A modern solution to overcome traditional problems
PasarMIKRO is a social enterprise that empowers smallholder farmers and rural traders in Indonesia to enhance their businesses. For this, they make use of modern-day trade finance solutions which they offer to farmers via a simple app on their mobile phone. With the app, they can make secure and direct payments, do their bookkeeping, have access to actual market information and can apply for working capital. The results are very positive: hundreds of farmers and small rural traders throughout Indonesia have already increased their cashflow and improved their livelihoods. Now, PasarMIKRO is looking for a loan so they can reach out to another 1,728 farmers and traders. Dien Wong, in the photo third to the right, tells us all about this effective enterprise.
Can you introduce yourself and your company?
“My name is Dien and I have been working in digital technology for a considerable amount of time. Prior to PasarMIKRO, I owned a software company that provided services in fishery and agriculture. We worked with small scale fishers and helped connect technology with supply chains. That’s actually how I came to start PasarMIKRO, as I saw similarities in the agricultural field and wanted to reach a broader audience. Three years ago, I initiated a project related to eggs trading, which eventually evolved into PasarMIKRO.”
How has PasarMIKRO evolved since its start?
“PasarMIKRO was founded in December 2020, so it’s been a little over three years now. We started with eggs, and that was an interesting start because eggs are produced every day, making the market more active compared to seasonal commodities like rice or corn. We saw great traction in the first month, where we had 200 transactions and a value of around 200,000 USD. Although it might seem small when discussing commodities, it's actually scalable. This led us to realize that we needed more capital to keep the business running, so I started raising working capital. In the fourth month, we received funding from a big foundation, which helped our then three-month-old company. We raised working capital two more times, and as of our second year, we began to attract more and more funds. From the initial focus on eggs, we diversified into commodities like corn, rice, fish, fruits, coffee, and cacao.”
How would you describe the local impact you have had in Indonesia?
“The reason I started PasarMIKRO was because I observed that the agricultural trading system in Indonesia was very manual and traditional, which was hindering progress. I believed that the solution was to digitalize the process, but the challenge was to get the community to adopt it. So, I proposed an operational and transactional solution that allowed farmers to do transactions through the platform and keep their bookkeeping tidy, while also providing them with working capital and faster payments. This not only improved their cash flow but also their livelihoods. On the traders' side, the platform helped them have the capacity to pay for the farmers. Both farmers and traders needed a digital platform, and PasarMIKRO was able to provide that. Initially, I convinced one trader to use the platform, and as they started transacting and generating capital, more farmers and traders got on board through word of mouth. We provided digital inclusion and were able to change the behavior of farmers towards using applications. Traders became the influencers towards the farmers, and the rest was organic, through referral. The farmers could register themselves and do transactions through the app. Through this process, we began to see data and new possible ways to include more farmers. We are curious to see how this will scale in the next two to five years.”
How many users are on the platform?
“At the moment we have around 1,400 registered users, and 350 registered businesses who make at least one transaction per week. Among the active businesses, some of them have been using the platform for more than 2 years.”
How did you get an audience so traditional to get on board in the first place?
“Once you have some farmers on board, the rest is easy. You’ll get referrals and word of mouth because the product is effective. But the difficulty is to find the first users. For this, our strategy was to start a collaboration with the head of a cooperative. This was very helpful and we are actually still using this. The cooperative is very influential among the farmers, even though their area is not that wide. Agriculture is very territorial; you sell to the ones that are close to you. So when they are in, their neighbors also join. This is how we got them to be willing to try PasarMIKRO out.”
What are the challenges you and your employees went through while scaling up?
“In the early days of our scale-up, I was the one to go see the cooperative head as I was in charge of the relations. We still had to settle the transfer of the knowledge and the structure of how we operate within the company. We also struggled to find funds in the beginning, now we have more access to finance. Also, having a multicultural environment is great but it also has its own challenges. For example, we’re used to certain Indonesian ways of working, but we have several Dutch people in the team and they have Dutch ways. It’s a good thing, the differences also have a positive effect. There is a new culture forming at PasarMIKRO. And agriculture itself can be challenging, people and approaches are different. We don’t only work with the farmers but also with the traders so it’s sometimes challenging to explain who we are, what we do and why we work with both farmers and traders. There is a lot of education both external and internal.”
What are your plans for the loan you are currently requesting at PlusPlus?
“It’s mainly for working capital. We structure our funding operation with two structures, which is equity that funds our operations like research, development, product and operations. And there is the working capital, because the main channel that makes the digital inclusion comes from the trade finance. For this, we need working capital, which is why we are currently requesting a loan via PlusPlus, intended to bring liquidity for farmers’ payments.”
What are your short-term and long-term plans for the future?
“The near future goal for the coming two years would definitely be to scale. As a startup company, we believe that the key to success is focus. So we focus on what we are doing right now, we found a way to be successful within these past years so we’ll keep on doing it. What is beyond two years? Like a glimpse of the story that I just mentioned, beyond what we are doing my vision is to change the way people are doing things that are very conventional. There are millions of smallholder farmers, they are fragmented and to reach them is difficult. We envision that if we scale and reach more of them, connect more of them to the platform, this already would be substantial growth. And it's a network of commerce, you can get something more from there. You can plan demand, maybe sell cheaper seeds, fertilizers, get better prices. And this is all based on data, which was previously not possible. So that’s our idea of being in the scene. When you’re a smallholder in the ecosystem, the network is chaos right now. When you want to buy coffee from a smallholder farmer it is very difficult, the only thing you can do is talk to a trader. But when everyone is on the platform, we see that it becomes possible for you to directly contact all the farmers. With smallholders you need to collect crops, to aggregate. You can’t just talk to one farmer and expect to get everything. So this type model is like Uber for agriculture. At Uber there are a lot of drivers, they’re all scattered and unstructured. Uber connects them all in an app, to be reached effectively by clients. We kind of do the same, but the drivers are actually the farmers and the traders aren’t the enemies here. Traders are also a part of the ecosystem, once they’re all on the platform you can operate like Uber. That’s what we want.”
Is there a personal story that you’d like to share?
“One of the stories came from one of our egg traders. She has a small family trading business and every day she used to negotiate prices with the farmers. Once when she had a deal, she started to collect the eggs. But because it’s a cash business, after the deal she had to handle the deliveries that were made by the boys with the pickup truck, who arrange the pickup from the farmers. Once the eggs arrived in the warehouse at night she would go around and drop cash payments to the farmers. When we approached her to get her on board to use our platform, she started using it. We saw that she’s more diligent in teaching the farmers, and she did it very well. After around 6-7 months when I visited her, she said “Now all my farmers are using the platform for the transactions. Which is why nowadays I don’t need to drive at night to drop cash because the transactions happen on the platform.” She realized that it’s easier for her to manage transactions digitally through the platform. In a way, PasarMIKRO has become her finance team 😊. This is a good digitalization story for us.
And I have another story about a farmer, he’s 60 years old. He’s one of the oldest farmers in the ecosystem. One day I visited him. He understands Indonesian but he still speaks local Javanese language, so he responded to me in Javanese. I asked him if he registered by himself, he said yes. I asked if he is using the app all by himself he said yes. He’s 62-63 years old. This is amazing, this shows that if they want to, farmers are more than able to use the app, even at old age. This changes the idea that farmers can’t use technology, that they’re lazy etc. It proves that when there is motivation, they are willing to change their ways. And if the product is easy and user friendly, that also makes a great difference. In the phase of product development, as a developer sometimes you want to create a product like Uber where the interface is very complex. It’s not always what works best, our users have an age average of 40 years8. And a lot of them use the larger phones, younger ones tend to use smaller phones. That’s why we use a very simplistic layout without too many icons to not be confusing. Designing for them is different…”
Is there a special part or feature of the product that you’re specifically proud of?
“Not really. When you see the app it’s actually very plain and boring. It just works. In 3 simple steps you can do the transaction and that’s all. Nothing fancy, just effective.”
Would you like to say anything to the PlusPlus community and PlusPlus investors?
“I have two messages. First, supporting us is to support the liquidity of the farmers. We want to make sure that they always get the money fast. Second, the money that is invested in PasarMIKRO actually has more value than the money itself. As a liquidity provider, we have a cycle of 10 days to rotate the money. In one month, every euro invested can be used three times. In a year time, the value of 1 euro is 36 times more than the initial amount! So a PlusPlus loan to PasarMIKRO is very effective and it creates a lot of impact.”