What if the Key to Revolutionizing Indonesia’s Agricultural Industry Lies in Simple Gathering Point/Titik Kumpul?

After spending some time in my current role at Elevarm, I strongly believe that one of the most promising solutions to these challenges is implementing a ’titik kumpul’ model or aggregator as a central hub for marketing and distributing agricultural produce, particularly for commodities like chili peppers.

Most farmers in Indonesia operate on a small scale, typically managing plots of land between 0.5 to 2 hectares. With such a small scale, chili production becomes scattered and fragmented, making marketing and distribution inefficient. Small-scale farmers often face difficulties in selling their harvest due to limited access to larger markets or efficient distribution networks. As a result, they often rely on intermediaries, reducing the profit margins that farmers can retain. This situation contributes to the low bargaining power of farmers in the agricultural supply chain, making them vulnerable to price fluctuations.

The small scale of production units also makes it difficult to track chili production in Indonesia on a real-time, daily basis. This poses a unique challenge, especially given that chili is a daily staple for many Indonesians. For example, in the supply chain of electronic products, demand can be estimated with relative ease, allowing players within it to adjust their supply accordingly. However, this isn’t the case for the chili supply chain, which is mostly dominated by small-scale farmers and small businesses. As a result, there’s often a disconnect between supply and demand across many regions. This imbalance is a major factor behind the high price fluctuations in chili commodities.

High price fluctuations never benefit anyone except for large capital speculators. In developing countries with significant economic disparities, such as Indonesia, extreme price fluctuations that can be exploited by large capital speculators to multiply their profits will only exacerbate the situation. This creates a scenario where the wealthy have increasingly wider opportunities to enhance their prosperity, while those without capital face the opposite. Consequently, this will increase the wealth gap within Indonesian society.

As we confront the multifaceted challenges of Indonesia’s agricultural sector, particularly in the realm of chili production, we turn our attention to the potential inherent in the “titik kumpul” model. This aggregator functions as a central hub that consolidates harvests from various small-scale farmers for processing, packaging, and more efficient distribution. In the context of chili commodities, a titik kumpul can serve as an entity that integrates production from multiple farmers, thus providing a larger and more consistent volume of chilies to broader markets. Through this aggregation, a larger economy of scale can be achieved, improving price competitiveness and reducing distribution costs.

By using this model, farmers no longer need to sell their produce individually, which is often inefficient. Instead, they can rely on an aggregator to manage logistics and marketing, allowing them to focus on production. Additionally, by consolidating the harvest, titik kumpul can offer products with more uniform quality and meet the standards required by modern retail markets and the processing industry.

On the macro level, we can envision that when 80% of chili products are marketed through titik kumpul, the process of collecting national daily chili production data will become much easier and more accurate, with titik kumpul serving as data providers. This enables an efficient supply chain that aligns with demand in each region, thereby helping to prevent extreme price fluctuations.

One of the significant advantages of the ‘titik kumpul’ model is the opportunity to integrate modern technology and knowledge into the agricultural system. Professionally managed collection points can serve as centers of information and education for farmers, providing access to the latest technology, cultivation training, and improvements in production quality. For example, with the establishment of a titik kumpul, the use of technologies such as precision irrigation systems, sensor-based pest control, and efficient fertilizer application can be promoted and more widely adopted.

Aggregators can also facilitate the application of digital technology in the marketing of agricultural products. For instance, real-time data on production and prices can be collected, making decision-making in selling products more informed. By managing data from various farmers, titik kumpul can offer more accurate projections of supply and demand, helping to prevent overproduction or supply shortages, which often cause price fluctuations in chili commodities.

This titik kumpul model presents significant potential for the development of Indonesia’s agricultural industry, particularly in chili commodities. By increasing the scale and efficiency of production, this model not only benefits farmers economically but also reduces inefficiencies in the distribution chain. Well-managed collection points can create a more organized and measurable system, reducing waste and ensuring higher product quality. On a national scale, the adoption of this model could be one of the keys to creating a more modern, sustainable, and competitive agricultural industry.