‘The farms were so inefficient’: Indonesian start-ups seek to modernise agriculture
08 January, 2023
Arief Witjaksono remembered feeling excited when a few friends asked him to join a chicken breeding business in 2018.
Chicken is the most widely consumed protein in Indonesia, his friends highlighted to him. And with millions of potential customers, the growth prospects were very bright.
“It was no brainer. For sure, I was going to make some money,” the 38-year-old thought at that time.
But the venture ended in disaster. Despite their best efforts, many of the chickens died and the farm, which was located in the western suburbs of Indonesia’s capital Jakarta, was losing money.
Witjaksono quickly realised that his farm – and many others like it in the country – relied on workers who were accustomed to doing things the traditional way. They used poultry-rearing methods passed down from one generation to the next, with little scientific basis in their operations.
The majority of chicken farms in Indonesia do not have a thermometer or a fan controller to ensure that chickens are kept at an optimum temperature. Workers also tend to feed the chickens at irregular intervals, depending on their availability and mood.
“The farms were just so inefficient,” Witjaksono told CNA, adding that from that point on, he decided to devote his efforts to modernise chicken farming in the country.
Witjaksono, who was working for his family’s palm oil business at the time, went on to co-found a start-up called Pitik in June 2021. The aim of the start-up was to provide chicken farmers with technologies and knowledge to help them run their businesses more efficiently.
Today, Pitik, which means “chicken” in the local Javanese language, is working with more than 500 chicken farms across Indonesia. The farms are each equipped with sensors, feed hoppers, heaters and fans that can be controlled remotely using smartphones.
The Pitik CEO said the technologies allowed the chicken mortality rate to drop. At the same time, the feed conversion ratio – the proportion between the weight of the chicken and the amount of feed consumed – has increased significantly. The Pitik team also makes it easier for farmers to scale up their businesses. “Before Pitik came along, we struggled to breed just a few hundred chickens, because we were doing everything manually using simple methods. But with the help of technology, it is easy for us to breed 35,000 or even 40,000 chickens,” said one Pitik user, Syuaeb, who like many Indonesians goes by one name.
Pitik rents out its equipment to farmers. It also allows the farmers to borrow the devices for free if they sell live chickens to Pitik at a wholesale price.
Pitik is just one of a handful of start-ups aiming to modernise Indonesia’s agriculture sector. Other examples include Eratani, which focuses on rice production, and eFishery, which works with fish farms.
These agritech (or agriculture technology) start-ups are trying to address the issues of food security amid the backdrop of more extreme weather conditions due to climate change as well as low yield due to antiquated farming methods.
REVOLUTIONISING THE INDUSTRY
Achieving food security has been the long-term goal of eFishery, one of Indonesia’s first agritech companies.
Launched in 2013, eFishery has been providing fish farmers with automatic feeder machines which dispense food pellets at predetermined intervals, depending on the type of fish and their life cycle.
These machines can be made to work round the clock, rain or shine, providing a huge advantage compared to the traditional way of fish farming.
“Humans don’t feed the fish when it rains, when they are sick or when they are away to attend weddings or visit relatives. (When they are busy), what they do is feed them all at once in the morning instead of three to five times a day or don’t feed them at all,” eFishery chief product officer and co-founder Chrisna Aditya told CNA.
Dumping feed once a day in bulk can result in them going to waste, as the excess food pellets sink to the bottom. When not fed regularly, some types of fish may resort to cannibalism.
Aditya admitted that the technology behind eFishery’s automatic feeder machines “is not rocket science.” In fact, the company’s early machines were fashioned out of modified plastic drums with aluminum frames put together at a local welding shop.
But the small technological intervention was enough for the farmers enrolled in the programme to enjoy a 20 to 30 per cent increase in production. It also led to a significant reduction in the amount of fish food they have to buy. The feed alone can account for 60 per cent of production costs.
Today, eFishery is working with around 200,000 fish farmers across Indonesia. Its services have also grown to include an online marketplace where farmers can buy fish seed (fertilised fish eggs), feed and probiotics.
On the same platform, farmers can also sell their fish directly to end consumers without the need to go through middlemen.
The start-up makes money by renting out automatic feeding machines to fish farmers and by taking a cut for the transactions carried out on its platform.
CUTTING OUT THE MIDDLEMAN
Another agritech start-up, Eratani is also offering a marketplace where rice farmers can buy agricultural products and sell their rice to mills and food manufacturers. Unlike eFishery however, Eratani is not offering any game-changing technical solution.
“(Rice farmers in Indonesia) are still harvesting rice grains using sickles. So we are focusing on mechanising some of the processes,” Eratani co-founder Kevin Laksono told CNA.
Laksono said the majority of rice farmers in Indonesia have been eager to switch from the labour-intensive methods of traditional farming to using machines to plough their land or harvest rice more efficiently. However, they lack the money to do so.
This is why Eratani is focusing on providing loans to rice farmers, the majority of whom are either not well-served in financial services or have no bank accounts at all.
Since he began farming in 1994, Apik Supriyadi, 53 said he has been relying on loan sharks and middlemen to get the capital he needed. These loan sharks, he said, can demand farmers to provide hundreds of kilograms of rice for every one million rupiah (US$64) of loans.
“Only farmers who have (land) certificates can go to the bank (to apply for loans). I am just a farmhand. I have no papers which can serve as collateral,” he told CNA.
Since using the Eratani platform, Supriyadi said he no longer struggles to get the loans needed to mechanise his farm. The production of his 11-ha rice field has gone up by 20 per cent.
Loans provided by Eratani are not given in cash but in app-based store credits that farmers can use to buy seeds, fertilisers, pesticides or rent farming equipment.
“We then help them in the farm management side so they use (these farming tools and inputs) properly based on scientifically (proven) methods,” Laksono said.
Laksono said 10,000 farmers across Indonesia have been using Eratani since the company was founded in April last year. The farmers, he said, are seeing an average production increase of 25 per cent.
“Before, they bought half of the fertilisers they needed because they didn’t have the money. Now with loans we encourage them to buy all of it. That alone already produces results,” he said.
GROWING PAINS
Getting farmers in rural areas with low digital literacy and slow Internet connection to embrace technology has been an uphill task.
As a pioneer in the agritech sector, eFishery struggled to convince fish farmers to use their automatic feeding machines when they were launched nine years ago.
“I remember when we brought our feeder to (the fish farmers) and we showed them that they can set the feeders using smartphones. They thought that smartphones are like remotes. They didn’t know that smartphones can be used to make a call, send a message and so on,” eFishery co-founder Aditya said.
“That was how low the farmers’ tech-savviness was at the time. It took time and hard work to educate them, and introduce them to the technology until they were willing to try the technology that we offered.”
Aditya said over time, farmers began to show interest in eFishery’s technology. But even then, eFishery was struggling to get the capital it needed to scale up its business.
Despite huge potential in the agritech sector, not many investors in Indonesia's crowded tech landscape were interested.
“We built IoT (internet of things) during a time when investors were more into software, app, marketplace and e-commerce,” Aditya recounted. IoT refers to systems of sensors, devices and software which connect and exchange data with each other over the Internet.
eFishery had to survive on a shoestring budget for two years before it finally piqued the interest of Aqua Spark, a Dutch-based investment fund which specialises in investing in aquaculture businesses around the globe.
Today, eFishery has garnered a total investment of US$120 million from a number of investors. The company has been profitable since 2020. Local media has reported that eFishery is on its way to reaching unicorn status.
Witjaksono of Pitik, the start-up which is helping chicken farmers, said that eFishery’s success in pioneering Indonesia’s agritech sector has made it easier for other players in the industry to raise funds. “Had we started five years ago, I don’t know if anybody would be willing to invest in us,” the Pitik CEO said.
Witjaksono said it is also becoming easier for agritech companies like Pitik to convince farmers to join compared to when eFishery first started.
“Smartphones have become a lot cheaper. Now everyone uses apps on their phones, especially the younger generation. These are the types of people we target in the beginning. They are more receptive. They are more willing to try new things,” he said.
The lockdowns during the COVID-19 pandemic also prompted many to turn to technology for their day-to-day activities.
Less than two years after the company started, Pitik is already on its path to profitability and could break even early next year.
Meanwhile, Eratani is expected to be profitable by the end of 2023 or early 2024.
CONTINUOUS INNOVATION
Despite some signs of success, these companies are continuing to innovate.
Witjaksono of Pitik noted that Indonesia’s chicken farming industry is years behind countries in Europe and North America.
“The Indonesian (chicken) mortality rate is around 10 per cent. Our technology helps reduce this to 5 per cent. (Farms in) Europe and America are already (at) 1 per cent,” he said.
One of the reasons why Indonesia is still playing catch up with modern farms abroad is that farmers still need to physically inspect the coops to see if any of the chickens are sick.
Witjaksono said Pitik is using artificial intelligence (AI) to identify sick chickens through cameras and microphones, since chickens emit a kind of snoring sound when they are ill. The technology, he said, could be launched early next year.
EFishery is also looking at AI to detect and mitigate disease in a given fish pond as well as a variety of sensors and devices to monitor and regulate water quality automatically.
“Maybe five or ten years from now, the whole cultivation process will be automated. We need to produce more food in decreasing amount of space. Doing things manually will no longer be sufficient,” eFishery’s Aditya said, adding that a fully automated fish farm could see a 100 to 200 per cent increase in yield.
Meanwhile, Eratani is also looking for ways to boost rice production further. Rice fields in Indonesia could typically produce 5 to 6 tonnes of rice per ha. This is a far cry from the 15 tonnes of rice per ha seen in countries like China.
Eratani co-founder Laksono said the company is currently developing its own rice variety which he said can produce a harvest of up to 10 tonnes per ha. The variety is currently still in its trial period.
With the modernisation of the farming sector, these start-ups hope that more young people will be attracted to join the agriculture sector.
The number of farmers in Indonesia is falling. According to the Indonesian Central Statistics Bureau, there were 38.7 million farmers in 2021. In 2011, the figure was 42.4 million.
Laksono said many farmers who joined Eratani are now encouraging their children to follow their footsteps.
“If farming proves to be profitable, afford them a proper livelihood and enable them to have savings, (these farmers) will stay in farming and not push their children to work in the city,” he said.
Meanwhile, Aditya of eFishery said that he is seeing more and more youths continuing their parents’ fish farming businesses, including those who have degrees from top universities in Indonesia and abroad.
“In the past, many young people didn't want to participate in this sector. It used to be very traditional. It involved standing outside in the sun. It is not fancy for the young generation. But technology changes that,” he said.
He added: “Farmers back in the day needed decades to learn the appropriate way of cultivating fish and to gain that wisdom and instinct on how to manage fish properly. Technology accelerates this learning curve. Even youths with no background in farming can start a fish farming business.
“Technology has made everything simpler, more convenient, more efficient and more profitable.”
Source: www.channelnewsasia.com
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