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00:00Hi everyone, welcome back to the program.
00:04It is ten past seven in the a.m. and it's time for our first discussion of the morning
00:09and today we're going to talk about sustainable agriculture.
00:13Now many of us know that sustainable agriculture plays a vital role in reducing emissions and
00:18mitigating climate change impacts on farming systems, especially across Southeast Asia.
00:24Yes, by adopting eco-friendly practices and technologies, farmers can significantly reduce
00:29their carbon footprint while maintaining or even enhancing crop yields and overall
00:35productivity.
00:36Agros is one of the companies leading the way, offering sustainable agricultural solutions
00:42to small and medium-sized farmers all across Southeast Asia, including us right here in
00:48Indonesia.
00:49Yes, the company also strives to raising awareness on sustainable practices to help farmers increase
00:56profitability, make communities more resilient to changing climate conditions, and cut carbon
01:02emissions.
01:05And to find out more about Agros and their efforts towards sustainable agriculture, let's
01:10now introduce our first guest, who is Agros founder and CEO, Max Nellen.
01:14Max, good morning, thank you for being here today.
01:16Morning, thank you Paul, thank you for having me.
01:18Welcome to the show.
01:19So, let's first talk about us, Indonesia as a country, we're an agrarian country that
01:24is heavily reliant on agriculture for economic growth, but many farmers continue to face
01:30challenges in growing their businesses, implementing new ideas and methods as well.
01:36First off, what do you think are the best ways to address these issues immediately?
01:40Right, I don't think I have the magic wand, that's just to start off, but I think that
01:47you can take a step-by-step approach that kind of makes sense.
01:50First of all, just to put it in perspective, Indonesia has more than 10 million hectares
01:55of land, on average a farmer only owns about a hectare, and so first of all I think it's
02:01about segmenting that land, and it's not just a thing like one farmer, one problem.
02:08So it's like you look at crops, which different crops are there, chili, shallots, potato,
02:13what are their problems, and then East Java versus South Sumatra will have different problems,
02:17different climate conditions, different soils.
02:20That's the first step.
02:21Second step is then really engage the community, and so we built teams on the ground, boots
02:27on the ground, so we understand their issues.
02:30And then thirdly is solve their biggest, most tangible problem first, and then start solving
02:37their other ones.
02:38So either they're spending too much on fuel, or their soil is heavily degraded, or they
02:43can't get a good price for their produce.
02:46If you solve that first, you create that trust, then you can solve their other problems.
02:50So those are those issues that you just mentioned, are they some of the more common problems
02:54that are arising?
02:55Correct.
02:56Yes, indeed.
02:57Yes, why a farmer should consider towards sustainable agriculture, despite from what,
03:04I mean, compared to what they have been doing traditionally?
03:07Yeah, so I think it's, as you can see already now with El Nino, which is really a very present
03:13topic these days, farmers are seeing changing conditions.
03:17So either a farmer was rain fed, or was using a polluting diesel pump to irrigate, well,
03:23once you have solar, you can actually use it whenever you want, as long as there's sunlight
03:27right then.
03:28So you become more climate resilient.
03:30And then there's other things like knowing your soil, the soil is getting heavily degraded.
03:35So I think it's about, these climate events are going to happen more and more, unfortunately.
03:41And so how do we equip farmers now to, you know, become more climate resilient while
03:44still increasing yields, so that we can produce food for the global population.
03:49And that will work as an incentive for them to change because, you know, some of the old
03:53school generations, they don't like change, right?
03:56So you have to introduce it to them in a more attractive way.
03:59And that leads us to our next question.
04:00Tell us about Agros and what exactly it is.
04:02Yeah.
04:03So Agros is actually Greek for farmland.
04:06So that's our core.
04:07And that's why we call it Agros.
04:09And when you look at our logo, it's water, sun, and soil, and those are interconnected.
04:15You create agricultural magic, if you will, by combining those three elements.
04:20And so where we focus on is keeping that balance across those elements.
04:23So we want to provide sustainable alternatives to irrigation.
04:27We want to provide sustainable alternatives to soil management, input management, as well
04:34as crop protection, for example, how you stop spraying pesticides to just keeping protecting
04:40your...
04:41And so for us, we're pioneering climate smart agriculture and setting the scene here.
04:46And I think our expansion in Tunisia is very exciting as well.
04:49So can you tell us what solutions do you offer to answer all these challenges faced by Indonesian
04:56agricultural sector, also by the farmers?
04:58Yeah.
04:59So on the one hand, we have designed an affordable solar water pump that farmers use.
05:05And today, farmers are using polluting diesel or gasoline pumps that are spending between
05:10500,000 to 1 million rupiah a month.
05:14And so you can move that entire fuel bill by switching to solar.
05:17And these solar water pumps are designed to last 15 to 20 years on the farm.
05:21So it's really great.
05:22And then on the other hand, we have our input in a box, if you call it.
05:26So we test the soil.
05:27And based on the soil test, similar to healthcare, where you go to the doctor, you do a health
05:32check, and then you get a prescription of medicine.
05:34So we want to do the same, right?
05:35So we want to give them the inputs that they need, but by educating them, right?
05:39And showing what the soil looks like, what nutrients they're missing, and then say, hey,
05:43here, you can buy this from us now.
05:45So a lot of farmers are not really even aware of the conditions of their soil.
05:49No.
05:50Well, yes and no, but maybe they don't want to be aware.
05:53It's like you're a smoker.
05:55People tell you, stop smoking, move on.
05:58So you need to give them a little incentive, right?
06:01So that's why our solutions are designed that they can increase yields up to 25%.
06:06And if you can offer that upside to them, as well as then provide them a pay after harvest,
06:10say like, okay, don't worry, follow my solution, you increase yields, and then you pay me after
06:16harvest, right?
06:17Well, increasing yields, obviously, this is right up your alley.
06:19It's a very attractive incentive, but at the same time, I'll just compare it to my own
06:24experience when we first wanted to switch to a solar water heater, and the upfront cost
06:30was a little bit heavy.
06:31But everyone was saying, look, you just pay the upfront cost, it's a little bit heavier,
06:34but you're going to save money in the long run, and it's going to be better for your
06:37water bills, electricity bills.
06:39So is there a heavier upfront cost when in regards to these farmers making some of these,
06:45implementing some of these changes?
06:47And how much of a challenge, and how do you tackle the challenge of being able to convince
06:50them to do so?
06:51So in theory, yes, it's a higher capex.
06:54But we give a lower down payment.
06:56And then we work with local financiers and banks to finance that, you know, credit periods,
07:01which can go up to 24 months, but usually they pay it back within 24 months.
07:05And so if you offer them, and then I think the key is the pay after harvest, not a monthly
07:09payment.
07:10So you match their cash flows.
07:12Like a shallot farmers would be every 65 days, chili, maybe 90, tomato as well.
07:16So you match that, rice would be almost 120.
07:18That's right.
07:19Yeah.
07:20Wish I had that for my house payments.
07:21Yeah.
07:22Correct.
07:24So that's how you make it more accessible to farmers.
07:27So when they can start experiencing or realizing, oh, this is a good measures to apply this
07:36new sustainable agriculture to their farm.
07:39Yeah.
07:40So we target first the more younger, more tech savvy farmers that can influence on the
07:46community.
07:47So you have these agri entrepreneurs, we call them.
07:49And so you make them, we have a program farmer champion program.
07:54So these are our first adopters.
07:55They developed, they're using our technology.
07:58We give them a hat, a t-shirt, they get commissioned on every farmer they refer.
08:03And that create deeply rooted because there's nothing stronger than a farmer to farmer testimony.
08:07Of course.
08:08Yes.
08:09And so we could deploy as many agronomists as we want.
08:11In the end, it's the farmer is going to listen to the farmer.
08:14So that's our go to market strategy, if you will.
08:16Now in regards to carbon emissions, how do you track in regards to the progress or in
08:23regards to the numbers when it comes to carbon emissions and what sort of impact that you're
08:27going to be having looking ahead?
08:30So this was bigger than I initially expected.
08:32So for example, a solar water pump reduce around five tons of CO2 per year, which is
08:37the equivalent of two cars.
08:39So that's quite big.
08:40And then on the input side, it's also around three to four tons per hectare.
08:46And so that's from reduced pesticides and reduced chemical fertilizers.
08:51Okay.
08:52In regards to Agros, it's still, we talked earlier, you just basically expanded into
08:57Indonesia.
08:58Correct.
08:59So what was the reason, the thinking behind expanding into Indonesia and what is the plan
09:04going forward as you, as Agros is now obviously prevalent here for farmers?
09:09Yeah.
09:10So it's obviously the size.
09:11I mean, as I said, more than 10 million hectares here in this country that needs to, you know,
09:16go switch towards smart farming.
09:19It's still a heavy subsidized industry as well.
09:21So there's optimizations as well for people to like stop spending on things that they're
09:26not supposed to be spending on in the next 20, 30 years.
09:30But as well as like when I'm here in Jakarta, you see the rapid development, tall buildings,
09:36very exciting.
09:37And then you go on the rural areas, it's still very underdeveloped, right?
09:39If you compare it to Vietnam or Thailand.
09:42And so I think there's now an amazing moment for us to be the pioneer in this kind of change
09:48and show like, you know, the world that we can actually build a sustainable agriculture
09:52in Indonesia being the potential food borne of the world.
09:55Yeah.
09:56Indonesian farmers seems like we rely heavily on fertilizer subsidy and I think maybe that's
10:03one of the policy has been carried out for so long.
10:08So how can Indonesia start effectively build its food security?
10:14As our president has mentioned, like in numerous time that we need to build and develop the
10:21food security in Indonesia.
10:22Right.
10:23I think it's a complex topic, of course.
10:26Agros will only play its part in it.
10:29But I think high level, it's more R&D.
10:33And when I say R&D, it's not sitting in a lab and researching, it's being on the farm,
10:37talking to the farmers, understand what their problems are.
10:40So that's one.
10:42Second one is then attracting more local as well as international entrepreneurs who bring
10:47change because entrepreneurs are great, are bringing change, even if it's not like to
10:51cover all the 10 million hectares, but at least to spark change across the government
10:55or across other public institutions.
10:59And then thirdly is building infrastructure, whether it's financial access to market, because
11:03you can grow the yields, but if there's no access to a market, either locally or internationally,
11:08it's difficult to offtake the produce.
11:11So you mentioned speaking and discussing with farmers.
11:15Has there been and what has it been like for the feedback for the farmers that you have
11:19reached so far in the time that Agros has been in?
11:22Yeah.
11:23Well, farmers are paying us, which is already the greatest sign.
11:25It means they believe in it.
11:27They believe in it.
11:28Farmers are quite stingy, I have to say.
11:30And they only give you money if they really like you or they believe in your product.
11:33So that's a good thing.
11:34So that's fine.
11:35But in general, I think they're quite excited, also a bit confused because they always saw
11:39like, for example, on the solar, they see it as like electricity for households, right?
11:44And then they see, oh, actually, this can power water.
11:46Wow, this is amazing.
11:47Right.
11:48And so they get quite excited about that, as well as, you know, so understanding they
11:52know they see it.
11:53But what they usually do is they grab the soil and they go like, right, old school way.
11:57But now it's like, wow, this is actually a report that comes out of it and can know what
12:00I do.
12:01So it's it's I think it's it's shifting.
12:05Farmers do get excited about these things.
12:07And I think there's been a huge shift in the farmers thinking like we always think
12:10of farmers wanting to stick with.
12:13And a lot of these are generational as well.
12:15So they're just doing things that past generations have done.
12:18But you see things now like applications that farmers rely on, like we wouldn't see that
12:22back in the day as well.
12:23So I think there's slowly starting to be that shift and perhaps Agro is playing a part in
12:27that shift.
12:28Yes.
12:29And in Indonesia, we have seen some startups also in the agriculture sector.
12:32So what are your target for Indonesia?
12:35It's quite big.
12:37It's going to be 30,000 farmers by the end of this year and then 100,000 in the next
12:40five.
12:41So that's starting East Java, then moving Central West and then probably South Sumatra
12:46and other islands.
12:47Yeah.
12:48So it's it's quite an exciting journey, 100,000 farmers.
12:51It's not it's not a little big number.
12:54So any plans as well, because we do know the government, as Alan mentioned, plays a big
12:58part in the agricultural sector here in Indonesia.
13:02So are there any plans looking ahead to perhaps work together with the government in order
13:05to advance this even quicker?
13:07I think we have to.
13:08Like there's not like you cannot do this on your own.
13:11See for now, we're just focusing on, you know, building the business case, building the traction.
13:16But once you hit a certain number, then you can go in and talk right and say like, look,
13:19we've done this now in East Java.
13:21Let's replicate this across the country.
13:22And I think regional governments would be very interested in that if they see their
13:26neighbors.
13:27Wow.
13:28You guys are producing a lot more.
13:29We're already doing a lot of events with with local governors and regencies.
13:32They they like it.
13:33They're promoting it to their things.
13:35They can have more influence on their farmers, show sustainable longevity in their programs.
13:40It's a domino effect, isn't it?
13:42Once a few of them get going, it's natural from there.
13:45Yeah.
13:46All right.
13:47So thank you so much for coming by.
13:48Thank you for having me.
13:49It's an honor to be here.
13:50How can we find out more about Agros, by the way, via website?
13:52Yeah.
13:53Website www.agrosglobal.com, Facebook, LinkedIn, YouTube, wherever we're.
13:58Perfect.
13:59Thank you so much.
14:00Thank you, Max and Alan.
14:01All right.
14:02We're going to take a short break here on the program.
14:04But when we return, we will bring you some of the latest updates from around the world
14:07here only on The C Morning Show.
14:09Stay tuned.