Growing Your Money
iGrow aims for Indonesian food sustainability, to train the next generation of farmers, and make a profit for investors
By Tellisa Ramadhani
Tuesday, January 17, 2017
Hand in hand with a growing world population comes concern over whether natural resources can keep up with the vital needs of the people, a major example being food. Despite its best intentions to achieve food security, Indonesia still heavily relies on imports to feed its people, even for their main protein source, soybeans.
Muhaimin Iqbal, CEO of iGrow, sees this problem only increasing if no action is taken. Iqbal, who has a background in the agricultural industry, wants to make this business sector appealing to investors. Motivated by concerns ranging from the lack of capital to the fading involvement of the younger generation, together with his team, he created iGrow. iGrow is a platform where anyone is able to invest in farming. The team compares it to a real life version of one of farming themed mobile games such as Farmville, but with real profits.
On its website, iGrow describes itself as “a marketplace that helps underemployed farmers, under-utilized land, and investors to produce high-quality organic food and sustainable incomes with cloud-based agricultural management software.
“Until now in Indonesia alone, we put 2,200 farmers to work and 1,197 hectares of land to use, delivered 500 tons of healthy peanuts, and gained revenue for the farmers, landowners, and investors.”
Since the birth of the idea in 2014, iGrow has received much exposure in the startup world, NGOs, businesses and the media. It joined a startup accelerator program in the US, pocketed the runner’s up trophy at StartUp Istanbul in 2015, and soon will be meeting Google at its US headquarters to receive more support. Featured in Forbes, The Financial Times, CNN Indonesia, and many other media outlets, iGrow plans to attract much greater recognition overseas to achieve food sustainability in Indonesia.
AmCham Indonesia: What is iGrow and the story behind it?
Muhaimin Iqbal: We know that farmers in Indonesia are a marginalized group and the young generations tend to not be attracted to this field, even the ones who have degrees in agriculture. This is understandable because agriculture is one of the sectors that does not get much funding. Banks only give out about 3 percent for the agricultural industry, and this is usually taken up by the big agriculture companies who run, for example, rubber and palm oil plantations. Farmers do not get their share of it. Without capital, this sector will never be able to grow and so will never be an attractive sector.
But this sector needs a lot of attention, otherwise we will have a food scarcity issue in Indonesia. We keep on relying on imports to feed our nation. Our concern is what if one day we do not have the resources to import these products any more? It would become a huge problem for Indonesia. Luckily, in the startup world, big problems for the masses mean big opportunities for us. This is why we created iGrow, because it is very much needed by the nation.
We were offered a 60 hectares plot of land at the end of the Cipali tollway. We decided to plant sorghum there, from which the syrup can be used for food and the leftovers will be sold as fodder. But we plan to maximize the value of what we have there by turning it into an agrotourism site. We will plant the sorghum in paths that create a big maze. Aside from the pleasure benefits for people, this will be a great way to promote the products that we have. We are open to anyone who has idle land to offer to us to farm.
We still have a limited area of farming fields. In Java, we are aiming for at least 10 hectares in one location, to make it the most economical when we have to send out our surveyors and to distribute the produce. But most of our fields are almost 100 hectares. We have fields in Banten, Garut, Bogor, Blitar, and Bali, with the biggest in Blitar at 600 hectares.
As a start-up, we have attracted the attention of Google, the UN’s World Food Programme (WFP), and the World Bank. They offered us help in order to achieve reaching one of the SDGs [UN sustainable development goals] by 2030, which is zero hunger.
Who is your target market?
At first, our market target was young people who still have the idealism to make an impact in a community, regardless of the profit. But lately, after we introduced iGrow during the startup accelerator in the US, interest in iGrow has grown. In the US, bank interest rates are only 1.35 percent compared to 6 percent in Indonesia. So when we introduced iGrow there, even with a scheme where the profit would only be 5-10 percent, it became such an attractive prospect for them. In Indonesia, this scheme does not seem to be appealing, but elsewhere in the world, like the US, Europe and Japan, this could be appealing. And thanks to globalization, we can bring this to the world.
Can you explain iGrow’s investment scheme?
We split the profit into three parts: 40 percent for the farmers, 40 percent for investors and 20 percent for the independent surveyor that we hire to do all the technical things, such as surveying and verifying the farming field and process and finding a market for the produce.
The investors can sign up and check the seeds available, which vary from olive, durian, avocado and many others. On the webpage of each seed, you can see the rate of interest and the return scheme. These seeds are then planted by iGrow farmers who have met iGrow qualifications to ensure the best produce. The investors can check the progress of their plants with their account using the iGrow Plant Monitoring feature, which is updated periodically by our credible surveyors, and the updates include photographs, plant height and comments from the surveyors. The surveyors are needed to give more assurance in this risky investment that the farmers are actually doing their job and they are guided to manage the field and money. The investors can also check the plants in the fields themselves, if they wish. When it is harvest season, iGrow will give reports to the investors and the produce will be sold to the iGrow seller partners. The return scheme differs with each crop. To ensure sustainability, we keep reserves of the produce, depending on the risks we face during each harvest.
We choose the seeds to offer to investors by looking at the market situation. Also, we guide the farmers from the beginning until the end of the farming process. Without guidance, the farmers tend to just plant whatever without seeing what is in demand. After that, we tell the farmers which produce is in demand and tell them the qualifications needed, sort of giving them the skills.
At the moment, we are experimenting with planting dates and olives in West Nusa Tenggara and East Nusa Tenggara due to their similar climate to the Mediterranean. We need to educate our children that farming can exist elsewhere, not just Java. The problem with Indonesia is agriculture is very Java-centric.
We also try to create end products for our produce. For example, we plant fragrant roots and we have studied that from the tips of the roots we can create essential oils. These essential oils end up in various beauty products, from natural facemasks to natural perfume. We built a catalog where people can see and buy the essential oils from us.
What is the most significant challenge that you have faced so far?
It is mostly with the farmers. We are educating them to be more disciplined and produce harvests that are able to reach standards. The weakness with this industry is food cannot be mass-produced like, for example, the textile industry. To do this business, we need the land, adequate skills, and after all that you can produce something.
We have anticipated this issue by creating a course at Jonggol, our closest farm to Jakarta. Anyone can apply to this as long as they have a passion for agriculture and they will be trained for three months.