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Empowering smallholders for organic nutmeg Indonesia

This program aims to qualify 5,000 nutmeg farmers from Galela and Patani, North Moluccas, in producing organic nutmeg. Indonesia has everything it takes to serve the huge nutmeg demand worldwide. Besides, over 50% of the population of North Moluccas is involved in the nutmeg production. Due to this high demand, the international market provides farmers with a good opportunity to improve their livelihoods. However, they should meet the market requirements of spices that are free of mold toxins.

  • Location
  • Start project
    2015
  • Projectstatus
    Needs funding
  • ID: NL-KVK-56484038-C_005359
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Background

The high demand for nutmeg on the international market requires a guaranteed quality level and spices that are free from aflatoxin. The price of low quality nutmeg is approximately 1/3 of that of premium quality and organic nutmeg. In order to improve the livelihoods of nutmeg farmers, the program intends to qualify them in producing organic nutmeg and to bring them into contact with (international) value chains. At the same time, the program focuses on intercultural dialogues to improve the socio-economic relationships in the area where the program runs.

Nutmeg quality
The nutmeg quality in the region, however, is subject to deterioration over the past years. For example, the price of nutmeg from North Moluccas was low caused by contamination and high levels of aflatoxin, which are toxic metabolites from fungi. Because of a lack of knowledge and agricultural skills, North Moluccan farmers have suffered from negative influence on their positioning in the nutmeg value chain so far. By implementing proper postharvest handling practices, it is possible to effectively prevent mold growth and mycotoxin formation.

Multi-sector, international partnership
The project has a multi-sector partnership which consists of ICCO Cooperation South East Asia and Horti Chain Center, supported by the Indonesian Netherlands Association and Financial Access. Supporting partners in the private sector are: AgriPro Tridaya Nusantara in Jakarta, Multi Rempah BV in Manado, Indonesia and LenersanPoortman in the Netherlands.

Wide range of support
Financial support is given by the Ministry of Foreign Affairs of The Netherlands, IDH Sustainable Trade Initiative, Common Fund for Commodities, and ICCO Investments.
Empowering smallholders for organic nutmeg Indonesia

Spicing Up Organic Nutmeg in Galela

In North Moluccas, the 2nd biggest nutmeg area in the world, over 50% of the population is involved in traditional nutmeg production. The high demand of nutmeg in the international market provides an opportunity for farmers to improve their livelihoods if they comply with market requirements of premium quality and organic nutmeg. Unfortunately, the quality of nutmeg in the region has been deteriorating over the years due to high levels of aflatoxin.

In partnership with various public and private organisations, ICCO South East Asia aims to spice up the North Moluccan organic and aflatoxin free nutmeg sector by developing farmers’ capacities in organic nutmeg production and including them in the (international) value chain. After 1 year, the program has already reached 3,000 farmers and increased their income by 80%. This project has become the new inspiration for working with non-grant mechanism in the near future.

Target group

5,000 nutmeg farmers from Galela and Patani, North Moluccas, of which 2,000 female farmers.

Sustainability

ICCO Cooperation has developed successful models to connect farmers and businesses to pro-poor and gender responsive value chains in Southeast Asia. These models are based on the approach of M4P (market for the poor) and Value Chain Development. What is included is the use of economic tools in conflict resolution and peacebuilding. It is important because a history of tension and ethno-political conflicts (1999-2003) in the region continues to influence the collaboration between stakeholders in the nutmeg value chain.

Following a blended strategy, ICCO combines loans, grants, and guarantees in the program for sustainable execution. The value chain stakeholders play an important role in the continuation of the project. They can set an example by raising awareness among the local community and by doing business responsibly.

Goals overview

1. 5,000 Nutmeg farmers from Galela and Patani, North Moluccas will increase their income with at least 10%, by producing good quality, organic, aflatoxin free nutmeg. 2,000 female farmers out of a total of 5,000 farmers will participate in this program.

2.Partner trading companies will increase their income with 10% and create 100 new jobs.

3. Registered, viable and sustainable farmer groups (agribusiness units) are established and capacitated, positioned strongly in the nutmeg market and able to provide trainings to farmers.

4. An internal Control System is being implemented.

5. The different program strategies (grant, loan, guarantee) strengthen the multi-stakeholder platform that brings together civil society, private sector, and local universities.
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