Indonesia: Farmer development programme

Black soybeans provide an extra income for rice farmers

Kecap Bango is a popular sweet soy sauce in Indonesia, and a strong local brand for Unilever in the region. The sauce gets its unique taste from black soybeans grown by farmers between rice-growing seasons on the island of Java. As a supplementary crop to rice, it gives farmers an extra source of income.

However in recent years many farmers switched to growing yellow soybeans or other crops between rice harvests, meaning fewer black beans on the market in Java. At the same time demand for Kecap Bango has been growing, both within Indonesia and other parts of Asia.

Unilever needed to find access to a growing and sustainable supply of high-quality black soybeans. We also recognised a real need among farmers in the region for ways to generate better incomes. As a longstanding supporter of small and medium-sized enterprises, we saw an opportunity to build a partnership with farmers who were keen to improve their growing and harvesting techniques. The impact of this initiative was studied by Oxfam in our joint research project.

A productive partnership

In 2000 we began working with Gajah Mada University in Yogyakarta to develop a programme to engage local farmers in producing high-quality black soybeans. This direct-sourcing initiative was intended to supplement our purchase of black soybeans on the open market through market traders, which provides the majority of our beans. Just one year later the first group of 12 farmers began seeding specially selected varieties of black soybeans on around 5 hectares of land in Ciwalen village in west Java.

The success and our learning from those early harvests have led to rapid growth of the initiative. By early 2003 it was rolled out to 450 farmers and 110 hectares in a larger area of Yogyakarta, Nganjuk and Trenggalek. In 2006 the programme extended to 5 000 farmers planting black soybeans across 600 hectares.

The black soybean farmer development programme is based on mutually beneficial partnership. Unilever benefits from a new and growing source of high quality beans. Farmers have the opportunity to increase their income in between rice-growing seasons.

Success factors

Three factors are important in ensuring both the farmers and Unilever benefit from the partnership.

• Guaranteeing a market  

Unilever gives the farmers secure access to market by committing to buy at price, quantity and quality agreed before the crop is planted. This means that farmers get a guaranteed market and Unilever is assured of a steady supply of black soybeans. The farmers also receive 10-15% more for their crop by selling direct to Unilever, rather via traditional traders who retain a proportion of the purchase price.

• Technical assistance improves quality and productivity  

In partnership with Gajah Mada University and the local government agricultural office, Unilever trains farmers in how to plant and harvest black soybeans to ensure they meet our high quality requirements. From the planting period through to harvesting time, experts from Unilever and our partners guide the farmers in proper handling of the crop and in how to improve productivity so each farmer produces a larger harvest. We also 'train the trainers', to ensure the skills are shared and spread among more farmers – making the programme sustainable into the future. 

• Access to finance   

Some farmers may need to borrow money to buy tools or seeds to begin growing black soybeans. We offer interest-free loans that are distributed through farmers' groups or co-operatives. Farmers repay the loans after they have sold their crop. This approach helps farmers avoid the very high interest rates of traditional moneylenders.

Spreading the benefits

Through our partnership with Gajah Mada University expert field officers are trained to work directly with farmers in their villages, encouraging a sense of local ownership of the programme. And other parts of the community get involved too: local women are employed to assist at harvest time, providing an extra source of income for their families.

We also hold an annual competition to recognise the farmers producing the highest yields and those who are the best trainers – as we have learned that the most effective way to train farmers is through sharing experiences with their fellow farmers.

The benefits to Unilever are clear: access to a sustainable source of high quality black soybeans to make Kecap Bango. But in addition we have found that the farmer development initiative helps to maintain Kecap Bango's reputation in Indonesia, with close ties to its producers and communities.