Candlenut, chili and chickens: UN facilitates rural economic transformation in Eastern Indonesia

INEGENA, FLORES ISLAND, INDONESIA – Wilfridus Ngala had a vision – to turn his village of 1100, most of them subsistence farmers, into an agricultural powerhouse with its own food processing industry and exports. Sounds far-fetched? It isn’t. After just a year of support from the International Fund for Agricultural Development (IFAD) and the Ministry of Villages, Development of Disadvantaged Regions and Transmigration, signs of progress in this community amidst the central hills of Flores Island are clear to see: formerly baren lands converted into horticulture fields, and chickens clucking along previously tranquil village roads.

“Our village now has a future, and many young people have decided to stay and participate in the new agriculture projects,” says Viktorinus Roja, 30, who learned chicken farming last year and has been elected the head of the village enterprise association known by its Indonesian acronym as BUMDES. “A year ago I was thinking of moving on to find work in a city. But I’ve decided to give Mayor Ngala a chance.”

Building long-term economic success

Inegena is one of 1110 Indonesian villages supported through IFAD’s Integrated Village Economic Transformation Programme (TEKAD), which puts enhancing governance and community engagement in the use of village resources for local economic and social development at the heart of planning. In the case of Inegena and 19 other villages in the Ngada district on Flores Island, it is helping villagers design business plans and long-term development strategies, and submit applications for funding to the Rp 68 billion (US$ 4.3 billion) national Village Fund, managed by the Ministry of Village. TEKAD has hired a team of experts who work with the villagers. The funding mostly comes not from a grant but a loan, which the government and the villages will need to pay back from the proceeds of the increased economic activity.

“Many times in rural Indonesia, money is not the issue. Insightful planning to build the basis for long-term economic success is,” says Harlina Sulistroyini, General Director of Economic Development and Investment at the Ministry of Village. “Places like Inegena are proof of what small funding and big ideas can achieve jointly.”

The key, Ms Sulistroyini adds, is for communities to focus on a single product where they have economic and market advantage. In the case of Inegena, villagers with TEKAD support drew up a business plan to improve the harvesting and start local processing of candlenuts, the village’s main commodity and future cash-crop. Until recently, each farmer harvested the nuts, cleaned them manually and took them to the local market. As a first step in the transformation process, they are now banding together to fetch better deals from buyers. Equally importantly, villagers no longer need to make the one-hour journey to town and spend hours selling their produce – the buyers now come to the village.

Oil extracted from candle nuts, which taste a bit like walnuts but softer on the palate, are used in the cosmetics and pharmaceutical industries as raw material.

The ministry will support purchase of a machine to replace the manual labour now required to peel the nuts, and will also provide funding for the village to buy a machine to extract the nut’s oil, Ms Sulistroyini says. By selling the oil rather than the nuts will enable the village to keep more of the revenues from the candlenut value chain. “We want to support villages with the vision and the potential,” she adds. “Inegena is a small village but one day it will go international – as long as they keep the focus.”

Once the villagers have the oil extraction machine in place, planned for late 2023, they will also be able to process candle nuts harvested in neighbouring villages, Ngala says. “We are planning to become a local centre.”

Increasing production, finding markets

While the focus in the village’s economic transformation plan is on candlenuts, there are other products where locals see potential: they used Rp 152 million (US$ 9600) from the Village Fund to increase the cultivated area around the village by 50%. Fields formerly filled with shrubs have been converted into horticulture plantations. Most of the chili, eggplants and cabbage grown is sold at the local market.

Farmer Bonevasius Redo has already managed to extend his bamboo house from the additional income he earned during the last growing season. Thanks to the new opportunities at home, he moved back to Inegana after working on an oil palm plantation on Borneo for years. He now earns around 5 million Rupiahs a month (US$ 320), compared to just 3 million (US$ 190) at the planation. “We can now lead a life here by growing vegetables and chili,” he says.

Chickens and food security

The aim of the chicken scheme, which convinced Mr Roja not to move to the city, is primarily to improve food security and nutrition by providing a stable protein intake to the community – as well as income from selling the surplus. There are now 2400 chickens in the village, up from a few hundred two years ago.

The goal of TEKAD is to provide support in economic transformation to interested villages in the five poorest provinces in Indonesia, including East Nusa Tenggara, where Inegena is located. Through hiring and training local facilitators to work with the villagers, it ensures that there is buy-in from communities towards long-term planning. “In order to create the foundations for development that is sustainable, villages need to spend money on projects that will have long lasting economic benefits, rather than simply spending the Village Fund’s money each year on ad hoc initiatives,” says Anissa Pratiwi, Country Programme Officer at IFAD’s Jakarta office. “This fundamental change in approach requires learning and capacity building at the village level.”

The change is sorely needed, as presently only 10% of the Village Fund is used to support rural economic development. TEKAD helps to change that by increasing technical skills and the market information available to villages, along with guidance and oversight in planning and implementation of projects. The villages it works in have a combined population of over 1.6 million – making it one of the UN projects with the largest reach in Indonesia.

TEKAD is funded jointly by IFAD and the government, with the government taking the lead in implementation. “We are using TEKAD not only to help the participating villages develop but to also show other communities in these regions an example for long-term, sustainable economic development,” Ms Sulistroyini says.