference between the price offered by the demand and the middlemen is between 30% and 40%.
“Nevertheless, we are giving farmers the freedom to market their products, but they have to deliver the products to the partner we identified. As a result, farmers usually obtain a better price as they do not have to deal with middlemen,” he said.
Sharing profit between farmers and company
As a company, CROWDE also aims to make profits. The company has an agreement with farmers to share production. In the agreement, the company will provide seeds, pesticides and fertilizers while farmers allocates their land in collaboration with CROWDE to plant a variety of crops. Farmers are then required to share a certain percentage of the harvest with the company.
“In addition to platform fees, we also receive a certain percentage for assisting farmers in securing funding,” Sugihtononugroho said.
However, he refused to disclose the company’s 2021 revenue and net profit figures.
Sugihtononugroho only said that his start-up received investments from several venture capitals.
“But we did not disclose the amount or the identities of the investors,” he said, adding that his company also provided opportunities for other agritech companies and angel investors to collaborate. He hoped that other agritech firms and investors could contribute to improving Indonesian farmers’ livelihoods.
Indonesia has around 100 million people working in agricultural sector. The Agriculture Ministry has targeted that Indonesia would become the world’s food barn by 2045. According to the ministry, the agricultural sector grew by 24.1% in July 2021.
