Samuel Ady Mahendra
IPMI International Business School
Amelia Naim Indrajaya
This business model innovation is called Better Life Farming. Bayer Indonesia is organizing Better Life Farming throughout Indonesia since the pilot project in 2018. Better Life Farming (Or BLF in short), which provides holistic and innovative solutions for smallholder farmers in developing economies area, involving stakeholder engagement supporting the enhancement of livelihoods in rural communities. Jointly, with the farming communities in Indonesia (here I will take example from two location in Banten, Banten province and Kupang, East Nusa Tenggara province), and more than 10 local partnerships – the BLF model provides entrepreneurial opportunities for men and women alike, to own and operate Better Life Farming Centers. The centers, which currently reach more than 300,000 smallholders, allow farmers to purchase seeds, crop protection inputs, irrigation solutions, sustainable agronomic practices, continuous social impact monitoring, as well as have improved access to markets and financial solutions. The business model is also backed by the local governments which supports Better Life Farming’s expansion as part of their rural development strategies. Since its launch in 2018, Bayer Indonesia – Better Life Farming has helping smallholder farmers to increase their farming productivity to 27% incremental yield and 73% net income increase. The local partners just to mention few are such as PRISMA, Netafim, BNI Bank, Jasindo insurance, TPS and Medco. This partnership alliance offers last-mile delivery solutions to help smallholder farmers become sustainable, commercially viable supplier of agricultural products. The inclusive growth Better Life Farming ecosystem increases profits for rural smallholder farmers and their private partners while directly supporting the first two United Nations’ Sustainable Development Goals (SDG) to eliminate poverty in all its form everywhere, and to end hunger, achieve food security and improved nutrition, and promote sustainable agriculture.
There are around 16.9 million farmers in Indonesia and 90% of these are smallholder farmers whose livelihoods are vulnerable to the changing weather conditions, with 40% of them on income less than Rp 30.000,00 (Thirty Thousand Rupiah) per day. Despite high rates of poverty and malnutrition, these smallholders produce food for more than 50% of the population, and they have to be part of any solution for achieving the 50% higher food production required to feed the world’s projected 2050 population of nearly 10 billion people. Rice smallholders face cultivation constraints such as getting fertilizer, crop protection products or high-quality seeds for their fields. At the same time, they need to improve productivity to feed the population in the long-term. Taking rice as the example, Indonesia has one of the largest rice consumptions per capita in the world. In order to meet this demand, yields would have to rise until 2035, even by 38% according to the International Rice Research Institute (IRRI). Yet Indonesia smallholders cultivating the rice aren’t employing modern agricultural production techniques. For the majority of smallholder farmers it is difficult to grow the quality and quantity to feed both, their families and the world. In Indonesia, Bayer – Better Life Farming works with local partners to provide farmers with access to the knowledge and technology needed to increase their yields. In addition, Better Life Farming connects smallholders to local markets and provides them access to finance and risk management to strengthen their business. According to the leader, Bayer builds the Better Life Farming innovation first as commercial development then sustainable development will follow at the same time and same place.
Bayer Indonesia – Better Life Farming (BLF) creates local ecosystems or community development of private and public partners, offering comprehensive and accessible services to smallholders. The products and services include education and trainings, access to credit and insurance, and supplies of seed, fertilizers, crop protection, irrigation, and farming equipment. The community development also engages smallholders with downstream customers, and capacity-building partners such as farming insurance, farming finance credit solution, local off-takers, local aggregators, distributors, and drone service providers. The novel components in a BLF ecosystem is a Better Life Farming Center that connects up to 500 small and previously fragmented, and isolated smallholder farmers in a region to the capabilities, products, and services of corporations. Each center is owned and operated by an agri-entrepreneur under an agreement with BLF. The agri-entrepreneur will receive training in modern agricultural practices and business at a BLF Academy, assisted by a BLF agri-consultant, then he/she develops a model farm where local farmers are trained in effective, efficient, and sustainable agronomic and irrigation practices. In short-term, the education and training enable the smallholders to operate with lower environmental footprints while becoming higher-quality and higher-yield producers. And in long-term, the agri-entrepreneur works with local BLF partners to improve farmers’ financial literacy, providing financing and insurance services, offer integrated access to supplies of efficient irrigation equipment, seeds, fertilizers, and crop protection, and downstream connections to regional aggregators, distributors, markets, and corporate supply chains. In summary, the Bayer Indonesia – Better Life Farming Center becomes the center of a new ecosystem of education, training, financing, supplier, and distribution services for smallholders. On top of that, the Better Life Farming Center pay special attention to unlock previously untapped more opportunities for women, both in the roles of agri-consultants and agri-entrepreneurs.
As of October 2021, Bayer Indonesia – Better Life Farming had established BLF Centers throughout Indonesia, reaching more than 100,000 smallholder farmers with products and services from 29 different partner organizations. In this innovative business model solution, Bayer does not start from issues or challenges smallholder farmers are facing but the approach starts from what value Bayer can provide them and their surroundings. Many normal or conservative business models always have profit as the ultimate target without considering sustainable development along the value chain. The philosophy of the business model is the if Bayer takes the initiative to help smallholder farmers they will be followed by other partners that are also willing to help later. In some BLF Centers, sometimes Bayer alone starts off the project by giving education and training to smallholder farmers then partnerships will follow. By this approach, the sales are sustainable and continuous. With the Better Life Farming business model, smallholder farmers can really see the value not only from single solutions, but it will also help them to solve their other issues like access to market linkage and financial solutions as well. In addition, farmers become more loyal to Bayer. Along with increased farming productivity, comes increased net income for the farmers, and in the end, an increase in Bayer's revenue.
The benefit of Bayer Indonesia – Better Life Farming (BLF) to society is building the community development where the Better Life Farming Centers are located. In each center, Bayer Indonesia trains the agri-entrepreneur, typically a farmer from the community or a young graduate. Assisted by a BLF agri-consultant, the agri-entrepreneur then develops a model farm where local farmers are trained in effective, efficient, and sustainable agronomic and irrigation practices. The education and training enable the smallholders to operate with lower environmental footprints while becoming higher-quality and higher-yield producers. The agri-entrepreneur works with local BLF partners to improve farmers’ financial literacy, provide financing and insurance services, offer integrated access to supplies of efficient irrigation equipment, seeds, fertilizers, and crop protection, and downstream connections to regional aggregators, distributors, markets, and corporate supply chains. In addition, BLF Centers also pay special attention to unlock previously untapped business potential by supporting women smallholders and creating more opportunities for women. During the Covid-19 pandemic, BLF Centers instantly adopted heightened safety norms and educated farmers on hygiene concepts. As part of Bayer Indonesia Covid-19 response program supported by local governments, the centers distributed thousands of kits to subsistence farmers, which contained a combination of free commercial samples of high-quality hybrid seeds and crop protection products, along with face masks and personal protective equipment. For the benefit to the environment, BLF Centers taught smallholder farmers how to lower food spoilage and wastage through better linkages to aggregators and distributors, and by improved local disposal of their waste. Better Life Farming model helped interested farmers introduce micro-irrigation systems and better water management practices to enable optimal utilization of scarce water supplies. In the long-term, Bayer Indonesia – Better Life Farming expects to further promote water-efficient farming and reduce GHG emissions, especially the high methane emissions from traditionally tilled rice fields.
Dani Adi Prasetya, Campaign Activation and Smallholder Farming Manager
Keep this story going! Share below!
Jakarta, East Nusa Tenggara, ID
Business Website: https://www.bayer.com/id/id/indonesia-home
Year Founded: 1957
Number of Employees: 5001 to 10000