The shallots of Sumbawang

The company Sumbawang Superior, which started in 2014, farms in shallots in Indonesia. As the demand of shallots surpasses the supply, the owner of the company saw the farming of shallots as a good business opportunity. Sumbawa is a good location to cultivate shallots because of the dry climate. Before, farmers in Sumbawa mostly cultivated corn. The farming of shallot creates new opportunities for the company and the farmers.

The market

The farming of shallots is a good agribusiness opportunity because the demand surpasses the supply. This is also why the Indonesian government supports the fulfilment of the gap by local farmers. Sumbawa is a good location to cultivate shallot, due to the climate which is mostly dry. Currently, there are only a few farmers farming shallot in Sumbawa, Indonesia. The owner of Sumbawang Superior saw this as a chance to start a business in 2014. A location near the river was chosen, providing the company enough water for irrigation. Thanks to the use of quality seeds, the yield of the company is currently 12 tons/ha, which is above the national average of 8tons/ha.

Social impact: employment

Currently there are 17 staff members who work in the farms, nursery and warehouse of Sumbawang Superior. During the planting season, the company needs around 50 casual workers and during the harvest season around 25 casual workers. Sumbawang Superior is planning to introduce contract farming on a profit sharing basis. In that case the farmers will directly work for the company, providing them a sustainable income. All the seeds, inputs and other costs will be covered by the company. If this is realized, there will be around 100 staff members and 200 farmers. Also there will be work for around 1,000 casual workers.

Social impact: using sustainable seeds with high yields

The company source their input (like pesticides and fertilizer) from local suppliers, providing them an income. The seeds however are brought from the Netherlands, because with those seeds the yield is 50% higher than the average shallot yield in Indonesia. This means that the income of the farmers also increase with 50%. The seeds also need less pesticides, less or no fertilizer and they are able to survive during the rainy season. This contributes to lower input costs as well as to a sustainable environment. The owner is innovative in the way to explain the farmers how to farm the shallot in the best way: he reach the farmers through social media.

Warehouse to handle price fluctuations

Price fluctuations are common for shallots in Indonesia. The price can be low, for example due to the influx of shallot import and higher yields from producers in other areas. On the other hand, the price can be high due extreme weather conditions. To handle the price fluctuations, the company has built a new warehouse in Sumbawa. It is owned by the company and has a capacity of around 30 tons. In the warehouse the shallots and bulbs can be stocked up. In this way they remain in good condition so that they can be sold later.

The entrepreneur

Jurgen Nagel is a highly motivated social business development specialist with broad experience in increasing food security and reducing poverty in rural areas in Asia. He has a bachelor degree in Psychology from the University of Applied Science in Utrecht, the Netherlands. He is working in the development sector for more than 10 years now, of which 6 years experience in the agribusiness industry. He is well-known for his good relationships with the local communities.

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