4 Great Ways in Supply Chain to Improve Indonesian Agriculture
Have you ever asked why fresh products are highly valued in the market? Is that really that expensive from the start?
Don’t you get suspicious if fresh fruits and vegetables are sold at a high price? Why aren’t the farmers getting rich?
Unfortunately, most of our farmers are not economically prosperous for generations.
Does it mean that farmers are getting bribed by another party?
Hmm.. partially yes. Some middlemen took advantages by monopolizing the supply to get the farmer's low prices and then sell it much higher in the market.
But, that case is no longer a big problem in this era. Since many millennial farmers join the league and every kind of information can be obtained on the internet, monopolizing market price will be very difficult.
Here is the real problem
The fact is almost 40% of fresh foods are literally thrown away every day. Then, to cover up that cost, every single party increased the price remarkably — CNA Insider
The high rate of defective fresh food is the tip of the iceberg only. And if we look even further, there will be more problems appear on the surface.
The biggest problem here is the distribution process. And what I would like to discuss its supply chain. In Indonesia, we have TaniHub, an Agritech Start-Up with the most sophisticated ecosystem. TaniHub solves those problems by integrating all the components from upstream to downstream thoroughly.
Reducing Distribution Process and Time
Before arriving at the market, Indonesian fruits and vegetables have already take a very long journey. If we look at the illustration, they are harvested, shipped to a warehouse (1st middleman), delivered to another warehouse (2nd middleman), shorted, then distributed to the markets.
Normally we need 1 day for every step; we need 5 days after harvesting to selling the product. Let’s assume that the average freshness of the products is 2 weeks, and the market has only 9 days to sell all the products.
What if all the farmers harvesting simultaneously? How many products need to be absorbed daily before they expired?
In this case, good supply chain management will help to reduce distribution time. Then, it will be expanding the freshness of the product, which means more time to market and less potential for breakage.
Modifying Material Handling
Most fresh products are susceptible to impact and contamination (especially with organic contamination, e.g., our sweat).
Since material handling is unavoidable, reducing or modifying the process is a more appropriate option. TaniHub, as the biggest Agritech Start-Up in Indonesia, has been conducting innovation by utilizing highly technological machines for sorting and grading.
It has been a year since Processing and Packing Center (PPC) Malang was operating, and the farmer’s agricultural products absorption increasing up to 95 percent.
How is that possible?
TaniHub receiving almost everything that farmers products, then the advanced machine help to grade them. It is producing several grades of products, which is easier to market. For example, fruits with a sour taste and blemished skin are difficult to sell in supermarkets, but it has no problem for industries.
Higher technology in handling products will increase market absorption.
Advanced Inventory Facility and Management System
In the long, long journey of agricultural fresh products, inventory is one of their safety factors. Better inventory management will help them to be fresh longer.
One small example, if the product could be identified their harvest date and expired date, we will be able to make a priority in selling them. Either First In First Out (FIFO) or First Expired First Out (FEFO) system can be implemented.
Storing up fresh products is also related to the environment of the warehouse. Setting up a more suitable environment will make its freshness getting longer. To do it, we need to keep the temperature and humidity at the optimum value.
In this case, utilizing technology for inventory management will greatly affect the fresh product's freshness and value.
TaniHub has already build up National Fulfilment Center (NFC) in Cikarang, with high capacity and cold storage, could store any kind of fresh product, meat, and seafood. It is supported by information technology system and international handling standard, NFC ready to support inbound and outbound process for entire Indonesia. — Jawa Pos
Data-Driven Plantation and Harvesting Process
There was a moment when the harvesting cost was higher than the selling price. The farmers will likely choose to minimize the cost by rejecting their product rather than spending more on harvesting.
If we examine further, it is caused by an oversupplied market with the same product. That condition will automatically crash the market price. Based on economic principles, when the supply is high, the price will be down.
On the other hand, there was also a moment when the market out of stock in several commodities. Then, the government is forced to import from another country. Again, it makes national agriculture lost the opportunity for getting the market.
What if our farmers plant and cultivate in specific time series?
Utilizing data to manage the plantation to cultivation could make a balanced state between supply and demand.
Source:
[1] CNA Insider, Why So Much Food Is Lost In The Supply Chain (2021)
[2] Jawa Pos, Kang Emil Jadi Tamu Podcast TaniTalks Perdana (2021)
