Increasing access by establishing cooperatives

Pak Ruben Supriyadi is a local community leader in South Sumatra. He had already been supporting palm oil smallholders in his community (for example by starting a savings and lending association) when he first came into contact with SNV at a business training for oil palm smallholders.. Afterwards he elicited SNV’s support to help him establish an official cooperative in his village, the Sumber Rejeki Cooperative.

In Indonesia cooperatives are legal enterprises that are jointly owned and democratically operated by its members. They are an important platform to improve farmers’ access to financing, inputs, and markets. Government-sponsored oil palm replanting programme for example, only support cooperative members.

The journey to create a cooperative however is a long and winding one. To begin with smallholders need to prepare legal documents, and navigate complex government bureaucracy. Very few people have that kind of knowledge, but SNV has expertise that help them to accelerate the bureaucratic process.

After initial discussions with SNV, Pak Ruben gathered the members of his group. All farmers agreed to establish a cooperative. Then Pak Ruben informed the local government cooperative office of their intention. At an official stakeholder meeting they decided on the cooperative’s structure and governance. They elected another farmer, Pak Budi as their chairman and Pak Ruben as the secretary. The business units included a loans-and-savings unit, agricultural inputs and a fresh fruit bunch (FFB) sales unit. As many farmers also own rubber plantations, they decided to establish a rubber auction as well.

SNV provided assistance to the farmer group throughout this whole process: supporting their communication with the government’s cooperative office; assistance to hold various meetings; support to draft the Cooperative's Articles of Association and preparing legal documents; and assistance  to develop their business plan.

With the articles of association, a letter of recommendation from SNV, and support from  the village chief, Pak Ruben visited the cooperative office again. A few weeks after the cooperative’s deeds were notarised the cooperative was officially established. “This is one big step forward for us. We are grateful that SNV helped us set up the Sumber Rejeki cooperative,” Pak Ruben told us. “I hope our members can truly take advantage of our new cooperative and ultimately increase their welfare altogether.”

The Sumber Rejeki cooperative was established as part of the multi-stakeholder South Sumatra Partnership for Landscape Management project that ran from 2014 to 2018.The project aimed to improve the livelihood of oil palm smallholders by supporting sustainable community-based landscape development. In addition to supporting existing cooperatives, the project established two additional cooperatives, reaching more than 500 rubber and palm oil farmers.

Some months after the project’s closure, we got in touch with Pak Ruben. He told us that his cooperative is doing great: they are in the process of securing a loan and seeking a deal with a supplier to provide fertilizers for its members.