How are locals cultivating and developing businesses for peat-adapted commodities?

On 11 and 12 September 2018, CIFOR’s team hosted an on-site focus group discussion (FGD) in Bengkalis and Siak districts, targeting smallholder farmers (producers) and middlemen. In this FGD, CIFOR’s Dr. Herry Purnomo, Dyah Puspitaloka and Pandam Nugroho Prasetyo visited farmers of pineapple, agarwood and honey, managing their farms through principles of agroforestry. The team also visited arboretum (for eco-education and eco-tourism purposes) developed by local communities. Whilst in the field, the team conducted a FGD with leaders (of the farmer group association and of the community-based conservation group), land-owners (arboretum, honey, agarwood and pineapple), and middlemen (pineapple and agarwood) at their farms. The FGD was held to understand both production and post-production processes; and the value chain of peat-adapted commodities like pineapple, agarwood and kelulut honey.

Pineapple, agarwood and kelulut honey have been developed by local communities using agroforestry methods; the presence of multiple commodities and implementation of agroforestry techniques are important to sustain their income. The local community have cultivated and developed pineapple into many kinds of chips, toffees and sweets. Some have also started to cultivate agarwood with a focus on generating products of high economic value. We also found a local community who cultivated kelulut honey, priced at IDR 500,000/ml.

A local community cultivating kelulut (Trigona) honey on his small-scale agroforestry land. Honey was obtained from Trigona thoracica, a stingless bee species native to the Indo-Malayan landscape.

Despite this, oil palm and rubber may dominate and contribute the most towards farmers’ income. Participants involved in the FGD saw oil palm as providing short-term support, and hoped their current commodity diversification (i.e. agarwood agroforestry) would generate higher long-term benefits than oil palm. Prior to determining what commodity to cultivate, communities look at economic considerations, for example, commodity price stability and opportunities to fill gaps in supply; they also consider the labor intensity in producing the commodity. Time availability and the presence of high risk and uncertainty in the market inhibit farmers from selling their products directly. In terms of financing, neither the farmers nor the small-scale middlemen present in the FGD had used microfinancing services, despite the availability of KUR (Kredit Usaha Rakyat, business credit) at many local banks; they were highly dependent on their own capital and family loans. This low adoption of microfinancing services among farmers might influence the scale of their business.