Herlina Herlina
IPMI International Business School
Amelia Naim Indrajaya
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Kendal Agro Atsiri is the first essential oil distiller that produces clove oil from scattered, unused clove leaves and specializes in essential oil production. Kendal Agro Atsiri was established in 2010 by Khafidz Nasrullah, a young man from Purwosari Village, District Sukorejo, Kendal, Central Java. He started the business for several reasons, and one of them was to improve the welfare of the villagers. In accordance with its motto, “In Harmony with Nature and Human Being,” the company collaborates with around 2,550 farmers and concentrates on zero waste management. They are also concerned about the education of the children in the village.
Kendal Agro Atsiri plays its single role in producing the pure, organic clove oil in the area using modern techniques but still sticking to traditional ways. They are the only simple distiller that has international certification on their product. Thus, they are able to export their product directly to Europe (through the Weleda company to Germany and Switzerland). Some local companies had already been their customers, such as PT Indaroma, Atsiri Indonesia, PT. Djasula Wangi, Indesso, and Haldin.
The sustainable business model of Kendal Agro Atsiri’s innovation significantly changes the way they operate to ensure greater sustainability. Sustainability is embedded into the business purpose and processes and serves as a key driver of competitive advantage by capturing economic value for firms through delivering social and environmental benefits and superior customer value.
The reason why he came up with this business model was simply, "I want to make a difference in other people's life by doing what I do." This is a direct quotation from Khafidz Nasrullah, the founder.
Kendal Agro Atsiri was founded on the basis of concern for the abundant natural resources that were not utilized around the village. He had the initiative to utilize the clove leaves available abundantly in the village and processed them into clove leaf essential oils. They are empowering the villagers, housewives, and old women and clove leaf collectors.
They also take advantage of dry and critical land to plant crops that are suitable for the production of essential oils. They cooperated with farmers for cultivation and breeding farms, and also committed to buy all harvested seeds from the farmers.
Kendal Agro Atsiri is also the pioneer in applying an eco-friendly waste management system. The solid waste, which is the boiled leaves, are used as the fuel for the burner. They are also very concerned with air pollution caused by the distillation process of essential oil. Two hundred acacia and trembesi trees are planted around the clove farm to absorb the carbon dioxide resulting from the distillation process.
Kendal Agro Atsiri is also concerned about the education of the children in the village. In 2012, they built "Rumah Pintar Kendal" as an education center for the local children to access books and computers. Many of the children from this village are now continuing their education to higher levels such as senior high school and university.
Sukorejo is one of the districts in Kendal, Central Java, and is located in the southern district of Kendal. Economic activity in the area Sukorejo involves mainly agricultural activities, especially in the villages. Cloves are a commodity that has become one of the mainstays of a number of farmers in Sukorejo, especially during the fruit season.
Clove leaves, especially those that are old and in autumn, can usually only be thrown away under the tree. In fact, the owners consider them junk that interferes with the beauty and cleanliness. The leaves are discarded or burned in order to keep the area clean.
Another reason that drove Khafidz Nasrullah to establish Kendal Agro Atsiri was the fact that Sukorejo was one of the biggest clove producers in Indonesia, but yet the lives of the villagers were very poor. There were enormous gaps in economic conditions/welfare between farmers and clove oil distillation agents. The villagers were unexposed to good education and decent health facilities due to their low awareness about these issues and their low incomes. The old tradition of processing clove leaves into the valuable clove oil also contributed significantly to air pollution (CO2).
This condition was stirring the heart of Khafidz Nasrullah, a young man from Purwosari Village District in Sukorejo, to make a change. In 2010, he founded Kendal Agro Atsiri with capital that he borrowed from his friend. At the beginning, Khafidz, who was born in Kendal on March 11, 1989, still focused on the utilization of clove leaves that were overflowing in the village and processed them into clove leaf essential oils.
The production cycle starts with the leaf collector collecting scattered clove leaves on the clove farms around the area and taking them to the collector stations. The company was set up to produce the clove oil by boiling the clove leaves in high-pressure tanks and using the evaporation process, which is called a distillation process.
Kendal Agro Atsiri also takes advantage of dry and critical land to plant crops suitable for the production of essential oils. They cooperated with farmers for cultivation and breeding farms to empower non-productive land and also empower the farmers. They called farmers MITRA. They provide the feed for free to the farmers and provide direct, on-the-ground capabilities to work with suppliers including training, technical support, mentoring, monitoring, and performance assessment. Kendal Agro Atsiri also committed to buy all harvested seeds at the price already agreed upon by Kendal Agro Atsiri and the farmers. The crop prices would not be lowered even if the selling price of the essential oil was falling.
Kendal Agro Atsiri plays its single role in producing the pure organic clove oil in the area using modern techniques but still sticking to traditional ways. They are the only simple distiller that has international certification on their product. Thus, they are able to export their product directly to Europe (through the Weleda company to Germany and Switzerland). Some local companies had already been their customers, such as PT Indaroma, Atsiri Indonesia, PT. Djasula Wangi, Indesso, and Haldin.
Recently, Kendal Agro Atsiri has empowered 2,550 local people, consisting of 2,000 leaf collectors, 50 collector stations, and 500 farmers. They are empowering farmers around the village and also housewives and old ladies as clove leaf collectors. Kendal Argo Atsiri has different schemes for the purchase method of clove leaf collectors. The leaf collectors earn TRIPLE their daily income as farmers. The raw material is collected from 45 villages around the area, which indirectly has impacted around 135,000 lives. Therefore, this rise in income helps them to afford better education for their children and also better health service for the families.
Kendal Agro Atsiri as a company has linked their CSR strategies with the extended supply chain, bringing benefit to communities in terms of employment and wealth creation for villagers. It is a best practice in integrating CSR into company operations. They also create capacity building for the farmers and villagers that generates improvements in the local and regional economies in Kendal.
These initiatives are part of a process for implementing a sustainable development plan aimed at achieving improved business performance; increasing efficiencies in the use of natural resources or raw materials; reducing the environmental and societal impact of business operations upon local communities and the global biosphere; and expanding economic and quality-of-life enhancing opportunities that result from the company’s business activities.
The extended supply chain of the essential oil is presently working to install greater performance rigor and operational control over their extended supply chains. It also can preserve the business continuity of Kendal Agro Atsiri.
The best supply chains have buyer-supplier relationships that are based on value and consistent delivery of this value. That value can be based on services, quality, on-time deliveries, returns management, or some combination of these. It’s what makes buyers increase their percentage of purchases from individual suppliers for the long run. This provides a double-edged benefit for suppliers: when a buyer increases its purchase of a needed material, this not only enhances the chosen supplier’s bottom line, but also negatively impacts the competition. Further, this increased collaboration between supply chain buyer and seller leads to another valuable outcome: increased efficiencies.
Regarding Kendal Agro Atsiri, nowadays, the leaf collectors can earn about Rp.50,000 a day by only working 3-4 hours a day compared to their old job as a farmer only earning Rp.15,000 a day. Their children can go to higher education than just elementary school and also can access health service in the nearest town because their parents can afford it due to their higher incomes.
Kendal Agro Atsiri is also concerned about the education of the children in the village. In 2012,the company built "Rumah Pintar Kendal" as an education center for the local children to access books and computers. They have a collection of 1,000 books and 2 computers with Internet access. The purpose is to expose them to the outside world. Many of the children from this village are now continuing their education to higher levels such as senior high school and university.
Kendal Agro Atsiri has applied eco-friendly waste management by using waste from boiled leaves as the fuel for the burner. They are also planting acacia and trembesi trees that absorb the CO2 resulting from the distillation process.
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