Joint marketing of agricultural products: lessons learned from the implementation of rural agro-enterprise development in Indonesia

Agriculture is the leading sector in Indonesian economy. The production has increased but it does not accordingly always increase farmer's income. Farmers still face the lowest bargaining power in selling their produces in which they become the price taker at farm gate. Thus marketing practice that may influence the selling price and accordingly will lead to an increase in farmers' income is being important. CRS Indonesia, particularly the Agriculture Program, has implemented Rural Agro-enterprise Development (RAeD) Project (2004-2008) in collaboration with 9 local NGOs [nongovernmental organizations] in 6 provinces in Indonesia. RAeD project put emphasis in marketing where farmers can sell their produces and accordingly will increase their access to market and cash income. During the implementation of the project, CRS Indonesia conducted monitoring and evaluation in which questionnaire survey was conducted every year. This paper aims to 1) document the implementation of RAeD project and 2) analyze the impact of joint marketing in increasing farmers' income. Joint (collective) marketing through farmer groups or associations that conducted agreements with their business partners or buyers. The principles of the joint marketing are: 1) direct selling to final consumers or manufacturers, avoiding dealing with the middlemen, 2) shortening the marketing channels, and 3) selling the products collectively, especially in the some territory (territorial approach). The selling price of the products is the same as the on-going price in the market, but farmers were able to receive higher prices compared to the conventional marketing practices due to the marketing margin by conducting direct selling and shortening the marketing channels. Farmer groups or associations protected farmers from receiving price lower than the market price, thus market survey was conducted regularly by the farmer groups or associations. Farmers have earned higher income through the joint marketing and hopefully it can be implemented in other areas.