BUSINESS MODEL CONSULTANCY
TAPIOCA STARCH FACTORY & CASSAVA FARMERS PARTNERSHIP
A. Background and Requestor
Most Asian countries succeeded in multiplying major cereal production through the `Green Revolution'. This was made possible by the introduction of high yielding varieties and policy support which promoted the construction of irrigation facilities and the use of modern inputs such as chemical fertilizers and pesticides. However, up until now almost all institutional support in food crop production in Indonesia has been directed at rice production to attain rice self-sufficiently. Consequently, the food crop diversification index has dropped and rice is the only specialized crop in all provinces of Indonesia.
The key to cassava's future in global and domestic starch markets will be improvements in efficiency and quality, and a reduction in production costs. For a model of successful cassava starch industry development, we need to look no further than Thailand, the world's No. 1 producer. The Thai industry began more than 50 years ago, and expanded rapidly during the 1990s, when trade restrictions sharply reduced the European market for Thai dried cassava chips, used as animal feed. The price of industrial-grade starch on the global market has risen from just over USD200 in the early 2000s to USD555 today, and it is highly unlikely to fall back down to previous levels. Therefore, the opportunities to expand industrialization of starch production are great, and though Indonesia's exports were surpassed by Thailand, the potential of cassava product exports is still large, which is shown by the lower DRC (Domestic Resource Cost) in the starch making process, indicating a comparative advantage in the world market (Nelson, 1984).
More than 50% of starch in Indonesia is produced on Sumatera Island, with the majority of that being produced in Lampung. However, throughout Sumatera, farmers are converting to palm oil wherever possible, including Lampung, due to the higher price and more stable market for palm fruit than cassava.
APRIL has been working with a local investor to establish a stronger base for industrial grade starch requirements for APRIL's paper mill located in Riau Province. This is intended to be achieved by the
establishment of an industrial-grade starch factory in Riau Province that implements a viable, sustainable social business model which creates a mutually beneficial partnership between farmers and an industrial grade starch mill. The aim of the project is not only to support the pulp and paper mill of APRIL in diversifying and strengthening local supply of industrial-grade starch, but also to support the sustainable economic improvement of farmers that will be providing cassava to the starch mill, while ensuring both farming and mill practices are environmentally sound.
B. Objectives
The broad objective of this consultancy is to conduct a quick assessment and to produce a report on cassava agribusiness systems for the tapioca industrial-grade starch industry in Indonesia with taking into account the relevant global contexts and to develop social business model options to guide the successful establishment of industrial-grade tapioca starch production in partnership with local farmers in the province of Riau to support the pulp and paper industry in this province. Potential locations and partners have been identified in a specific location in Riau Province.
C. Outputs
1. Provide a strategy related to mill and cassava production to improve the welfare of the farmers.
2. Present a technical plan and process for its development and implementation to assist farmers develop high yields and quality. This plan and its implementation is to include processes to improve on-farm productivity and profitability in line with the livelihoods of the farmers and maintain short and long term environmental sustainability.
Specific Outputs
1. A comprehensive study report outlining the following:
· Analysis on global and local cassava cropping patterns (cropping, harvesting, yield etc.)
· Analysis on the national and local tapioca starch processing industry, specific to medium-scale starch production
· Potential support from the provincial government for this business and related supply chain issues, such as policies and issues (land), supporting infrastructure, etc.
· Strategy for private public partnership
2. A list of possible models for industrial-grade tapioca starch factory and cassava farmer partnerships, with the strengths and weaknesses of these potential models, considering the following: market and business viability, sustainability, social and political aspects and investment requirements.
3. Provide a strategy related to the mill and cassava production to improve the welfare of the farmers
4. Present a technical plan and process for the development and implementation of the chosen model to assist farmers develop high yields and quality. This plan and its implementation are to include processes to improve on-farm productivity and profitability in line with the livelihoods of the farmers and maintain short and long term environmental sustainability.
5. Questions of most interest to APRIL for the models and analysis provided should cover:
· How to develop a more economical farming system
· How to develop win–win partnership scheme with farmers
· How to produce cassava with higher starch content
· How to increase productivity (ton/Ha)
· How to improve market structure, e.g. eliminate middlemen, presence of cooperatives, etc.
· How to optimize income, e.g. intercropping, shareholdings within mill
· How to optimize APRIL's role beyond providing the market for the starch
· How to ensure that government policies are utilized and developed to support the proposed option
D. Requested Service & Suggested Methodology
In order to achieve the objectives, the consultant will be required to work closely with the Social Department of RAPP in Jakarta and Riau (Pangkalan Kerinci) in undertaking the following:
1. Stakeholder analysis, particularly with government departments, mill operations, other relevant businesses and farmers.
2. Design and implement assessments of potential business model ranges and surveys of other providers globally
3. Analyze and interpret the data and provide solid strategic recommendations to APRIL to ensure competitiveness and sustainability of operations to satisfaction of farmers, starch mill producers and buyer (APRIL).
4. Select the range of farmer/mill business relationship model options and analyze their feasibility.
The methodology for the study will be developed by the selected consultant at the outset of the work and will be presented in detail in the inception report. It is anticipated, however, that the study will employ desk research and qualitative research techniques which may include focus group discussions, in-depth interviews and structured observations. It should also include quantitative surveys and interviews of other providers/potential buyers and case-studies.
E. Reporting & Timeline
The consultancy is expected to be completed in 4 (four) weeks and scheduled to be commenced in July 2011. The consultant should provide a detailed workplan once the contract is approved.
It is expected that the consultant can provide the following reports in English or Indonesian during his/her service:
1. Draft Final Report – After 3 weeks
2. Final Report – max 1 week after feedback provided
F. Required Expert Profiles
1. Holds minimum secondary degree in agribusiness and/or economic studies.
2. Minimum 10 years of experience in related sectors or research.
3. Possess strong knowledge in cassava farming and industry globally and in Indonesia
4. Possess practical experience in implementing agribusiness modeling
G. Remuneration
1. Upon signed of contract 30%
2. Submission of Draft Report 50%
3. Acceptance of Final Report 20%
H. Proposal
The proposal should be no longer than 5 pages plus annexes. The proposal needs to identify the following:
* Proposed research design, methodologies and instruments and how they will address the study objectives * Proposed research phases and timeline, and * Proposed fee, which should:
- Include tax in the proposed fees, which APRIL will deduct at payment and submit to Tax Department on behalf of the organization.
- Exclude travel and accommodation. These items will be arranged and paid by APRIL or reimbursed at cost by APRIL.
· Organisation profile, to include CV of key personnel who will be involved in the proposed scope of work, the organisation's past experience and proven record in developing and implementing similar studies.
Please submit proposals to:
Jordan Hoffmann
Tanoto Foundation
Jl. MH Thamrin 31
Jakarta 10230
Email: Jordan_Hoffmann@tanotofoundation.org
For any inquiries about any aspects of this Terms of Reference, please contact Jordan Hoffmann at the above email or the following telephone numbers: +62 (0)21-392-3189 ext. 192.
Last date for submission: 17 June 2011
TAPIOCA STARCH FACTORY & CASSAVA FARMERS PARTNERSHIP
A. Background and Requestor
Most Asian countries succeeded in multiplying major cereal production through the `Green Revolution'. This was made possible by the introduction of high yielding varieties and policy support which promoted the construction of irrigation facilities and the use of modern inputs such as chemical fertilizers and pesticides. However, up until now almost all institutional support in food crop production in Indonesia has been directed at rice production to attain rice self-sufficiently. Consequently, the food crop diversification index has dropped and rice is the only specialized crop in all provinces of Indonesia.
The key to cassava's future in global and domestic starch markets will be improvements in efficiency and quality, and a reduction in production costs. For a model of successful cassava starch industry development, we need to look no further than Thailand, the world's No. 1 producer. The Thai industry began more than 50 years ago, and expanded rapidly during the 1990s, when trade restrictions sharply reduced the European market for Thai dried cassava chips, used as animal feed. The price of industrial-grade starch on the global market has risen from just over USD200 in the early 2000s to USD555 today, and it is highly unlikely to fall back down to previous levels. Therefore, the opportunities to expand industrialization of starch production are great, and though Indonesia's exports were surpassed by Thailand, the potential of cassava product exports is still large, which is shown by the lower DRC (Domestic Resource Cost) in the starch making process, indicating a comparative advantage in the world market (Nelson, 1984).
More than 50% of starch in Indonesia is produced on Sumatera Island, with the majority of that being produced in Lampung. However, throughout Sumatera, farmers are converting to palm oil wherever possible, including Lampung, due to the higher price and more stable market for palm fruit than cassava.
APRIL has been working with a local investor to establish a stronger base for industrial grade starch requirements for APRIL's paper mill located in Riau Province. This is intended to be achieved by the
establishment of an industrial-grade starch factory in Riau Province that implements a viable, sustainable social business model which creates a mutually beneficial partnership between farmers and an industrial grade starch mill. The aim of the project is not only to support the pulp and paper mill of APRIL in diversifying and strengthening local supply of industrial-grade starch, but also to support the sustainable economic improvement of farmers that will be providing cassava to the starch mill, while ensuring both farming and mill practices are environmentally sound.
B. Objectives
The broad objective of this consultancy is to conduct a quick assessment and to produce a report on cassava agribusiness systems for the tapioca industrial-grade starch industry in Indonesia with taking into account the relevant global contexts and to develop social business model options to guide the successful establishment of industrial-grade tapioca starch production in partnership with local farmers in the province of Riau to support the pulp and paper industry in this province. Potential locations and partners have been identified in a specific location in Riau Province.
C. Outputs
1. Provide a strategy related to mill and cassava production to improve the welfare of the farmers.
2. Present a technical plan and process for its development and implementation to assist farmers develop high yields and quality. This plan and its implementation is to include processes to improve on-farm productivity and profitability in line with the livelihoods of the farmers and maintain short and long term environmental sustainability.
Specific Outputs
1. A comprehensive study report outlining the following:
· Analysis on global and local cassava cropping patterns (cropping, harvesting, yield etc.)
· Analysis on the national and local tapioca starch processing industry, specific to medium-scale starch production
· Potential support from the provincial government for this business and related supply chain issues, such as policies and issues (land), supporting infrastructure, etc.
· Strategy for private public partnership
2. A list of possible models for industrial-grade tapioca starch factory and cassava farmer partnerships, with the strengths and weaknesses of these potential models, considering the following: market and business viability, sustainability, social and political aspects and investment requirements.
3. Provide a strategy related to the mill and cassava production to improve the welfare of the farmers
4. Present a technical plan and process for the development and implementation of the chosen model to assist farmers develop high yields and quality. This plan and its implementation are to include processes to improve on-farm productivity and profitability in line with the livelihoods of the farmers and maintain short and long term environmental sustainability.
5. Questions of most interest to APRIL for the models and analysis provided should cover:
· How to develop a more economical farming system
· How to develop win–win partnership scheme with farmers
· How to produce cassava with higher starch content
· How to increase productivity (ton/Ha)
· How to improve market structure, e.g. eliminate middlemen, presence of cooperatives, etc.
· How to optimize income, e.g. intercropping, shareholdings within mill
· How to optimize APRIL's role beyond providing the market for the starch
· How to ensure that government policies are utilized and developed to support the proposed option
D. Requested Service & Suggested Methodology
In order to achieve the objectives, the consultant will be required to work closely with the Social Department of RAPP in Jakarta and Riau (Pangkalan Kerinci) in undertaking the following:
1. Stakeholder analysis, particularly with government departments, mill operations, other relevant businesses and farmers.
2. Design and implement assessments of potential business model ranges and surveys of other providers globally
3. Analyze and interpret the data and provide solid strategic recommendations to APRIL to ensure competitiveness and sustainability of operations to satisfaction of farmers, starch mill producers and buyer (APRIL).
4. Select the range of farmer/mill business relationship model options and analyze their feasibility.
The methodology for the study will be developed by the selected consultant at the outset of the work and will be presented in detail in the inception report. It is anticipated, however, that the study will employ desk research and qualitative research techniques which may include focus group discussions, in-depth interviews and structured observations. It should also include quantitative surveys and interviews of other providers/potential buyers and case-studies.
E. Reporting & Timeline
The consultancy is expected to be completed in 4 (four) weeks and scheduled to be commenced in July 2011. The consultant should provide a detailed workplan once the contract is approved.
It is expected that the consultant can provide the following reports in English or Indonesian during his/her service:
1. Draft Final Report – After 3 weeks
2. Final Report – max 1 week after feedback provided
F. Required Expert Profiles
1. Holds minimum secondary degree in agribusiness and/or economic studies.
2. Minimum 10 years of experience in related sectors or research.
3. Possess strong knowledge in cassava farming and industry globally and in Indonesia
4. Possess practical experience in implementing agribusiness modeling
G. Remuneration
1. Upon signed of contract 30%
2. Submission of Draft Report 50%
3. Acceptance of Final Report 20%
H. Proposal
The proposal should be no longer than 5 pages plus annexes. The proposal needs to identify the following:
* Proposed research design, methodologies and instruments and how they will address the study objectives * Proposed research phases and timeline, and * Proposed fee, which should:
- Include tax in the proposed fees, which APRIL will deduct at payment and submit to Tax Department on behalf of the organization.
- Exclude travel and accommodation. These items will be arranged and paid by APRIL or reimbursed at cost by APRIL.
· Organisation profile, to include CV of key personnel who will be involved in the proposed scope of work, the organisation's past experience and proven record in developing and implementing similar studies.
Please submit proposals to:
Jordan Hoffmann
Tanoto Foundation
Jl. MH Thamrin 31
Jakarta 10230
Email: Jordan_Hoffmann@tanotofoundation.org
For any inquiries about any aspects of this Terms of Reference, please contact Jordan Hoffmann at the above email or the following telephone numbers: +62 (0)21-392-3189 ext. 192.
Last date for submission: 17 June 2011
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