Candlenuts, chili and chicken: transforming Indonesia’s rural economy


Wilfridus Ngala, the mayor of Inegena, a village nestled in the central hills of the Ngada district, on the island of Flores, had a vision: turn its community of 1,100 people, most of them subsistence farmers, into an agricultural powerhouse with its own food processing and export industries.

Mayor Ngala’s idea may sound far-fetched, but a year after Inegena was chosen as a recipient of support from the International Fund for Agricultural Development (IFAD, a UN agency) and Indonesia’s Ministry of Villages, Development of Disadvantaged Regions and Transmigration, many clear signs of progress in his community, with crops and vegetables grown in previously barren soils, and chickens cackling along the previously quiet village roads.

“Our village now has a future and many young people have decided to stay and participate in the new agricultural projects,” says Viktorinus Roja, who learned how to keep chickens last year and was elected head of the village enterprise association. “A year ago I thought about moving on to look for work in a city. But I have decided to give Mayor Ngala a chance.”

M. Gaspar / UNIC Jakarta

Building long-term economic success

Inegena is one of 1,110 Indonesian villages supported by IFAD’s Integrated Village Economic Transformation Program (TEKAD), which is jointly funded by the UN agency and the Indonesian government. In Ngada district, 20 communities benefit from TEKAD experts, who help villagers design business plans and long-term development strategies, as well as submit funding applications for the 68 billion Indonesian rupiah ($4.3 billion) National Village Fund, managed by the Ministry of Villages. . Financing usually comes in the form of a loan, which the government and the villages will have to repay from the proceeds of increased economic activity.

“Money is often not the problem in rural Indonesia. Insightful planning to lay the foundations for long-term economic success is,” said Harlina Sulistroyini, general manager of Economic Development and Investment at the Ministry of Villages. “Places like Inegena are proof of what small funding and big ideas can achieve together.”

The key, Ms. Sulistroyini adds, is for communities to focus on a single product where they have economic and market advantage. In Inegena’s case, candlenuts are the main commodity and future cash crop, used as raw materials in the cosmetics and pharmaceutical industries.

With the support of TEKAD, the villagers drew up a business plan to improve the harvest and start local processing of candlesticks. Until recently, each farmer harvested the nuts, cleaned them manually and brought them to the local market, but now they work together to get better deals from buyers. Equally important, villagers no longer have to make the hour-long journey to town and spend hours selling their produce – the buyers now come to the village.

The next step is to purchase, with support from the ministry, a machine to replace the manual labor now required to shell the nuts, and funding for a machine to extract the oil from the nut, says Ms. Sulistroyini.

Villagers in Inegena, eastern Indonesia, manually processing candlenuts.

M. Gaspar / UNIC Jakarta

Increase production, find markets

Selling the oil instead of the nuts allows the village to keep more of the revenue from the candlestick value chain. “We want to support villages with the vision and potential,” she adds. “Inegena is a small village, but one day it will become international – as long as they keep the focus.”

The villagers plan to have the oil extraction machine ready by the end of 2023 so that they can process candlenuts harvested in neighboring villages. “We intend to become a local center,” said Mayor Ngala.

While the village’s economic transformation plan focuses on candlenuts, there are other products that locals see potential in: they used Rp152 million ($9,600) from the Village Fund to increase the village’s cultivated acreage by 50 percent; fields formerly full of bushes have been converted to horticultural plantations, and most of the chilli, aubergines and cabbages grown are sold at the local market.

Local farmer Bonevasius Redo has already managed to expand his bamboo house with the extra income he earned during the past growing season. Thanks to the new opportunities at home, he was able to move back to Inegana after years of working on an oil palm plantation in Borneo. He now earns about five million rupiah ($320) a month, compared to just three million ($190) on the plantation. “We can now make a living here growing vegetables and chilli,” he says.

Villagers in the village of Inegena, eastern Indonesia, meet monthly to discuss the implementation of their village's economic transformation plan.

M. Gaspar / UNIC Jakarta

Chickens and food security

The goal of the chicken plan, which Mr. What convinced Roja not to move to the city is primarily to improve food security and nutrition by providing the community with stable protein intake – as well as income from selling the surplus. There are now 2,400 chickens in the village, a few hundred two years ago.

TEKAD’s goal is to support interested villages in Indonesia’s five poorest provinces in economic transformation, including East Nusa Tenggara, where Inegena is located. By hiring and training local facilitators to work with the villagers, the program ensures the communities are committed to long-term planning.

“In order to lay the foundations for sustainable development, villages should spend money on projects that generate long-term economic benefits, rather than spending the money from the Village Fund annually on AD hoc initiatives,” said Anissa Pratiwi, Country Program Officer at IFAD’s Jakarta office. “This fundamental change in approach requires learning and capacity building at the village level.”

The change is badly needed, as currently only 10 percent of the Village Fund is used to support rural economic development. TEKAD is helping to change that by increasing the technical skills and market intelligence available to villages, along with guidance and oversight in project planning and implementation. The villages it works in have a combined population of more than 1.6 million – making it one of the UN projects with the widest outreach in Indonesia.

“We use TEKAD not only to help the participating villages to develop, but also to set an example for other communities in these regions for long-term sustainable economic development,” says Ms. Sulistroyini.

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