TaniHub: Creating Lasting Impact for Indonesia’s Highly Fragmented Agriculture Sector

TaniHub: Creating Lasting Impact for Indonesia’s Highly Fragmented Agriculture Sector

“I never imagined myself to be an entrepreneur.” Growing up, Pamitra Wineka, founder of TaniHub always envisioned himself going into research or government work. This idea was challenged during a social project for the World Bank, where he grew close to a group of farmers and started to ponder how he could make their lives better. He recounted his experience with our Global Investments Advisor, Smita Aggarwal during a Flourish Focus conversation. Here is how his journey with TaniHub began.

Fixing logistics in Java

During his time with local farmers in Java, Indonesia, Pamitra wondered why he repeatedly heard complaints about how difficult it was to sell produce. The products were high quality, there was plenty of demand, so where was the disconnect? To figure it out, Pamitra followed the supply chain.

“I went to several farms, walked through the process of harvesting, and rode on a truck that carries all the produce.” Pamitra realized that the logistics for farmers needed innovation. “Fruits are stacked so 10 – 15% are already damaged and another 10% get damaged during sorting.  Every day their produce doesn’t sell, another 5% is lost.” 92% of Indonesia’s farmers are smallholder farmers and usually sell their produce to the local middlemen. For the buyer side, every buyer wants products with consistent quality and cheaper pricing. If he could help farmers get their products to market more efficiently and reduce price disparity between farmer and buyer, they could increase their earnings, pay off debts, and improve their lives.

With this idea, TaniHub was born.

From social project to high growth startup

What started as a small logistics project quickly turned into a full-fledged business. “A lot of the farmers that we helped felt it was really useful,” Pamitra recounted. “The first group of farmers experienced a significant increase in income and were able to sell all their products.” Farmers in neighboring areas who were outside of the TaniHub cohort wanted to know about the secret strategy that was increasing profits so dramatically. Word got out that it was TaniHub and signups started to climb. “All of a sudden everyone wanted to register for TaniHub.”

As the TaniHub platform grew with more and more suppliers, buyers also wanted access. The platform soon hosted thousands of farmers and could give buyers choice of products for the exact cost they want. TaniHub not only fixed the supply chain issues but also delivered value to both the buyer and the supplier.

“The farmers get a better price and the buyers get a lower price which is actually a win-win situation for all the stakeholders,” said Smita.

As overwhelming interest in the company continued, Pamitra’s vision for the future transformed. “I’ve always wanted to create impactful things for people.” He quickly realized that if TaniHub was successful for this test group of farmers and suppliers, it could also provide a lasting impact on the highly fragmented agriculture sector. He quit his day job, assembled a team and thoughtfully considered how to advance Indonesian agriculture and boost local economies.

Revising lending for farmers

For inspiration, Pamitra went back to his time in Java. He examined how to fix logistics and discovered that Indonesian farmers are hindered by a vicious cycle of unpaid loans and bad credit. “If they can’t sell their products, the farmers can’t repay their loans,” Pamitra noted. Since TaniHub had removed the obstacle of logistics, the team decided to tackle lending for farmers.

In exchange for lending, traditional banks ask for collateral which farmers often don’t possess. Pamitra and the team leveraged the platform’s trade data. “With a history of transactions, we have the data to inform what we can lend farmers through our peer-to-peer lending platform.” Once they have their track record of borrowing through TaniFund, farmers can be referred to a bank for more substantial funding. “It’s kind of a virtuous cycle that you’re kicking off in which everyone gains and there is sustained income growth,” Smita said.

Tackling too much?

The agriculture industry is fragmented and highly volatile. Quality, quantity, and timing all impact the yield. “This is why we’re trying to do the entire supply chain,” Pamitra explained. With proper funding, farmers can gain access to quality seeds and fertilizers, produce high-quality crops, find buyers and markets for them, and see their incomes increase. Pamitra believes that to change the industry, TaniHub needs to play a part in every step.

Currently, this strategy works for the farmers and TaniHub. Farmers on the platform offer high-quality products and have amassed a large following of business buyers. “We significantly reduce post-harvest wastage and consistently provide grade A or B produce with a very sophisticated grading system,” Pamitra explained. This is key to TaniHub’s rapid growth and success – providing buyers with quality and consistency on one hand and ensuring continuous demand for farmer’s output.

Turning adversity into opportunity

When Covid-19 hit, a lot of businesses suffered and many shut down. Perversely, the TaniHub revenue grew by more than 600%. A lot of farmers lost out when the wet markets were shut and traditional buyers like food processing units and hotels reduced demand. TaniHub evolved and focused on a B2C offering for families to buy fruits and vegetables online. “B2C was always one of our tough markets because a lot of people don’t like the idea of someone else picking out their produce,” said Pamitra. “This changed overnight with the pandemic. “Once online shoppers received fruits and vegetables at home and saw that the quality was really good, they trusted TaniHub. Additionally, we saw an increase in home-based food entrepreneurs who would source high-quality produce and offer tasty meals.”

As a result, more farmers joined the TaniHub platform and word-of-mouth recommendations drove B2C registrations through the roof. “I actually got three phone calls from governors of different states asking for us to collaborate,” said Pamitra. In 2020, the TaniHub team onboarded more than 30,000 new farmers.

“The pandemic has been a shock, but a good shock,” Pamitra said. “If I could put it into two words, Covid was ‘amazing chaos’ for us.”

With such fast-paced growth, how does Pamitra stay focused and motivated? “My team inspires me,” he explained. “They all work for impact. They are dedicated to helping farmers gain financial stability and want to change the lives of people. It makes me excited to go to work every day.”

Watch the on-demand replay of Flourish Focus: TaniHub below and subscribe to be alerted to future 1:1 exchanges with fintech innovators around the world.