ABOUT
Seaweed Cultivation Project Report - 5 December 2006
The Seaweed Cultivation Project, funded by Cult Industries, was completed and reported on in June 2005. Since then, TLM’s seaweed program has been developed in two ways:
1) The seaweed cultivation lending program in Nembrala has been expanded (the original program was established with the funding received from Cult Industries), and
2) An enterprise development services (EDS) operation has been established to assist seaweed farmers access markets and attain better prices for their dried seaweed.
The lending methodology and operations of the seaweed cultivation program have not changed significantly in the past 18 months since Cult Industries received its final project report. The objective of this program is to provide income generating opportunities to isolated farmers in and around Nembrala, with loans for seaweed cultivation. This is coupled with training, assistance and information on a number of issues for the farmers and the community.
The EDS operation was established when TLM observed the restricted and unfair trading circumstances of the farmers. For example, there was one buyer who offered a set price, regardless of the market demand for seaweed, as well as cheating the farmers with incorrect weights. The objective of the EDS operation was to link farmers with a number of buyers who have networks regionally and internationally, so that farmers receive the appropriate price for their dried seaweed. This also brings new money into the community. To achieve this objective, TLM is acting as a buyer for seaweed farmers in Rote, negotiating prices for the farmers with established buyers around Indonesia, and providing shipping services for the seaweed.
In the second half of 2006, TLM also employed an EDS consultant to focus on refining these services, improving performance, managing the operations, and developing a long term plan.
Update on the Seaweed Cultivation Lending Program
Update on Enterprise Development Services
1) The seaweed cultivation lending program in Nembrala has been expanded (the original program was established with the funding received from Cult Industries), and
2) An enterprise development services (EDS) operation has been established to assist seaweed farmers access markets and attain better prices for their dried seaweed.
The lending methodology and operations of the seaweed cultivation program have not changed significantly in the past 18 months since Cult Industries received its final project report. The objective of this program is to provide income generating opportunities to isolated farmers in and around Nembrala, with loans for seaweed cultivation. This is coupled with training, assistance and information on a number of issues for the farmers and the community. The EDS operation was established when TLM observed the restricted and unfair trading circumstances of the farmers. For example, there was one buyer who offered a set price, regardless of the market demand for seaweed, as well as cheating the farmers with incorrect weights. The objective of the EDS operation was to link farmers with a number of buyers who have networks regionally and internationally, so that farmers receive the appropriate price for their dried seaweed. This also brings new money into the community. To achieve this objective, TLM is acting as a buyer for seaweed farmers in Rote, negotiating prices for the farmers with established buyers around Indonesia, and providing shipping services for the seaweed.
In the second half of 2006, TLM also employed an EDS consultant to focus on refining these services, improving performance, managing the operations, and developing a long term plan.
Update on the Seaweed Cultivation Lending Program
- At the end of September 2006, TLM was serving 601 seaweed farmers, the majority of these out of the Nembrala Service Post, with a loan size of approximately A$55.
- The Service Post has, for the most part, not changed since it was built in 2004/20051. Electricity was connected towards the end of 2005, and a warehouse was added to store the dried seaweed. Additional equipment includes: a weighing scale and truck for collecting seaweed from farmers, as well as office equipment for additional staff.
- Staff for both the EDS operations (reporting to the EDS consultant) and the lending program operations (reporting to the Operations Director) work out of the Nembrala Service Post. In total, there are nine staff.
- As there are a number of farmers who have been in the program for a few years now, TLM is assessing the size of the loans for mature clients; this loan size is currently up to A$150.
- The effect of the seaweed disease, “Ice Ice”, is still causing problems for seaweed farmers. The disease is unpredictable as it moves with the currents, and is only visible when it affects the seaweed, turning it white and spreading through the crop. TLM continues to investigate causes of the disease and ways to reduce its impact. This is an industry wide problem for seaweed cultivation.
- The ongoing development process with the farmers has proven to be a highly effective way of driving momentum, enthusiasm and commitment within the community for the program. The development process includes day to day mentoring and guidance to help farmers become accustomed to market standards and conditions.
- TLM monitors the client impact of its programs using Opportunity International’s Client Impact Information Management System (CIIMS). The latest survey of TLM Trust Bank clients (seaweed clients are part of the Trust Bank program) is summarised in the accompanying Trust Banks – East Indonesia Summer Update 2006.
Update on Enterprise Development Services
- TLM is currently buying 40 tonnes of seaweed per month from Rote, with plans to increase
this to 70 tonnes by May 2007. - TLM is paying A$0.63/per kilogram of dried seaweed, whilst other buyers are paying A$0.61/per kilogram. All clients sell to TLM, as well as non-client farmers around Rote.
- In the past, TLM has sold the vast majority of seaweed to a single buyer in Kupang; therefore its experience is limited to shipping between Kupang and Rote. TLM has now established a business relationship with a new buyer who ships seaweed to a large trader in Surabaya in Java, who, in turn, sells the seaweed to a European manufacturer. TLM has also made contact with other traders in Surabaya. TLM will have to continue selling to the traders until it can supply 200 -300 tonnes per month directly to the manufacturers.
- Over this time TLM will also be able to expand its capability to export seaweed and build up a network of business relationships with various service providers (for example, shipping companies, freight forwarders, cargo insurers).
- The EDS Consultant has also been able to establish a connection with two large manufacturers of seaweed that are connected to an international seaweed network.
- Since the establishment of the EDS operation, the buying process has been refined to ensure that it is beneficial for the farmers, as well as still achieving the EDS and lending program objectives.
- TLM is the only significant seaweed trader within the region that has a focus on serving the interests of the farmers, rather than just attaining business profits. As TLM is able to reach larger and more profitable markets, they will be able to offer higher prices to farmers. Not only will this have a direct benefit for the farmers that TLM buys from, but it will also create a more competitive trading environment that will have an impact on all farmers within the region.
