AwanTunai to Facilitate Credit Agriculture for Farmers on Sayurbox

The p2p lending startup AwanTunai is expanding its financing products for farmers who distribute their crops in Sayurbox. Pilot projects are already ongoing for selected farmers located in Bogor, Sukabumi, Bandung, and Indramayu.

The two companies partnered due to the circumstances of sister companies and founded by the same co-founder, Rama Notowidigdo. Both have the same ambition to improve the lives of micro-entrepreneurs.

AwanTunai's Co-Founder and CEO, Dino Setiawan explained that the company is interested in entering this segment considering it's in line with the company's core focus on SME financing in the FMCG and grocery supply chain.

"Downstream we have stalls that sell goods to end consumers and upstream there are farmers. Therefore, farmers are the next SME group we serve," he told DailySocial.

Before AwanTunai, Sayurbox had never been involved with farmers to finance working capital because the selling system was off. Sayurbox Head of Communication Oshin Hernis explained, when farmers need a loan, the company will usually educate and recommend it to Bank BRI Agro as the company's partner.

Furthermore, the bank will perform some curation based on historical data from Sayurbox regarding these farmers. The bank will get an overview of determining credit scoring before approving a capital loan.

On the other hand, the company also offers a one-month partnership, when they meet certain requirements. For example, it is in good quality and guaranteed quantity.

"If the two big factors fulfilled, Sayurbox will offer to be a partner as a form of higher commitment and appreciation. This is one of our selections so that our partners' expectations can be maintained properly in the future,” Oshin added.

Regarding its partnership with AwanTunai, there will be no specific criteria for farmers in Sayurbox to get a loan. The company only ensures that the farmers to be referred are Indonesian citizens as proven by an ID.

"The rest, we provide flexibility for AwanTunai to select farmers who become our suppliers to get a capital loan facility."

Dino continued, the company provides loans ranging from IDR5 million to IDR 500 million per farmer for this collaboration curated by Sayurbox. The tenor is quite short, between 2 weeks to 1 month and the interest is 0.75% per week.

"Loan repayments through virtual accounts/bank transfers are due to maturity. For every return according to maturity, we will be given cashback," he said.

In risk mitigation, companies do not provide financing in cash, it is in the form of seeds, fertilizers, or other inputs needed for agriculture. They believe this method can reduce the risk default, as well as learn from previous mistakes.

This method is also used for AwanTempo, a financing product for grocery stores in need of additional capital to buy their shop needs. The company works closely with suppliers to provide financing to the small shop.

“In past agricultural financing programs, loan misuse has become quite a problem. We want to apply our AwanTempo financing program to micro farmers."

This product has been rolled out for selected farmers located in Bogor, Sukabumi, Bandung, and Indramayu. Dino said that there were interesting insights found in the field, including that some farmers needed advanced payment therefore they could turn the funds into agricultural raw materials such as seeds and pesticides.

"This scheme is similar to cash on delivery (COD) without additional time. Meanwhile, for gardens or paddy fields, some farmers manage land owned by other people through a production sharing system or land rental system. "

The pandemic effect

Sayurbox is one of the leading e-commerce players for groceries in Indonesia. Was founded in 2016, it has received seeds from Insignia Ventures Partners, Patamar Capital, and Tokopedia.

Oshin explained, since the pandemic happened at the end of March-April, Sayurbox transactions skyrocketed due to panic buying. The company had decided to temporarily close the transaction for a while.

"However, as the new normal began, transactions are quite stable even though the current level of competition is increasing," Oshin said.

In an interview with Tempo, Sayurbox Co-Founder and CEO Amanda Cole said that the company added more partnerships with farmers from 50 to 100 people during the pandemic as the demand increases.

He said, the company is lucky to become “famous” and continues to grow exponentially because of the recommendation of “word of mouth”. He hopes that after the pandemic ends, it'll be a new habit for people to shopping for vegetables and fruit online.

– Original article is in Indonesian, translated by Kristin Siagian