Country lead (Indonesia & Malaysia) at Bayer Crop Science
|Rhishi Pethe||Jun 20||3|
Hi. If you are new here, I am Rhishi Pethe, and I am excited you’re in the “Software is Feeding the World'' community. Every Sunday, you will receive this free newsletter at the intersection of technology and agriculture systems. I am a product manager at Project Mineral (focused on sustainable agriculture) at X, the moonshot factory. The views expressed in this newsletter are my personal opinions.
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Today’s conversation features Patrick Gerlich. Patrick is the country lead (Indonesia & Malaysia) at Bayer Crop Science. Bayer Crop Science is the largest agriculture inputs company in the world. Patrick has worked in Europe, Brazil, and the United States across a wide variety of functions.
We talked about the following topics:
Challenges faced by smallholder farmers in Indonesia
Fragmented and distributed supply chain in Indonesia (17,000 islands)
Bayer’s footprint in Indonesia
Problems with palm oil
Bayer’s “Better Life Farming” initiative
Women in agriculture
Patrick’s productivity and learning process, and his inspirations
Agriculture in Indonesia
Rhishi: You were part of the Bayer rotation program. How did you end up in Indonesia?
Patrick:The Bayer rotation program is a dual study program. It consists of a bachelor's degree and an apprenticeship, combining theoretical and practical know-how. The program ended with an MBA after which you went on to develop your career as you normally would.
The advantage is that by your early twenties, you have three to four years of Bayer work experience. You are able to build a network, get broad experience across a number of different functions and generally a good picture of the overall company. While I spent some time in the other Bayer divisions (back then: Corporate, Health Care and Material Science) it quickly became clear that I would end up at Crop Science one day.
My father worked for a big multinational company. He spent 30 years traveling the world and moving us to a new country every three or four years. The largest part of my youth we spent in India. I lived there for six years, My parents stayed for a total of 11 years. Ever since, I have had a big affinity to Asia in general.
I have always been looking to get back to Asia. I cannot think of a more exciting place to be. The economic growth and especially the dynamic agricultural developments are super interesting.
Rhishi: Could you talk about your business in Indonesia? What's your footprint?
Patrick: In Indonesia, we provide crop protection products for rice, corn, fruits and vegetables as well as our Dekalb corn hybrids. We do a bit over $100 million in sales with a team of 300 people.
The deregulation of Biotech in the country presents a great opportunity over the next few years to introduce our globally successful corn traits into the market. Besides the business opportunity, access to Biotech will be great for Indonesian farmers and contribute to food security and self-sufficiency in Indonesia.
Indonesia map (Source: Google Maps)
Distribution challenges and distance to customer
Rhishi: Indonesia is such a big country. Are you in row crops?
Patrick: Indonesia is made of 17000 islands and about a 7 hour flight from one end to the other. The market is super fragmented and covers different growing zones. The crop profile and the agronomic practices are also different. In the seed business, we're currently only present in corn. For crop protection, we're present across herbicides, insecticides, fungicides, and seed treatments across segments like fruits, vegetables, corn, and rice. In the plantation business, it is oil palm and rubber.
Rhishi: I’m curious about your distribution strategy with 17000 islands. It's different from big countries like the US and Brazil.
Patrick: Most farming in Indonesia is done by smallholder farmers. There are about 25 million smallholders.It’s a challenge to reach such a large number of growers by ourselves, especially in remote areas and so called blank spots. Both from a cost and effort perspective. So there are 3 levels in the channel. Distributors are our direct customers, then you have 2 levels of retailers, and finally the farmers.
In Indonesia, we need this distribution and retailer network on the ground to reach into the fragmented market and help with last mile delivery, so - similar to the US or Brazil - the partnership with our channel partners is very important.
Rhishi: You are two (three) steps removed from the final customer. What challenges does it pose when you're thinking about products and their usage?
Patrick: It is difficult to tailor your programs and products to customer needs if you are far from the customer. We try to have our people in fields with farmers as much as possible. They are doing field demos and trials, hold farmer and retailer events to get direct customer feedback.
A large part of our field force comes from an agricultural background. They often work in areas they grew up in, which oftentimes are rural areas, and they have personal networks into the farming community there.
We get a lot of informal information. We've a good understanding of the inventory levels in distribution through our close contact with them. While we have applications to track inventory further down the channel, across 7000 retailers, the picture definitely gets blurrier and almost impossible to control at a detailed level.
Rhishi: Can you talk about the footprint of the farmers themselves?
Patrick: Indonesian agriculture is to a large extent smallholder farming. Like India or Africa, you’re looking at average acreage per farmer below 1 hectare.
You've got large plantations which are multi-million dollar enterprises. And both the large plantations and the smallholder farmers are important customers for us, but they require completely different levels of access.
Smallholders struggle to access finance, off-taker markets, training, and know-how. Depending on where they are, some challenges weigh heavier than others so there's no such thing as a one-size-fits-all solution.
Rice farmers might face issues in pest management. Farmers in oil palm struggle with labor availability issues. That's why you need to be close to them, which is difficult.
Rhishi: Do the local and state governments have extension agents? How do you try to bridge the knowledge and know-how gap?
Patrick: Of course digital interactions have accelerated greatly, especially over the past year. Despite large scale lockdowns, our teams managed to interact regularly with large groups of farmers. We’re able to conduct a majority of the necessary training on our own as we have a large expertise within Bayer. These trainings range from product training, application best practices and using the right protective gear, to name a few.
But it’s necessary to partner in a fragmented market like Indonesia because we can't be everywhere. We're in discussions with public institutions, developmental agencies as well as companies along the value chain to find ways on how to lift smallholder farmers on to the next level and improve their livelihoods.
Rhishi: What about the supply chain network? I imagine it's pretty challenging when you're in such a fragmented geography.
Patrick: Definitely. There's so much water between our sales territories and two production sites. How do you get products from there to growers spread out across a few thousand islands?
Again, we rely on our distribution and partner network. They’ve a good logistics network, with boats and lorries. There are many small farmers in remote areas and they don’t need hundreds of liters of products. Often our retailers are selling only a little bottle to an individual farmer.
So what’s keeping us from sending bottles through Go-Jek? We can transport the bottles everywhere, including last mile delivery.So one could think about what’s keeping us from sending a few of these bottles through Go-Jek to whatever little village it needs to get to? We can then transport it all over the place, including last mile delivery. (go-jek is an Indonesian on-demand multi-service platform & digital payment technology group)
The dichotomy of tech adoption
Rhishi: What does the tech landscape look like for farmers, retailers, and distributors?
Patrick: Tech in Indonesia is a very interesting topic. There's such a buzz around Agtech in Indonesia. Like India, you've different startups in the agtech space or connected to ag popping up all over.
On the one hand, there's a lot of investor interest and funding going into it, with many great concepts and ideas. But on the other hand, farmers are not ready to adopt innovation. There are barriers to adoption such as lack of awareness and a perceived difficulty in use.
A few interesting ideas are in the value chain partnership space. There's an app called Sayurbox, to order produce directly from smallholder farmers. There are companies focusing on IoT sensors, weather prediction apps. But it's so far removed from the reality of smallholder farmers today, that the real value add is still unclear.
Indonesian agriculture has a good foundation for tech adoption. Cell phone penetration is high at around 65% and there is an intrinsic affinity to technology. Similar to China, Indonesia leapfrogged the computer and went straight to apps and smartphones.
When farmers are using smartphones, they're using WhatsApp and social media. Less than 10% are using e-commerce platforms in agriculture. There is definitely an opportunity. But so far, AgTech has missed out on raising awareness, proper training, and has forgotten to take smallholder farmers along.
Rhishi: I talked with an African farmer a few weeks back. He talked about YouTube videos for getting information. Do Indonesian farmers use YouTube/Facebook?
Patrick: Farmers get a lot of education from YouTube and Facebook. It's not supervised by any company. We've started to use them to disseminate knowledge and product training. They then get passed on and shared through WhatsApp or Facebook.
Farmers today still get a big part of their agricultural know-how through farmer groups, in which they are members. These are usually organized around 50-200 farmers with two to five representatives. We interact with the representatives and give them necessary knowhow. They're then able to multiply to hundreds of farmers, oftentimes using YouTube tutorials. We also supply them with promotional materials and samples. It motivates them and enables them to be ambassadors for us.
“Better Life Farming”
Rhishi: You find those influencers, if you will. and they're more well-versed with tech. You can read them and have a conversation. They can spread the message and know how.
You have a “Better Life Farming” program. Can you talk about the program?
Patrick: I have spent a lot of time in the last few months on our “Better Life Farming” program. I’m convinced this will have a big impact on Indonesian agriculture in the coming years, and we’re already now seeing very positive signs.
The Better Life Farming program falls under a strategic alliance between a number of global partners including Bayer, IFC, SwissRe, Netafim and a number of local partners depending on the country.
The objective is a holistic approach to improve the livelihoods of smallholder farmers. We help small farmers build viable businesses and follow sustainable farming practices. We aim to provide them with access to technology, knowledge, finance, risk management tools, and off-taker markets. The outcome is financial security, increased know-how and improvement in their livelihood.
Better Life Farming: Our Holistic Approach (source: Better Life Farming website)
One of our metrics is to expand the “Better Life Farming” initiative, with 20% of the farmers we reach being women. We're creating new Better Life Farming Centers (BLFCs), all across Indonesia at the retailer level and putting a special focus on women-owned BLFCs.
We are converting the lowest level retailers into these BLFCs. We've over 170 across Indonesia already and are targeting to double that by the end of 2021. By 2030, we want to have 3000 BLFCs in Indonesia alone which would allow us to reach 3.5-4 million smallholder farmers. These "Better Life Farming" centers are one stop shops for the rural community. Farmers can buy crop protection products or seeds, get agricultural training, and information. We’re working on a number of other services through discussions with partners, ranging from telecommunications providers to banks. I expect BLFCs to be offering services way beyond Ag Inputs in the new future.
We’re actually taking it to the next level already. At Bayer we have a strong footprint in pharmaceuticals and healthcare, in addition to agriculture. In line with our global vision “Health for all, hunger for none” we are piloting an approach where we offer know-how and products from our pharmaceuticals and consumer health divisions through the Better Life Farming Centers.
Through our Consumer Health division, we sell single serve packages of vitamins or nutritional supplements. Through Pharma, we provide knowledge and training on reproductive health and family planning. We use the three divisional approach to improve the lives of rural communities overall.
Rhishi: The breadth of the services is impressive. You're able to bring the whole Bayer portfolio, and your partners along with it.
Patrick: It was obvious to piggyback some of our other offers, though the implementation has its challenges. But we’re connected through our global sustainability commitments. Bayer aims to reach 100 million smallholder farmers by the end of 2030 globally. It is a commercial initiative first. It is a sustainability initiative as a result. That is why it is so successful in Indonesia.
It's a win-win situation. We're able to build up their financial situation, their know-how around health and nutrition and through that improve their livelihoods.
Rhishi: You have partners for insurance products. But you don't have a partner for financing. It is a challenge to get operating capital for inputs like seed or chem for smallholder farmers. Do you have any plans to address the financing issue?
Patrick: I don't see us doing it ourselves, as it is not our area of expertise. It's a tough nut to crack because many of these farmers don't even have a bank account. We're in discussions on a regional level with some banks. We're looking for local partners to help us with the financing piece as well.
In the meantime, we're exploring some other avenues. We're in conversations with telecom providers for example. They can help with digitalization and access to the internet in rural areas.
On the financing piece, in the absence of a banking partnership, we’re working on finding ways to connect smallholders with an off-taker. This could provide them with security, potentially solve their cash flow issue to a certain extent. It could be some sort of a barter program.
Rhishi: What role do women play in agriculture? They do a lot of the work, but they either don't have ownership or decision power. How do they engage with the “Better Life Farming” centers?
Patrick: I subscribe to what you said about women farmers. Women, especially in the smallholder farming space, do a lot of the work, but get almost none of the credit.
From Empowering Indonesia’s Women Farmers “In Indonesia, approximately 49 percent of agricultural households are women farmers according to the 2018 Agriculture Census. These women are involved in almost all agricultural processes and vital functions, yet they still often lack recognition. Their agricultural work is perceived as secondary to their domestic responsibilities and to men’s involvement in agriculture.”
Female farmers can go to “Better Life Farming” to get information on contraception, family planning, education, nutrition, etc.Tracking the number of centers is easy because we know our retailer network. We collect data from these shops. It gives us a good view on our gender footprint. We call it gender smart agriculture. We want to reach farmers, 20% of which should be women. We do two main things.
One is monitoring the average yield of male versus female farmers. The other is the training and capacity building methods and tools for female farmers. We have female-only training, and through that have their contact details. We're able to check in with them regularly. It’s a two-edged sword to a certain extent. On the one hand, you're helping these female farmers. You do need to watch out from a cultural and social perspective, respect them and try to tackle them with the right level of care. Oftentimes, it's not welcome when the woman participates in training, sharing opinions.
The farmer leaders or ambassadors have opinion leader status in their villages. Oftentimes, BLFC owners are also opinion leaders. In the future, you would have female opinion leaders or group leaders, even in Indonesia. It might not be reality, from a cultural or religious perspective. But I’m optimistic we’ll get there.
Rhishi: It sounds difficult to do, but the impact will be huge. Are there huge differences between outcomes between female farmers and male farmers?
Patrick: The idea is not to show huge differences. It is to show women are at least as good as men, if they get the proper training. You'll have a male farmer go to training, get a cool t-shirt and knowledge, go home and make his wife do all the work. The person doing the work in the fields is not the one benefiting from the training. We're trying to break it up to say, look, we know women are in the field every day doing the work.
So they should receive this training along with men. It's not a women-only thing. It is something we need to force in the beginning because it doesn't reflect the reality of the situation.
The “P” word - Palm oil
Rhishi: The connection to off-take is so important. It gives them some guarantee that their product has a market. and there's a buyer on the other side.
Talking about tough problems, let’s talk about oil palm. What are some of the challenges?
Patrick: This is my personal opinion. There's a deforestation issue. Some of the criticisms of palm plantations are justified. Bayer and companies like Bayer provide the best possible product portfolio. They connect to training, stewardship practices, and safety.
The goal is that these plantations become so productive, the plantations no longer need to expand and can actually reduce their areas and use the land for something else. Our current impact is real and immediate. We have partnerships with other public sector companies to tackle sustainable oil palm.
It comes down to the proper, safe and effective use of crop protection products. It should lower the need for plantations to expand.
Rhishi: Deforestation is one issue. The other issue is human rights and working conditions.
Patrick: Working in a plantation is hard. Plantations have faced a huge challenge during COVID. They haven't had the same access to migrant workers as they had in the past, so labor has not been as easy to come by. It will be interesting to see if anything will change post-pandemic. Plantation workers had to find other sources of income, to make a living. Will they have found work they consider better than working in a plantation, so that plantation will have to improve working conditions to win them back?
The general mechanization of applications is good. For example, drone applications are super interesting in the plantation space. We're far away from automation, but switching some of the tedious tasks is worth looking into. You need to spray pesticides up and down oil palm trees, while standing on the ground. It creates volatility. You have to suit up. With temperatures of 30 degree C (95 degrees F) plus, it is torture. A switch to a drone or a robot is a good step to solve some of the labor issues.
Learning process and inspirations
Rhishi: The problems in Germany, US or South America were different from what you are doing in Indonesia. How do you manage the learning process?
Patrick: There's no big secret. It's the same as moving from one job to the next. I've always looked for jobs where I don't really have an idea of what to expect. I'll have an idea of what I bring to the table and what I could do in this role and what I could gain from it.
But it's diving into the deep end and figuring out how to swim. The best way to learn is by doing. I'm six months into the job now. I've spent most of those six months traveling, listening, and learning. I have a really great team in Indonesia and Malaysia, with a strong expertise in what they do.
They know their job. They know the market. They understand the customer. I'm the one learning much more from them than the other way around. Thanks to them, I’m now getting to the point of having a good enough overview to start kicking off some strategic projects.
When I take a new job I first try to understand how my personal relationships are. What's the level of trust? If the trust is there, I’m pretty hands off. In my case now, I have an experienced team. I can trust them to excel in their job without me micromanaging. So I am lucky.
Rhishi: What surprised you most about agriculture in Indonesia and Malaysia?
Patrick: Two things. One is how resilient small holder farmers have to be and are. Whether I went to north Sumatra or to east Java, you see women in their forties, fifties, sixties. They spend hours a day in the field. They are knee deep in a rice field, with back breaking work. The temperatures and humidity are crazy. They are working on one or one and half meals a day. At the end of the day 50,000 Rupiah or about $ 3 / day (1 USD is approximately equal to 14,250 Indonesian Rupiah), if at all. They have to go home, take care of the family, cook for the husband, do the chores, do shopping or buy groceries. I was expecting it to a certain extent, but the brutality of it surprised me.
The other is the state of technology adoption within Indonesia agriculture. I live in Jakarta. You do everything via your cell phone, whether it's ordering food or laundry services. I forgot my bag at a friend's house one evening. I sent a Go-Jek to go get it and drop it off at my house.
You can do everything. And it's immediate. Cell phone penetration is high. But it's difficult to bring a digital solution, even a simple app to the smaller farmers. Together with my team we’re trying to figure out a way to bridge the gap a little bit better in Indonesia.
Rhishi: I am sure it has increased your resolve to go deep on the "Better Life Farming" program.
Patrick: It is a real privilege to have a purposeful job with a real impact on the world. Having grown up in India, I saw poverty and the big divide between classes. "Better Life Farming" is a good avenue to solve a lot of these issues. We can't do it by ourselves. “Better Life Farming” isn't branded as a Bayer initiative. It's an alliance of different partners. We've been able to marry it with our commercial interests. It makes me even prouder because that's what a sustainable business means. It's not going to be truly sustainable and long-term if you're not making money with it to a certain extent, at least not in a stock listed company. I'm looking forward to seeing where this goes and I'm super optimistic to make a real impact.
Rhishi: Your background is so interesting and you've stayed all over the world. Who are the people or situations that inspire you to keep doing the work you're doing?
Patrick: I have to say my parents for two different reasons. My dad was able to go through his career and do a great job, making a professional impact to many people along the way. Despite being gone much of the time, he was always able to give my sister and I the feeling of being totally present and giving us just the right level of attention that young kids and later teenagers need. We always felt like we had a dad and a family life, even though he was busy.
My mother sacrificed her career to accompany my father and to raise us with dedication and a sense of purpose that I haven’t seen anywhere else. As we grew older and needed less raising, she got involved in social engagements. It really picked up in India.
She got involved with street children and helped them without having a real structure around it. It wasn't part of an organization. She would go out and basically meet the first few street kids she found and teach them how to brush teeth. Such a selfless way of living your life is inspiring to me. If I can combine those two aspects of my parents even to an extent, I’ll have done a lot of things right.
Rhishi: Patrick, thank you for your time. This has been an inspiring conversation.
“Better Life Farming” introduction
Better Life Farming rice fact sheet (Jan 2019)
World Wildlife Fund: 8 things to know about palm oil
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