Shallot Sub-Sector Growth Strategy IN West Nusa Tenggara

Australia-Indonesia Partnership for
Promoting Rural Income through

Support for Markets in Agriculture
(AIP-PRISMA)
SHALLOT SUB-SECTOR GROWTH STRATEGY

IN
WEST NUSA TENGGARA
August 18, 2015
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Table of Contents
Summary of key changes from previous GSDs and focus for next year .................................... 4
1 Executive summary ........................................................................................................... 5
2 Background ....................................................................................................................... 8
3 Sector description .............................................................................................................. 8
3.1 Sector profile .............................................................................................................. 8
3.1.1 Overall context .................................................................................................... 8
3.1.2 Local context ..................................................................................................... 10
3.2 Sector dynamics ....................................................................................................... 12
3.2.1 Market overview ................................................................................................ 12
3.2.2 Sector map ........................................................................................................ 13
3.2.3 Core value chain ............................................................................................... 14
3.2.4 Supporting functions .......................................................................................... 19
3.2.5 Supporting rules and regulations (enabling environment) .................................. 22
4 Analysis ........................................................................................................................... 23
4.1 Problems and underlying causes .............................................................................. 23
4.2 Services, enabling environment, and weaknesses analysis ...................................... 24
5 Strategy for change ......................................................................................................... 25
5.1 Market potential ........................................................................................................ 26
5.2 Vision of change ....................................................................................................... 26
5.3 Intervention areas..................................................................................................... 27
5.4 Sequencing and prioritisation of intervention areas .................................................. 29
5.5 Sector vision of change logic .................................................................................... 30
Annex 1: Intervention Logic Analysis Framework (ILAF) ...................................................... 31
Annex 2: Gender table ......................................................................................................... 32
Tables & Figures

Figure 1: Trends in production & harvested area in Indonesia .................................................. 8
Figure 2: Consumption trends in Indonesia (2008-2012) ........... Error! Bookmark not defined.
Figure 3: Monthly imports of shallots in Indonesia (2007-2012) .............................................. 10
Figure 4: Top 10 shallot producing provinces in 2014 ................ Error! Bookmark not defined.
Figure 5: Production by district in NTB (2013) ........................................................................ 11
Table 1: Production calendars for shallot farming in Bima, Sumbawa, and Lombok ............... 17
Table 2: Business potential in target area ............................................................................... 26
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Abbreviations
AIP-PRISMA Australia-Indonesia Partnership for Promoting Rural Income through
BPSB Balai Benih Indonesia (Seed Control and Certification Bureau)
BPTP Balai Pengkajian Tekhnologi Pertanian (Institute for Agricultural Technology)
BPTS Balai Penelitian Tanaman Sayur
BRI Bank Rakyat Indonesia
CAGR Compound annual growth rate
CNJ Cooperative Nusantara Jaya
CV-PHS CV Pertani dan Holtikultura Sumbawa
DEBNAS National Council of Shallots
EWINDO East West Seed Indonesia
FATIH Facilitating Integrated Investment in Horticulture
ha hectares
ILAF Intervention Logic Analysis Framework
NTB Nusa Tenggara Barat (West Nusa Tenggara)
NTT Nusa Tenggara Timur (East Nusa Tenggara)
TSS True seed shallot
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Summary of key changes from previous GSDs and focus for next year
Year August 2014 - June 2015

This section on the summary of key changes is not applicable as there was no previous GSD for
Shallots NTB.
The planned focus for July 2015-2016 is on:

• Identifying potential champions who will serve as distributors for G0Pro
• Proving the business model for G0Pro in order to convince EWINDO to adopt it as part of their
core business
• Identifying potential partners for the provision of net houses, solar panels, and storage solutions
• Conducting assessments on mobile net houses in Probolinggo and storage facilities in Cirebon
and Brebes, which will allow the team to learn from the experiences and models in these locations
Year August 2017

This section on the summary of key changes explain the changes in this GSD for updating the obsolete
data with the more update data.
• Update on shallot data figures and irrelevant explanations
• Adjustment on shallot restriction import
• Update on market map numbers
• Update on Gender Table
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1 Executive summary
Shallot is part of Allium together with Onion, Garlic and Leeks. Based on FAO data from
1990 to 2013, Shallot, Onion and Greens globally shows an increasing trend in terms of
production, land and productivity as showed in table 1. Allium has been using largely in the world
and traded since 2,000 BC, as one of the most consumed crops. Onion is largely used all over
the world, while shallot is mostly used by Asian as main ingredients in Asian Cuisine.
Figure 1. Onion, Shallot, and Green Land, Production and Productivity (Source: FAOSTAT)
5,000,000 20
4,500,000 18
4,000,000 16
3,500,000 14
3,000,000 12
2,500,000 10
2,000,000 8
1,500,000 6
1,000,000 4
500,000 2
- 0
2008
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2009
2010
2011
2012
2013
Land (Ha) Production (Ton) Productivity (Ton/Ha)
For Indonesia case, shallot production in Indonesia has been increasing in recent years.
Nevertheless, demand outstrips supply, and Indonesia is reliant on imports to satisfy
demand. Shallot ranks third amongst all vegetable crops in Indonesia in terms of cultivated
area. Only two other vegetable crops, chili and cabbage, have a larger cultivated area. As a key
condiment in Indonesian cuisine, demand for shallots is high. In order to meet domestic demand,
imports of shallots have increased sharply over the past decade. Imports account for 7 to 15%
of annual domestic shallot consumption. The shallot market is highly seasonal with significant
high and low periods and large corresponding price fluctuations. While planting times vary
depending on location, in most areas the crop is mainly grown during the dry season.
NTB is increasing into the third largest shallot producing province in Indonesia, with
approximately 12% of national production in 2015. Shallot production is concentrated in the
Java region, with Central, East, and West Java contributing over 71% of domestic cultivation.
These three provinces are followed by NTB, where Bima district is the epicentre of shallot
production and Sumbawa is growing in importance. Shallot farming in Sumbawa is relatively
new and has taken off in recent years because shallot farmers from Bima are expanding
production by renting farm land in Sumbawa. East Lombok is also a key shallot production zone
in NTB. Shallots in NTB are grown mainly from retained bulbs rather than seeds, with bulb
sourcing strategies and varietal choices varying by district. Despite potential high margins from
shallot farming, there is also high risk of crop loss from pests and disease. Farmers mainly grow
two seasons of shallots, primarily in the dry season. There are, however, some farmers in
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tobacco production zones in East Lombok who will grow shallots during the rainy season. Most
shallots are sold immediately after the harvest and are consumed fresh with bulb and its leeks.
Figure 2. Shallot Production Centre and Farming Land
There is market opportunity to stimulate higher availability of domestically produced

shallots during January to May in order to substitute imports. Imports are significant during
the first five or six months of each year, a period when domestic production cannot meet
consumer demand. As a result, there is potential for NTB to increase production and productivity,
especially in the rainy season and first half of the dry season. There is also potential to
implement measures that could prolong the storage of shallots produced in the second half of
the dry season, which is another mechanism through which increased volumes of domestic
shallots could be made available in the market during January to May.
Analysis of the market reveals a number of problems that currently constrain the ability
of shallot farmers to take advantage of this market opportunity. Limited access to good
quality planting materials (including higher yielding varieties) affects productivity in NTB, which
is low when compared to the potential of the main variety being used and well below potential
yields from true seed shallot varieties. Existing nurseries are few and have only produced quality
planting materials for their own farms or temporarily for government programs. Furthermore,
most shallot farmers continue to experience high crop failure and losses due to pest and disease
attacks. This reduces farmer profitability through lower production volumes and higher
production costs from high usage of chemical inputs to combat pests and disease. Although
alternative, more cost-effective solutions exist, technologies such as mobile net houses or insect
light traps are not commercially available or adapted for smallholder farmers. Finally, farmers
tend to sell all their crop immediately after the harvest. Traditional storage practices are not well
suited for extended periods of storage, making it difficult for farmers to reap the benefits of higher
prices during the off-season. Unlike Java, there are neither public nor private cold storage
facilities for shallots in NTB.
The vision of change at the sector level is to: (1) increase smallholder productivity and
production including during the rainy season and early months of the dry season and (2) improve
market performance for farmers by allowing them to realise higher prices through greater
flexibility in when they sell shallots. At the service level, it is envisaged that farmers will have
improved access to: (1) nursery and planting bulb services, (2) pest and disease control
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technology and information services, and (3) storage services. To realise this vision, this report
recommends the following three intervention areas:
• Promote higher quality planting materials (including more productive varieties)

• Promote technologies to counter pest and disease problems
• Establish sustainable storage facilities
We envision that nursery and planting bulb services will involve seed companies, nurseries,
traders, input retailers, and potentially universities. Pest and disease control technology and
information services will be provided through agricultural equipment companies or net house
manufacturers/service providers, with possible collaboration with BPTP. Storage services will
involve government, cooperatives, and traders.
It is recommended that the intervention areas in the NTB shallot sector are implemented
in two phases. In the first phase, the focus is on promoting higher quality planting materials
(including more productive varieties). This is because of the presence of a partner (EWINDO)
who has strong incentives to expand sales of the higher-yielding Tuk-Tuk variety in NTB. The
second phase will involve promoting technologies to counter pest and disease problems and
establishing sustainable storage facilities. This phase will build on and/or involve scaling-up
interventions that will be piloted in the shallot sector in East Java.
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2 Background
The Australia-Indonesia Partnership for Promoting Rural Income through Support for Markets in
Agriculture (AIP-PRISMA) is a multi-year program that is a part of the Government of Indonesia’s
midterm development strategy to accelerate poverty reduction through inclusive economic
growth. With the support of the Government of Australia, the program aims to achieve a 30%
increase in the net incomes of 300,000 male and female smallholder farmers in eastern
Indonesia by June 2017. PRISMA works in East Java, West Nusa Tenggara (NTB), East Nusa
Tenggara (NTT), Papua, and West Papua.
This Sector Report aims to provide a logic and rationale for market-based interventions which
can support the shallot sector to the benefit of smallholder farmers in NTB.
3 Sector description
3.1 Sector profile
The sector profile provides information on the current status and potential of the target sector.
This has been derived mainly from secondary data and literature relevant to the shallot sector.
3.1.1 Overall context
Worldwide demand for onions and shallots is robust and global trade is increasing. While
data from the FAO does not disaggregate between shallots and onions, production of the two
commodities combined has been growing by 2% annually between 2003 and 2012. Global
imports of onions and shallots have also increased at an annual rate of 4% during the same
period. Global production was estimated at 4.3 million tonnes in 2011 and was led by China,
Japan, and Korea, which together accounted for over 40% of total production.
Shallot ranks third amongst all vegetable crops in Indonesia in terms of cultivated area.
Shallot production has been increasing in recent years, mainly as a result of improved
yields. From 2009 to 2013, between 93,000 to 110,000 hectares (ha) of shallots were harvested
annually. Only two other vegetable crops, chili and cabbage, have a larger cultivated area.
Production peaked in 2010 at Figure 3: Trends in production & harvested area in Indonesia
nearly 1.05 million tonnes, after
1,100,000 120,000
several years of continuous
1,050,000
expansion. Between 2005 and 1,000,000
100,000
2010, the harvested area 950,000

80,000
900,000
increased by nearly one-third,
hectares
tonnes
850,000 60,000
from 83,500 to 109,500 ha while 800,000
average yields rose by 9% from 750,000
40,000
8.8 to 9.6 tonnes/ha. A 700,000

20,000
650,000
significant reduction in
600,000 -
harvested area in 2011 led to a 2005 2006 2007 2008 2009 2010 2011 2012 2013
15% decline in production to Production (left axis) Harvested Area (right axis)
0.89 million tonnes. Production,
which has since grown at a compound annual growth rate of 6%, is recovering and was 1.01
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million tonnes in 2013. Average national yields have also improved, reaching a record 10.22
tonnes/ha in 2013.
As a key condiment in Indonesian cuisine, demand for shallots is high. Consumers

generally prefer bulbs that are not too small and have a strong, pungent taste. Consumers also
show a preference for round and bright red bulbs. Between 2008 and 2012, national
consumption of shallots averaged 1.04 million tonnes per year. With demand for shallots being
income-inelastic, continued future growth in domestic consumption will have to come from
population growth, a decline in the price of shallots, or both.
Figure 4. Shallot Demand Trend in Indonesia (2008-2015)1
Yearly Shallot Demand in Indonesia

1,400,000 1,266,620
1,206,087
1,200,000 1,118,970 1,101,157
1,039,602 1,071,079
1,019,735
969,316
1,000,000
tonnes
800,000
600,000
400,000
200,000
-
2008 2009 2010 2011 2012 2013 2014 2015
Production-Exports Imports
With demand outstripping supply, Indonesia is reliant on imports to satisfy domestic

demand for shallots. Imports of shallots have increased sharply over the past decade, and
most imported bulbs are consumed as food. Thailand, the Philippines, and Vietnam are the main
sources of imported shallots, followed by India and Myanmar. Between 2002 and 2008, imports
increased from 33,000 tonnes to 128,015 tonnes. Over the recent five years from 2008 to 2012,
imports averaged 110,000 tonnes per annum, although there has been significant inter-annual
fluctuations. Imports accounted for 7 to 15% of domestic shallot consumption each year. Exports
are negligible, accounting for less than 1.5% of total production. Shallots are mainly exported in
September and October. Thailand and Vietnam are the two main destination markets, followed
by Malaysia and Singapore.
1 Data from ACIAR Report
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The shallot market is highly seasonal with significant high and low periods and large
corresponding price fluctuations. While planting times vary depending on location, in most
areas the crop is mainly grown
during the dry season between Figure 5: Monthly imports of shallots in Indonesia (2007-2012)
April and October. More than 50000
50% is harvested between 45000
40000
June and September, with a
35000
clear peak in August and 30000
September. Imports are 25000
tonnes
particularly significant during 20000
the first five or six months of 15000

10000
each year, a period when
5000
domestic production cannot 0
meet consumer demand. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Imports tend to peak around 2007 2008 2009 2010 2011 2012
March each year.
The price of shallots normally reaches its lowest levels during the peak harvesting months.
Prices will then start rising, peaking sometime in the first or second quarter of the next calendar
year. For example, the price of shallots fell to IDR 4,000/kg in October 2012. By January 2013,
it was IDR 15,000/kg. By March 2013, the price had jumped to IDR 50,000/kg.
In order to balance the supply and demand of shallots and allow a fair price for farmers
and consumers, the government has plans to spread out the production centres and
planting seasons for shallots. The government plans to develop more regions that are
potentially suitable for shallot cultivation so that the production centres are not simply
concentrated in a few areas. At the same time, the Ministry of Trade has stated that the
government will make efforts to encourage production outside of the regular harvest season.2
3.1.2 Local context
NTB is the third largest shallot producing province in Indonesia, with 1.229 thousand
tonnes of shallots or approximately 12% of national production in 2015. Shallot production
is concentrated in the Java region, with Central, East, and West Java contributing over 71% of
domestic cultivation. These three provinces are followed by NTB, where shallots are being
produced on 11,518 hectares (ha). Production in NTB has grown by a compound annual growth
rate (CAGR) of 3% during the past five years. This is slightly lower than the national CAGR of
4% over the same period but higher than growth rates in Central and West Java.
Shallot is an important component of household livelihood portfolios in many rural areas

of NTB, where a large number of households grow it as a cash crop or have one or more
members working as wage labour on shallot farms. Approximately 75% of shallot farmers in
Bima and 63% in East Lombok live on less than $2.5 a day at 2005 international prices. In some
villages, it generates on average USD 5,600/ha in net farm and wage income. It is also the
second most important vegetable crop in terms of household expenditure. While rural
households generally spend less than urban households on vegetables, they do spend more on
2http://www.kemendag.go.id/files/pdf/2012/05/25/brebes-tata-niaga-bawang-merah-akan-dibenahi-en1-
1353753970.pdf
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shallots. Outside production areas, significant employment is created in the transportation,

handling, processing, and retailing of shallot bulbs.
At the district level, the 3 districts in which AIP-PRISMA is targeting its shallot sector
interventions account for an estimated 57,000 farmers and almost all of the shallot
production in NTB.3 Bima is the epicentre of shallot production in NTB, with 124 thousand
tonnes 4 of shallots and 10.239 ha5 in 2015. The main shallot producing sub-districts in Bima
are Lambu and Sape. Sumbawa, which accounted for 14.9 % of provincial production, is also
growing in importance and is followed by East Lombok as the third main shallot producer.
Figure 6: Production by district in NTB (2015)
The dry climate and sandy soils of
140,000 124,860Bima makes it an ideal location for
120,000 shallot production. These soils allow
100,000
for good drainage, which helps to
80,000
Ton
60,000 prevent shallots from rotting.

40,000 23,956 However, since shallots is a traditional
20,000 68 14 7,501 3,711 80 - 12 crop in Bima, the land has also
-
become more susceptible to diseases
over time. In comparison to Bima,
shallot farming in Sumbawa is
relatively new and has taken off in
2015 recent years because shallot farmers
from Bima are expanding production
by renting farm land in Sumbawa. These farmers are attracted by the cheap rental prices in
Sumbawa. While there is some shallot farming in East Lombok, many of the farmers in East
Lombok prefer to grow other crops that are lower risk. For example, tobacco is a popular crop
in East Lombok since there are numerous tobacco buyers6 in Lombok which provide finance
and have off-take arrangements with farmers in the district.
There is significant intra- and inter-district variation in farm yields in NTB, with average
yields well below potential. Average provincial yields have fluctuated between 7.8 and 11
tonnes/ha since 2010. In 2015, provincial yields were 10.06 tonnes/ha, which is on par with the
national average. However, according to an impact assessment conducted by PRISMA,
government statistics are likely to be overestimating the productivity of shallot farming in NTB.
The impact assessment found that average yields were only 4.8 tonnes/ha in Bima and 6.9
tonnes/ha in East Lombok. In contrast, the main variety that is currently being used in NTB can
achieve up to 17.6 tonnes/ha.
3 This calculation based on an average shallot farm size of 2027sqm (from the 2015 Impact
Assessment) and a total shallot farming area of 11,518 ha in 2014 (BPS Statistics).
4 http://aplikasi.pertanian.go.id/bdsp/hasil_lok.asp
5 http://aplikasi.pertanian.go.id/bdsp/hasil_lok.asp
6 Tobacco buyers in Lombok include PT Sadhana Arifnusa from Sampoerna Group, PT Djarum, CV
Tresno Adi,CV Nyoto Permadi, PT Supriyanto, PT Cakrawala, PT Export Leaf Indonesia and British
American of Tobacco.
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3.2 Sector dynamics
3.2.1 Market overview
Shallots in NTB are grown mainly from retained bulbs rather than seeds, with bulb sourcing
strategies and varietal choices varying by district. Despite potential high margins from shallot
farming, there is also high risk of crop loss from pests and disease, especially during the rainy
season. This has led to excessively high pesticide usage, which affects the quality and
productivity of both planting materials and consumption bulbs. These inputs are available
through the dense network of well-stocked input retailers across NTB. There is also a large
concentration of shallot traders in Bima, with much of the production from Bima and Sumbawa
channelled to other provinces. Local traders have well-established links to wholesale buyers in
different provinces. In contrast, shallots produced in East Lombok are mainly traded within
Lombok Island. Although most shallots are consumed fresh, some traders also supply the
processing industry in Java, a small but important channel that provides an outlet for low-quality
bulbs, as well as the export market segment, which is also small but pays a significant price
premium.
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3.2.2 Sector map
Seed and Chemical Company Nursery Financial Inst. Extension Service Storage
(15) BPR (10) Local

(80) Nufarm, EWINDO, BISI, Pertiwi (50) East (1,500) Govt.
Pesisir Akbar Provider
Lombok Ext Service
Support Function
Processing
Big Distributors (250) Indofood,

Sedap, local
(25) Ilham Tani, Surya factory
Tani, Subur Makmur
Local Market
Collectors
Smallholder farmers Wholesalers Consumers
(900) traditional
(800) (70) Big and modern House Hold
(17,711)
1 collector Trader market in NTB
Input Retailers 20 farmers
R1 (250) and
R2 (1500)
Inter-island Market
(NA)
Core Value Chain
Government Regulation Association Government Program
(13) Import Policy, Seed Import Policy, (5) CropLife, CropCare, Seed Subsidy
Restricted Chemical PisAgro, Debnas
Business Enabling Environment
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3.2.3 Core value chain
Inputs
Most shallot farmers use retained bulbs sourced from their own farms, neighbouring farms,
or shallot traders as planting materials. The dominant shallot variety is Super-Philip. Shallots
can be grown using two methods — either by sowing small bulbs or seeds. The traditional practice
for smallholder farmers is to grow shallots from bulbs. At the farmer level, there is minimal
differentiation between consumption and planting bulbs except that bulbs used as planting materials
will be dried for a longer period (a minimum of two months). If the price of consumption bulbs are
high at harvest time, farmers tend to sell all their shallots as consumption bulbs and will not retain
any bulbs to be used as planting materials. In these cases, farmers will have to purchase bulbs
from other farmers or traders for the next planting season.
The Super-Philip variety, which originates from the Philippines, is the main variety used in Bima
and Sumbawa. It is a dry season variety which is adapted to low and midland conditions. Farmers
in East Lombok claim to use different varieties (e.g. from Vietnam and Thailand), especially since
shallot farmers in the sub-districts of Sakra Timur and Sakra are planting mainly during the rainy
season. However, in reality, both farmers and traders are not able to identify among different shallot
varieties, and it is unclear whether these farmers are in fact using a variety other than Super-Philip.
Bulb sourcing strategies vary across districts. While farmers in Bima prefer to use retained
bulbs from their own or neighbouring farms, farmers in Lombok tend to purchase retained
bulbs from traders. In Bima, the shallot crop from the August to October season (which is a smaller
planting season) is mainly used as planting materials while the crop from earlier seasons are
typically used for consumption. Farmers will often look at neighbouring farms during the August to
October season. If shallots show good signs of growth in the first month, they will approach their
neighbours to purchase the bulbs when they are harvested. Many of these farmers will buy the
bulbs while they are still wet and dry it themselves before using it as planting bulbs. Farmers in
Bima will typically only buy planting materials from traders if they cannot source bulbs from their
own or neighbouring farms.
Among traders in Bima, there is a common belief that shallot diseases can be reduced by using
planting materials from other areas. As a result, traders tend to source most of their planting bulbs
from other sub-districts and also a small amount from Java. If traders are not able to sell planting
bulbs at a reasonable price, they will approach farmers to engage in a profit-sharing arrangement
where the farmers will be provided the planting bulbs (and potentially also land and other inputs) in
exchange for a share of production. Many of the Bima farmers who are now planting shallots in
Sumbawa are engaged in such arrangements with traders. The remaining Bimanese farmers who
are planting in Sumbawa tend to source their planting materials from their own and neighbouring
farms. In contrast, it is rare for farmers in Lombok to retain bulbs, and they mainly purchase planting
materials from traders who source planting bulbs from Bima and Java.
There is, however, no assurance of the quality of retained planting bulbs, and government
certified planting materials are not currently available in NTB. According to the Institute for
Agricultural Technology (BPTP), it is common practice for farmers to spray pesticides and other
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chemical inputs as often as possible regardless of whether the bulbs actually need these chemicals.
Planting materials that have a high pesticide content may not perform as well in terms of
productivity. Although government certified planting bulbs exist in Indonesia, these are mainly
produced for the nationwide government distribution program and some are also available for
commercial sales in Central Java. The Directorate General for Horticulture estimates that
approximately 15% of planting bulbs sold in Java are certified by the Seed Control and Certification
Bureau (BPSB). The BPSB is responsible for verifying that certified planting bulbs comply with
government standards on purity and virus, fungal, and bacterial infections. Certified bulbs receive
a white label for planting bulbs for multiplication and blue label for planting bulbs to be used in
farmers’ fields.
Unlike Java, there is currently no production of BPSB certified planting bulbs in NTB, and the
distribution of government certified bulbs is also uncommon in NTB. However, one of the new
nurseries in NTB (which was established through PRISMA’s collaboration with EWINDO) has
recently been invited to a training on the certification of planting bulbs in Bogor and has plans to
produce certified planting bulbs for the government program in 2016.
There are also true seed shallot (TSS) varieties that are available commercially, such as the
Tuk-Tuk variety, but adoption rates in NTB have remained low. East West Indonesia
(EWINDO), one of the biggest vegetables seed producers in Indonesia, registered the Tuk-Tuk
variety in Indonesia in 2006. It has been promoting TSS cultivation in Bima since 2008, and Tuk-
Tuk seeds are available through input retailers across the province. Despite initial interest by
farmers, sales have been decreasing over time, and only a small number of farmers are growing
shallots from seeds. These tend to be medium-sized farmers who are more skilled at shallot
farming. While larger farmers will also have the necessary skills to engage in TSS cultivation, they
also tend to be shallot traders (or related to large traders) and typically prefer to get retained planting
bulbs from their shallot trading network.
Whereas bulbs require approximately two months to mature, seeds require about 70-85 days.
Seeds are also more difficult to grow, requiring higher levels of skills and knowledge of good
agricultural practices. The lack of technical knowledge and the fact that TSS does not fit with current
crop rotations (because of its longer growing cycle) have hindered the adoption of TSS varieties in
Indonesia. However, seeds can reduce the transmission of viruses and other seed borne diseases.
Existing TSS varieties in Indonesia also have higher potential yields (32 tonnes/ha for Tuk-Tuk
versus 17.8 tonnes/ha for Super-Philips). Furthermore, the Tuk-Tuk variety is also similar in colour
and taste to Super-Philips, making it a good substitute for locally produced shallots. The large
leaves on Tuk-Tuk shallots have also been cited as a desirable characteristic by farmers in Bima
and Lombok. According to these farmers, the larger the leaves the longer it would take for
caterpillars to damage the crop since these pests begin by eating the leaves first.
The other main inputs used by shallot farmers are fertilisers and pesticides. Most farmers
will use subsidised fertilisers on their shallot farms and will access other chemical inputs
using the same network of private input retailers as other crops. Most commonly used
fertilisers are subsidised NPK, SP36, Urea, and ZA. A smaller proportion of farmers (approximately
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16% in Bima and 50% in East Lombok)7 will also purchase unsubsidised fertilisers to supplement
what they receive through the government subsidy program. There is an extensive network of well-
stocked input outlets in villages where shallots are widely grown, and a number of chemical
companies (including BASF, Syngenta, Bayer) have products that are being used by shallot
farmers. Pesticides and other chemicals are purchased from these local input retailers on credit or
by cash payment. These transactions (along with fertilising and spraying of chemicals) are usually
carried out by male members of farming households. While the majority of decisions to purchase
chemical inputs are made by men, women influence the decisions in at least 35% of households.
As a result of the high risk of crop loss from pests and disease, farmers tend to use
excessive amounts of pesticides, which is the main approach to pest and disease
management. Pesticides account for 30% of total production costs for shallots. The lack of
crop rotation, with many farmers growing shallots over two or three consecutive seasons, may be
a contributing factor to the high incidences of pest and disease in Bima. On the other hand, in
Sumbawa, where shallot production is a more recent trend, the incidence of shallot disease is
relatively low. According to the Bogor Agriculture Institute, fungal and pest attacks can lead to crop
losses in the range of 10-90% of the entire crop. BPTS (Balai Penelitian Tanaman Sayur) estimates
that the percentage of crop losses caused by various pests and disease is 32% from caterpillars,
57% from purple blotch, 24-100% from anthracnose, and 27% from Fusarium. The BPTS also
estimated that the annual production losses from 2000-2003 amounted to an average of 17,300
tonnes (or IDR 138.4 billion annually).8 Fusarium, the main fungus affecting shallots, is prevalent
during the rainy season. Spodoptera exigua caterpillars and to a lesser degree Liriomyza are the
main pests that affect shallots. These insects will eat the leaves and the bulbs and affect both dry
and rainy season cultivation. Caterpillars can destroy entire plants overnight and can attack plants
from the beginning of the growth phase until bulb maturation.
In an attempt to deal with shallot pests and disease, farmers tend to follow intensive spraying
programmes where they typically spray once every two days. The application of cocktails of
chemicals is common, and label recommendations regarding application doses are frequently
disregarded. It is also likely that farmers apply the wrong insecticides to deal with particular pest
problems or spray the crop when insect populations have already had the time to develop. In some
villages, women will also spend significant time hand picking and removing caterpillars from the
plants before spraying chemicals. Farmers tend to purchase whichever chemicals are perceived to
be most powerful and are also increasing the dosages each season since pests have developed
resistance to insecticides. High pesticide residues are prevalent in both planting materials and
shallots for consumption and can pose a public health risk. Excessive application of chemical inputs
can also contribute to a decline in soil fertility. While farmers in Java have experimented with
alternative solutions like insect light traps and mobile nethouses, none of the shallot farmers in NTB
are using such technologies.
7 Based on 2015 Impact Assessment

8 BPTS (2005). Pengenalan Hama dan Penyakit pada Tanaman Bawang Merah dan Pengendaliannya.
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Production
Shallot production is dominated by smallholder farmers growing small areas (on average
0.2 ha) in rotation with other crops. While some farmers may harvest three shallot crops
annually, most grow two seasons of shallots. Shallot farming is concentrated in lowland areas
(except in Sembalun sub-district in East Lombok) and is mainly monoculture. In Bima, shallots is
usually grown in rice paddy fields after the rice is harvested. Rice is planted during the rainy season
(from November to February), after which farmers will generally plant two or three consecutive
seasons of shallots. The most common cropping patterns among shallot farmers in Bima are rice –
shallot – shallot– shallot or rice – maize – shallot– shallot. The peak harvest occurs in June and
July and most of the shallots planted during the first two seasons are for consumption.
Table 1: Production calendars for shallot farming in Bima, Sumbawa, and Lombok
Months Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Seasons rainy season dry season
Bima paddy shallots (2 seasons with peak harvest in shallots (smaller season,
Jun/July; mainly for consumption) mainly planting bulbs)
East Lombok shallots (for paddy tobacco & chili
consumption)
(Sakra Timur/Sakra)
East Lombok paddy shallots (2 seasons, possibly intercropped with other
vegetables; for consumption)
(other sub-districts)
Sumbawa Owners of land do not rent out land in these shallots (2 seasons grown by Bimanese
months (Aug-Nov) farmers on rented land; mainly for
consumption)
In East Lombok, when shallots are grown in tobacco production zones, they are grown during the
rainy season from November to December. The main cropping pattern for shallot farmers in these
areas is shallot – rice – tobacco. In other areas of East Lombok, rice is grown during the rainy
season followed by two consecutive seasons of shallots in the dry season.
As previously noted, many farmers in Bima are also taking advantage of opportunities to
expand shallot production by renting land in Sumbawa. Sumbawa is a district with low
population density, fertile volcanic soils, and where large tracts of farmland along the main road,
with good drainage and good access to groundwater, are available for rent. Shallot farm sizes tend
to be larger in Sumbawa than in Bima and East Lombok. Farmers from Bima tend to rent land in
Sumbawa from April to August and will typically plant two consecutive seasons of shallots. Most of
the labour for these farms is also sourced from Bima. During the remaining months of the year, the
Sumbawanese owners of the land will cultivate their own crops, such as rice and beans.
Women and men are both actively engaged in shallot production as either farmers or as
labourers (and sometimes as both). The use of family and hired labour is common, and many of
the workers employed on shallot farms are from households with very limited or no land. Shallot
households will usually hire male labour for land preparation and female labour for planting,
weeding, and harvesting. Tasks such as spraying pesticides, fertilising, watering, and transporting
harvested shallots from the field are typically done by male family labour. Decisions regarding what
agricultural practices to use are mainly made by male members of the household. According to the
impact assessment, these decisions are made by men in 61% of households and jointly in 24% of
households.
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Post-Harvest Handling, Trading and Processing

Since shallots are highly perishable and have a short shelf life, farmers tend to sell their crop
immediately after drying in Bima and Sumbawa or at harvest time in East Lombok. In Bima
and Sumbawa, after harvesting, shallots for consumption are left in the field to dry for seven to ten
days before they are sold. Rain does not normally pose a challenge, as most of the crop is harvested
when the weather is dry. In the evenings or in the event of rain, the bulbs are covered with plastic
sheets. After they are dried, bulbs will often be sorted and bundled by farmers according to size.
While there is no price differentiation by size or grades at the farmer level, collectors tend to reject
small sized bulbs (unless the market price of shallots is very high). These smaller bulbs are used
by farmers for household consumption or as planting materials. Women often take responsibility for
post-harvest handling – drying, sorting, bundling, and hanging shallots. This contrasts with East
Lombok where collectors will often harvest the shallots themselves and pay farmers by the weight
for the wet shallots. The drying of the shallots will then be done by the collectors.
It is not common practice for farmers to store their bulbs for longer periods of time in order to take
advantage of higher prices in the months between February and April. Storing the June harvest is
considered to be unprofitable, as prices will fall during the following months. When farmers do store
bulbs, they tend to store shallots in the house (on a rack or directly under the roof) or in the front or
backyard where they will hang the shallots on racks and keep them covered.
The majority of local shallots production is sold to local collectors or Javanese traders who
come directly to the field during the harvest period. Seasonal traders from Java buy directly
from the farmers and also from local traders. Women are more likely to sell the shallots, but men
will also take on this responsibility if the women are too busy. However, since women are considered
to be better negotiators and are responsible for managing the household finances, there is a
preference for women to conduct the sales of shallots.
Inter-provincial trade accounts for most (70%) of the shallot trade from Bima and Sumbawa.
The other major market destination is Mataram, the provincial capital on Lombok Island. On
the other hand, shallots produced in East Lombok are rarely traded outside of Lombok. There
is a large number of inter-provincial traders concentrated in Bima. These traders have good links to
a wide range of markets in different islands, particularly in the traditional wholesale trade. Most of
these larger traders are supplied by their own network of collectors and will sell the produce onwards
to markets in Java and Bali and to a lesser extent NTT, Maluku, and Papua. It appears that shallots
from Bima and Sumbawa are not, however, sent to Jakarta, which is supplied by major production
areas within Java itself. On Lombok Island, local production from East Lombok is supplemented
with shallots from Bima and also with shallots brought from outside of NTB. Imports from other
provinces are channelled through Mandalika market in Mataram.
There are three potential end markets for shallots: wholesale markets, the processing
industry, and companies in Brebes and Cirebon involved in the shallot export trade.
Traditional wholesale markets from other provinces absorb by far the largest volumes. Local
quality management systems are organised to meet the requirements of buyers in each of these
three market channels. While collectors may sometimes sort the bundles by grade and remove
some foreign matter, sorting, drying, and cleaning functions are more commonly performed by inter-
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provincial traders. These traders sometimes grade the shallots or re-bundle bulbs in order to ensure
stricter adherence to grade specifications or the needs of specific buyers.
Since the majority of bulbs are consumed fresh, traditional wholesale markets are the dominant
channel. Long-standing business relations, often underpinned by family ties, are a key ingredient in
the informal, highly personalised transactions which characterise long-distance traditional trading
systems. Most shallot bulbs are also retailed through traditional channels, with the modern retail
segment (supermarkets and hypermarkets) having a very marginal share of the Indonesian retail
market.
The volumes channelled to processors and exporters are small in comparison. However,
they have strategic importance in that exporters offer a premium, low-risk market for top-
quality shallots and the processing industry provides an outlet for poor-quality bulbs.
Processing enterprises, such as Indofood, Wings, and Heinz ABC, are particularly price-sensitive
and tend to purchase the lowest-quality consumer bulbs. There are approximately 15 traders in
Bima who have contracts with Indofood to sell Grade C shallots, which are estimated to account for
20 to 25% of the harvest in Bima and are the most difficult to market. Most traders in Bima are not
interested in supplying Indofood because of the low prices and delayed payment procedures from
the company. There are also no small-scale processors in NTB, although there is some interest
from the Association of Tuk-Tuk Nurseries (which was formed after PRISMA’s intervention in the
sector) to produce fried shallots when the price of shallots is low. The association has procured
cutting and frying machines and has plans to begin processing activities in 2015.
While processors are a small but important channel for low-quality bulbs, the export market segment
has the strictest quality standards. Inter-provincial traders must supply mature, well-dried, and firm
bulbs with at least 1.5 centimetre diameter, a round shape and bright red colour to exporters in
Brebes and Cirebon. In order to meet these requirements, these traders are particularly selective
in their procurement activities and pay considerable attention to the drying of the bulbs.
3.2.4 Supporting functions
Nursery and planting bulb services are important for stimulating the adoption of higher
quality planting materials by farmers. Prior to PRISMA’s engagement in the sector, there
were few shallot nurseries producing quality planting materials. Several medium-sized
farmers from Bima and Lombok have expertise in TSS cultivation and have their own nurseries
where they grow bulbs from Tuk-Tuk seeds and transplant these bulbs onto their own shallot farms.
Most of them do not sell these planting materials commercially. One of the few nursery operators
(Pak Aziz) who had sold Tuk-Tuk planting bulbs was only supplying them to Java Island. He has
since stopped selling Tuk-Tuk planting materials. Several years ago, there was also a company
called CV Pertani dan Holtikultura Sumbawa (CV-PHS) which was planting Tuk-Tuk for the
consumption market and also piloting the production of planting bulbs from TSS varieties developed
by a Dutch Company called De Groot en Slot. CV-PHS had tested two varieties in Sumbawa (Tropix
and Maserati) which have the potential to achieve yields of up to 40 tonnes/ha. The cost of the
Tropix and Maserati seeds (IDR 4.5 million/kg and IDR 12 million/kg respectively) is much higher
than Tuk-Tuk seeds (IDR 1.8 million/kg). While CV-PHS is no longer operational, De Groot en Slot
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continues to be interested in having a representative in NTB and has been in discussions with the
former production manager of CV-PHS, Jurgen Nagel, to set up a joint-venture.
Alongside limited nursery and planting bulb services, pest and disease control technology
services are largely absent in Indonesia. Only a few companies or individuals have conducted
R&D around better technologies, manufactured related equipment or materials, or provided
equipment rental services. Insect light traps have the potential to reduce the use of pesticides while
also improving control of pests. In East Java, one of the lead shallot farmers in Nganjuk has been
trying to modify the light trap so that it would be safer to use and more cost effective (e.g. by using
solar panels instead of using AC power sources). Alongside being safer to use, solar insect light
traps can also be used in more remote areas which are not connected to the power grid.
There are currently three producers/importers of insect light traps in Indonesia: CV Berkat Saron
Sejahtera in Bogor, CV Rianjaya Pestalindo in Lampung, and PT. Duta Bintara. CV Rianjaya
Pestalindo mainly imports solar pest lamps from Korea. CV Berkat Saron Sejahtera has a factory
where it can produce solar pest lamps. The company provides instalment and maintenance
services, as well as training on the proper usage of pest lamps. All three companies produce or
import pest lamps only when they receive an order from the government. The government also
tends to order pest lamps for rice farming. Since pest lamps for rice farming are not suitable for
shallot farming, further R&D is needed to adapt existing models or develop new models specifically
for shallots. Some of these companies have the technical capacity to develop and test new
prototypes, but they lack capital to manufacture the product for the open market. There are also
large companies such as PT Solusi Bioteknologi, which have sufficient capital and are interested in
expanding into the solar pest lamp business. However, PT Solusi Bioteknologi does not currently
have any knowledge or experience with R&D in solar pest lamps.
Other potential service providers include companies which are manufacturing nethouses. Although
CV Pilar Agro in Kediri does not sell mobile nethouses, it sells permanent nethouses and provides
training to farmers (mainly chili farmers) on building nethouses using local materials. There is also
PT Gani Arta Dwitunggal in Bandung, which is a manufacturer of textiles and fabrics including
nethouse materials for large chili and tomato farmers in West Java. Mobile nethouses (which are
smaller and more economical than permanent nethouses) can prevent Spodoptera exigua moths
from laying eggs on shallot plants. While this technology is not widespread even in Java, there is
one village in Probolinggo where two nethouse service providers rent out nethouses to shallot
farmers on a seasonal basis. According to farmers in that village, the use of nethouses has resulted
in a net saving of IDR 7.5 million/ha on pest and disease management.
Storage services are another important support function since they can help stabilise prices
and allow farmers to earn higher incomes when prices are more favourable. In general, the
storing of shallots is mainly done at the trader level. When farmers store shallots, this will usually
be done for short periods of time using traditional methods. These methods make it difficult to
control humidity and ensure that shallots remain sufficiently dry. This poses a challenge for storing
shallots for longer periods of time and is likely to result in a deterioration in the quality of shallots.
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There is, however, a functioning model of a sustainable shallot storage system in Central and West
Java that has helped farmers benefit from higher prices in the off-season. The original model was
developed in Cirebon, a major shallot producing centre located in West Java. The storage system
in Cirebon is run by the Cooperative Nusantara Jaya (CNJ), which is the business unit of the
National Council for Shallots. It uses a cold storage facility that was donated by the government for
the specific purpose of storing shallots. Cold storage helps maintain the freshness of shallots while
also minimising shrinkage of bulbs (from 30% shrinkage through traditional storage practices to only
10% shrinkage). The cooperative helps farmers to store shallots when shallot prices are low and to
market shallots when prices are better. The cooperative receives an agreed commission based on
the sales. Farmers are also able to sell a portion of their bulbs to the cooperative at current prices
if they need some immediate funds to continue planting. This model has been running for two years
in Cirebon and is being replicated in Majalengka in West Java and in Brebes in Central Java.
In terms of information and extension services, farmers rely on each other as primary
sources of technical information. For the most part, knowledge and skill levels in NTB tend
to be low when compared to Java (e.g. Brebes, Cirebon, Probolinggo, and Nganjuk). In the
Java region, there are numerous lead farmers, some of whom have developed innovations for the
sector (e.g. new seed varieties) and are involved in training shallot farmers in other provinces. This
is not the case in NTB where farmers tend to have lower overall knowledge of good agricultural
practices, including fertiliser usage, pest and disease control, and rainy season farming. For
example, rainy season shallot farming requires different practices (e.g. higher raised beds and
plastic covers) which can reduce damage from the rain, especially during the early stages of
planting when plants are fragile.
Aside from farmer-to-farmer transmission of information, there are limited alternative channels
where farmers can obtain technical information. Government extension services are weak and little
new knowledge about shallot cultivation is transferred through the public extension system. Local
input dealers, including those who are selling planting materials, have little relevant information to
offer farmers. Product promoters from chemical or seed companies may provide some information,
but this is geared towards their products. Traders are poorly positioned to contribute to technical
innovation processes because they themselves lack the required know-how.
Finally, financial services are important since the cost of shallot production is relatively high,
even when compared to other vegetables. Financial constraints can reduce the ability of shallot
growers to invest in their farms, hire labour, and purchase other farm inputs. Larger shallot growers
are able to access seasonal loans from local inter-provincial traders, Bank Rakyat Indonesia (BRI),
credit unions, and pawn shops. Land certificates are used as collateral for bank loans. Gold and
motorbikes are commonly used as collateral for pawn shop loans. An interest of 15% per annum is
paid on bank loans, whereas pawn shops charge 25% over a four-month period.
Smaller farmers have much poorer access to trader financing and institutional credit. Some of the
means by which these smaller farmers finance their shallot farms include obtaining planting bulbs
from family members or neighbouring farms on credit or by exchanging services (e.g. conducting
construction work); inputs on credit from retailers if they are trusted customers; inputs and/or land
from traders through profit-sharing arrangements in Sumbawa; and loans from informal
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moneylenders. Interest on loans from moneylenders can be quite high. In Ngali village in Bima, for
example, farmers mentioned interest rates around 50% on loans with a two-month maturity.
3.2.5 Supporting rules and regulations (enabling environment)
Shallot is one of the main commodities that influences inflation in Indonesia and is, hence,
closely monitored by the Bank of Indonesia. Nonetheless, there are no separate policies for
shallots outside of the more general horticultural policies for Indonesia. The Bank of Indonesia has,
however, collaborated with the main association in the sector to provide better bulbs to production
areas outside of Java. This is in line with the government’s effort to ensure that production is more
widely disbursed and not only concentrated on Java Island. For 2015-2016, the Ministry of
Agriculture has announced that 100 ha of free planting materials will be given to shallot farmers in
Bima. Between 2009 and 2011, the government also tried to promote the revival of the Katamocha
variety, a rain tolerant variety, under the Facilitating Integrated Investment in Horticulture (FATIH)
program. Some farmers in Bima were supported by FATIH to produce seed bulbs as part of a
reselection and multiplication programme. While the project has not had significant impacts within
Bima, Dinas reported increased adoption in West Timor and Papua.
In order to stabilise prices, the state-owned logistics board Bulog has recently been authorised to
purchase shallots directly from farmers. During Ramadan this year, the Ministry of Agriculture and
the state-owned logistics board Bulog was selling 100 tonnes of shallots per day at the price of IDR
17,000/kg. Bulog intends to purchase shallots from NTB to supply Jakarta, East Java, Lampung,
and South Sulawesi.
The National Council of Shallots (DEBNAS), which is headquartered in Cirebon, West Java,
was set up to represent shallots farmers across Indonesia. The decision to establish the council
was taken during the National Congress of Shallots in November 2011. The primary role of the
council and its provincial branches is to provide production forecast information and assessments
of shallot supplies to the Ministry of Agriculture. This information is used to inform government
decisions about import quotas. For example, in 2014, DEBNAS predicted that shallot yields would
increase and recommended that the government restrict imports that year. The council’s mandate
also includes strengthening the bargaining position of farmers. Since DEBNAS is based in Java, its
presence in NTB is weak.
Horticultural imports are highly regulated by both national legislation, which involves a
series of measures aimed at reducing imports. The horticultural law, which was endorsed by
Parliament in 2010, contains restrictions on trade and investment, including provisions that force
the existing foreign investment in the horticulture sector to divest to a maximum of 30% foreign
ownership. As of September 2012, import permits are required for all horticultural imports.
According to Regulation 60/12 of the Ministry of Agriculture, importers of fresh and processed
horticultural products are required to obtain a recommendation for importation from the Ministry of
Agriculture before applying for an import permit letter from the Ministry of Trade. Letters of
recommendation are issued on the basis of a number of criteria, including the level of competition
between imports and local production. Only importers registered with the Ministry of Trade can
apply for a letter of recommendation from the Ministry of Agriculture. The Ministry of Trade will in
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principle follow the recommendation from the Ministry of Agriculture and issue an import permit,
which is valid for a period of four months.
During the first three months of 2013, the price of shallots skyrocketed following the
introduction of a temporary import quota by the national government. However, most shallot
farmers did not benefit from these measures because relatively few farmers grow shallots during
the rainy season or are storing shallots from the previous harvest. If shallots are imported at the
wrong time, this may influence prices to the detriment of smallholder farmers. As a result, for 2014,
the Ministry of Trade issued a decision to only allow imports when prices were above 25,000/kg at
the retail level or 15,000/kg at the farm gate. In addition to measures to control the amount and
timing of imports, the government has also reduced the number of seaports and airports that are
able to accept horticultural imports. The closure of several main entry points (including Denpasar
Airport in Bali, Batam seaport, and for the most part Tanjung Priok seaport in Jakarta) has meant
that significant amounts of horticultural products have been diverted to Surabaya. In 2016 import of
shallot in Indonesia is prohibited by the Government and following year in 2017 Indonesia can
export shallot from Brebes to several Asian Country.
4 Analysis
4.1 Problems and underlying causes
The problems and underlying causes are specific to the poor target groups that AIP-PRISMA seeks
to support through interventions in the shallot market system in NTB. These problems have been
identified through the Sector Dynamics section above and are also presented in the Intervention
Logic Analysis Framework (ILAF) table. The three key problems can be summarised as:
• Farmer productivity is low because they use poor quality planting materials
• Farmers experience high production costs and high crop failure and losses due to pest and
disease attacks
• Farmers are unable to benefit from higher prices during the off-season
Farmer productivity is low because they use poor quality planting materials. Farmers have
limited access to good quality planting materials and are also unable to differentiate between good
and poor quality bulbs. Almost all smallholder farmers use retained bulbs sourced from their own
farms, neighbouring farms, or shallot traders, and average yields are 4.8 tonnes/ha in Bima and 6.9
tonnes/ha in East Lombok. This is below the potential of the main variety being used in NTB (which
can achieve up to 17.6 tonnes/ha) and well below the potential of TSS varieties such as Tuk-Tuk,
Tropix, and Maserati (which range from 32 to 40 tonnes/ha). There is potential for significant
improvements not only through using TSS varieties but also by using better quality planting bulbs
of varieties that are commonly used.
Farmers experience high production costs and high crop failure and losses due to pest and
disease attacks. Farmers lack knowledge of good agricultural practices and are unaware of more
affordable technologies to combat disease and pest attacks (including for rainy season production).
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Crop losses from Fusarium and pest attacks (in particular Spodoptera exigua caterpillars) are in the
range of 10-90% of the entire crop and can have a significant impact on the volumes of shallot that
are available for sale. The high incidence of pest and disease means that farmers spend a large
amount of funds on chemical inputs to combat pest and disease. This further reduces farmer
incomes by keeping average production costs high.
Farmers are unable to benefit from higher prices during the off-season. Farmers sell all their
crop immediately after the harvest because they lack access to storage facilities. Prices are low
during this period and can fall to IDR 3,900/kg. In contrast, prices in the off-season can reach as
high as IDR 79,000/kg.9 While farmers will need sufficient cash flow for household needs and inputs
for the next planting season, this can usually be fulfilled by selling a portion of the harvest. Hence,
the remainder of the crop could potentially be stored and sold when price conditions are more
favourable. At present, traditional storage practices, which involve storing directly under the roof or
on a rack inside the house or by hanging shallots on racks in the front or backyard, are not well
suited for extended periods of storage. The lack of mechanisms to control humidity and ensure that
shallots remain dry can result in a significant deterioration in quality.
4.2 Services, enabling environment, and weaknesses analysis
There are a number of services and enabling environment factors which affect the underlying
causes of the problems highlighted above. In order to strengthen the market system, it is crucial
that identified weaknesses in these services and enabling environment factors are the target of
interventions. The key services weaknesses are detailed in the ILAF table and include:
• Existing nurseries are few and have only produced quality planting materials for their own
farms or temporarily for government programs
• No suppliers of potential alternative pest and disease control technologies for smallholder
shallot farmers
• No existing cold storage facilities for shallots (neither public nor private run facilities)
Existing nurseries are few and have only produced quality planting materials for their own
farms or temporarily for government programs
The introduction of better quality planting materials can result in significant yield improvements for
farmers. Unfortunately, there are currently no nurseries that are producing BPSB certified planting
materials in NTB, although one nursery has plans to commence producing for the government
distribution program. At the same time, the few farmers who have nurseries that produce bulbs from
TSS seeds are producing planting materials for their own farms rather than for commercial sales.
As a result, shallot farmers are only able to grow higher-yielding TSS varieties if they are willing to
plant the seeds themselves. Given the high skills and long growing periods required when cultivating
9 http://pip.kementan.org/
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directly from seeds, nursery services can facilitate the adoption of TSS varieties, especially among
smallholder farmers who are unlikely to have the required skills to grow shallots from seeds.
In the absence of certified or branded planting materials, there are no measures to help farmers in
NTB verify whether bulbs are for propagation or for consumption. Farmers can only tell when bulbs
are damaged but not whether they are free from tuber borne diseases.
No suppliers of alternative pest and disease control technologies for smallholder shallot
farmers
The main pest and disease management strategies employed by farmers involve increased and
excessive use of chemical inputs. Although alternative solutions exist in other provinces, these
technologies are not widely available or adapted for smallholder farmers. Private sector equipment
providers have focused on providing insect light traps to government programs, mainly in other
agricultural sectors. Those that are imported (for example from Korea) are too expensive for
smallholders while the models being manufactured in Indonesia need further R&D so that they are
better adapted to smallholder shallot farming. Furthermore, the commercial viability of
manufacturing insect light traps for smallholder farmers is unclear. There are also no rental
providers of nethouses in NTB, and even in Java, this innovation appears to be confined to
Probolinggo in East Java.
No existing cold storage facilities for shallots (neither public nor private run facilities)
While government has supported the development of cold storages on some parts of Java Island,
there are no such facilities for shallots in NTB. In 2013, the national government started a program
to distribute cold storage machines that can help regulate temperature and humidity. These
machines are accessible to local investors (which could be local government, cooperatives, traders,
etc.) who are willing to build the cold storage facility and finance the operations of the facility.
However, high capital investment and operation costs remain a key deterrent for the establishment
of cold storages, and no one in NTB has taken advantage of the distribution program for cold
storage machinery. At the same time, there is no clear business case for private sector involvement,
and the private sector may not currently have the skills to engage smallholder farmers.
5 Strategy for change

The strategy is designed to strengthen the weaknesses in the current service provision and enabling
environment in the market system. This takes the form of (1) identifying the market potential,
through calculations to show the potential of the sector; (2) a vision of change, to envisage how the
value chain or market system would operate if identified problems are resolved; and (3) a set of
interventions which can be targeted at specific market actors or groups of market actors which can
be engaged to drive change in the system.
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5.1 Market potential
There is market opportunity to stimulate higher availability of domestically produced

shallots during January to May in order to substitute imports. Imports of shallots have
increased sharply over the past decade and account for 7 to 15% of domestic shallot consumption
each year. Imports are particularly significant during the first five or six months of each year, a
period when domestic production cannot meet consumer demand. As a result, there is potential for
NTB to increase production and productivity, especially in the rainy season and first half of the dry
season. While prices peak in April, they are still high in May, and there is potential to increase
production during the March planting season to take advantage of these higher prices. There is also
potential to implement measures that could prolong the storage of shallots produced in the second
half of the dry season, which is another mechanism through which increased volumes of domestic
shallots could be made available in the market during January to May.
Based on our calculations, there is potential to unlock at least an additional AUD 11.4 M.
Table 2: Business potential in target area
Total Business in the

Description/Years
target area (s)
Existing Production (MT) 39,952
Potential New Production in Existing Areas (MT) 11,986
Total Potential Production (MT) 51,938
Average Selling Price Shallots per kg (IDR) 10,000
Current Value of Production (million IDR) 399,520.0
Total value of potential production (million IDR) 519,376
Total value of potential production (AUD) 49,464,381
Total potential value of increased production (million IDR) 119,856
Total potential value of increased production (AUD) 11,414,857
5.2 Vision of change
Focusing on achieving the potential outlined above for the shallot sector in NTB, a vision of change
can be outlined for both the sector and service levels. The vision of change at the sector level is
to: (1) increase smallholder productivity and production, including during the rainy season and early
months of the dry season and (2) improve market performance for farmers by allowing them to
realise higher prices through greater flexibility in when they sell shallots. At the service level, it is
envisaged that farmers will have improved access to: (1) nursery and planting bulb services, (2)
pest and disease control technology and information services, and (3) storage services.
We envision that nursery and planting bulb services will involve seed companies, nurseries, traders,
input retailers, and potentially universities. Pest and disease control technology and information
services will be provided through agricultural equipment companies or nethouse
manufacturers/service providers, with possible collaboration with BPTP. Storage services will
involve government, cooperatives, and traders.
26
(AIP-PRISMA)
5.3 Intervention areas
It is crucial that interventions are designed which are ‘systemic’ so that outcomes are not dependent
upon the project or development partner for sustainability. This means that AIP-PRISMA should not
seek to provide services (or at least only temporarily) but rather enter the market system in a
catalytic manner to tackle the service weaknesses in existing market actors. Based on our analysis,
three key intervention areas will be necessary to transform the shallot sector in NTB. The following
table shows the key intervention areas along with approved, on-going, or completed interventions
and intervention concepts:
Approved, on-going, or completed

Intervention Areas
interventions and intervention concepts
• Branded bulbs distributed through traders &
Intervention Area 1: Promote higher quality
retailers (EWINDO in Bima, Sumbawa, and
planting materials (including more productive
Lombok)
varieties)
-
Intervention Area 2: Promote technologies to
counter pest and disease problems
-
Intervention Area 3: Establish sustainable
storage facilities
Intervention Area 1: Promote higher quality planting materials (including more productive
varieties)
The key objective is to ensure the availability and use of higher quality planting materials. This is
essential for improving farmer productivity and profitability from shallot farming. This may involve:
(1) supporting the production, promotion, and distribution of new TSS varieties in NTB (such as the
Tuk-Tuk variety); (2) developing linkages between traders in NTB and suppliers of certified or good
quality Super-Philip planting bulbs from Java; and/or (3) supporting the development of certified
producers of Super-Philip planting bulbs in NTB. Since women are heavily involved in the planting
of shallots and influence decisions around seed usage in at least 45% of households, it will be
important that exposure to the benefits of better quality planting materials and information on better
practices are accessible to women and tailored to their needs. While there are currently no female
nursery operators, there is also potential to consider more involvement of women in nursery
operations. This needs to bear in mind the financial risks involved as the new seeds are delicate
and it takes time to get it right, with some financial losses possible in the interim.
In order to promote higher quality planting materials in NTB, AIP-PRISMA has been working with
EWINDO to develop a market for first generation bulbs (G0) grown from Tuk-Tuk seeds. G0 bulbs
are planting bulbs that have higher productivity and are more pest-resistant than the retained bulbs
commonly used by farmers. G0 bulbs are also more acceptable to farmers than TSS seeds since
they require less time and skills to cultivate than seeds. The collaboration with EWINDO involves
support for the production, promotion, and distribution of G0 bulbs. Nurseries in both NTB and East
Java are being supported to produce G0 bulbs which will be sold to EWINDO for distribution in NTB.
27
(AIP-PRISMA)
G0 bulbs which have passed EWINDO’s quality assurance and quality check procedures are
marketed under the brand name “G0Pro.” AIP-PRISMA is also supporting EWINDO with
promotional activities (such as demo plots) and with designing and piloting various distribution
channels for G0Pro. There is also potential in the future to support the development of a distribution
network for G0 bulbs that have not met the G0Pro requirement but could still be a better quality
option than retained bulbs. Finally, since embedded information will be important to help farmers
maximise yields from planting better quality bulbs, information is being provided through EWINDO’s
product promoters. The team is also considering a potential collaboration between EWINDO and
the University of Mataram around a shallot learning centre.
In addition to working with EWINDO, the team has also been exploring the potential for introducing
other TSS varieties to NTB. For example, there is potential to partner with Jurgen Nagel, who is
interested in producing and selling planting bulbs grown from Tropix seeds. This will depend in part
on whether Jurgen is able to successfully register a new company in Indonesia.
Intervention Area 2: Promote technologies to counter pest and disease problems
The introduction of affordable, innovative technologies to address pest and disease can have a
significant impact on reducing crop failure and losses and on reducing production costs if the
technology is cheaper than the existing strategy of using excessive chemical inputs. It can also
reduce the labour burden for women, especially in areas where it is common for women to hand
pick caterpillars from the plants. Furthermore, there are environmental benefits to minimising the
use of chemical inputs, and lower pesticide residues can also have a positive impact on food safety
and shallot productivity.
There is potential to capitalise on the work that AIP-PRISMA has commenced in East Java on the
promotion of low cost, solar-powered insect light traps. Solar panel light traps are more
environmentally friendly and safe to use, with the potential to reduce spending on pesticides by up
to 80%. The team has been in discussions with several potential partners. PT Solusi Bioteknologi
is interested in expanding into the solar pest lamp business, but as this is a new business area from
them, the team is still in discussions with them to understand how much they would be willing to
invest in R&D to adapt the solar insect light traps for shallot farmers. Other potential partners such
as CV Berkat Saron Sejahtera have the R&D capacity to develop more suitable prototypes for
smallholder shallot farming (e.g. expanding the range of each light trap or lowering manufacturing
costs) but insufficient capital to manufacture the product. There may be potential for collaboration
between the two companies or separate interventions involving each of these market actors. If the
intervention in East Java is successful, there is potential to expand the business to distribute solar-
powered insect light traps to other provinces, including NTB.
At the same time, the team is exploring the potential to work with manufacturers of nethouse
materials and local service providers in Java who are interested in renting out mobile nethouses,
an alternative pest and disease control strategy to insect light traps. This model could also
potentially be introduced to NTB. Finally, there may be potential to collaborate with BPTP and with
the ARISA (a DFAT-funded program which is doing research on integrated pest management
solutions) to identify and scale-up other potential pest and disease management innovations.
28
(AIP-PRISMA)
Intervention Area 3: Establish sustainable storage facilities
The introduction of storage facilities, in particular cold storage, for shallot farmers can allow farmers
to realise higher prices through greater flexibility in when they sell their shallots. Since women often
take responsibility for post-harvest handling, any intervention in storage services will have to
consider women’s roles and perspectives on appropriate solutions.
There is potential to replicate the shallot storage system that was developed by CNJ in Cirebon and
is now being implemented in two other locations in West Java and Central Java. The intervention
could explore a public-private partnership to establish a similar system in NTB. In addition to local
government, potential partners in NTB may include cooperatives and traders. Information sharing
and study visits to Cirebon, Brebes, and Majalengka can be an important activity to facilitate
understanding and adaptation of this model to NTB. The team will be conducting an initial
assessment on the storage models in Cirebon and Brebes in the upcoming year.
5.4 Sequencing and prioritisation of intervention areas
It is recommended that the intervention areas in the NTB shallot sector are implemented in
two phases. In the first phase, the focus is on promoting higher quality planting materials (including
more productive varieties). This is because of the presence of a partner (EWINDO) who has strong
incentives to expand sales of the higher-yielding Tuk-Tuk variety in NTB. As a result of the strong
competition in Java from other sources of good quality planting bulbs, EWINDO wants to target NTB
where they already have a small customer base among medium-sized farmers. The second phase
will involve promoting technologies to counter pest and disease problems and establishing
sustainable storage facilities. This phase will build on and/or involve scaling-up interventions that
will be piloted in the shallot sector in East Java.
Phase 1
Promote higher quality planting
materials (including more productive
varieties)
Phase 2
Promote technologies to counter pest
Establish sustainable storage facilities
and disease problems
29
(AIP-PRISMA)
5.5 Sector vision of change logic
M4P Strategic Shallot NTB Vision of Change Logic

Framework
POVERTY REDUCTION
POVERTY REDUCTION
(Increased Incomes)
Access to better quality Access to pest and disease

Improved access and growth Access to storage facilities to
planting materials which control technologies which
for poor target group improve farmer bargaining
increase yields and the quality reduce crop losses/failure and
power
of consumption bulbs lower production costs
Sustainable storage facilities

Private sector provides
Market system change Private sector provides provided through private
commercial technologies to
improved planting materials sector or public-private
counter pest and disease
partnership
Promote higher quality Promote technologies to

Establish sustainable storage
planting materials (including counter pest and disease
Systemic facilities
more productive varieties) problems
Intervention
30
(AIP-PRISMA)
Annex 1: Intervention Logic Analysis Framework (ILAF)
(1) Problem/ (2) Underlying cause (3) (4) Services (5) Service (6) Intervention Service Provider/Partner
Symptom and Enabling weaknesses/ Areas
Environment underlying causes
Farmer productivity in Farmers have limited Nursery and Existing nurseries are Intervention Area • EWINDO
NTB is low because access to good quality planting bulb few and have only 1: Promote higher • De Groot en Slot/ Jurgen
they use poor quality planting materials and services produced quality planting quality planting Nagel
planting materials are also unable to materials for their own materials • Nurseries
differentiate between farms or temporarily for (including more • Traders
good and poor quality government programs productive • Input retailers
bulbs (rather than selling varieties) • University of Mataram
planting bulbs
commercially). There is
also no system by which
to guarantee the quality
of planting bulbs.
Farmer experience Farmers lack Pest & disease No suppliers of potential Intervention Area • Agricultural
high production costs knowledge of good control technology alternative pest and 2: Promote equipment/tools
and high crop failure agricultural practices and information disease control technologies to companies (CV Berkat
and losses due to and are unaware of services technologies for counter pest and Saron Sejahtera, CV
pest and disease more affordable smallholder shallot disease problems Rianjaya Pestalindo, PT
attacks technologies to combat farmers Duta Bintara, PT SOLBI)
disease and pest • Nethouse
attacks (including for manufacturers/ service
rainy season providers (CV Pilar Agro,
production) PT Gani Arta
Dwitunggal)
• BPTP
Farmers are unable Farmers sell all their Storage services No existing cold storage Intervention Area • Government
to benefit from higher crop immediately after facilities for shallots 3: Establish • Cooperatives
prices during the off- the harvest because (neither public nor private sustainable • Traders
season they lack access to run facilities) storage facilities
storage facilities
31
(AIP-PRISMA)
Annex 2: Gender table
Women and men are both actively engaged in shallot production as either farmers or as labourers (and sometimes
as both). Women typically carried out a range of tasks from planting through to harvesting although cultivation and
spraying of fertilizer are usually (but not always) men’s jobs. When the husband is absent (e.g., some husbands are
in Malaysia working), women take on these additional tasks. Below the gender table base on Shallot Impact
assessment in early 2015.
No Activity In Task Division Remarks

Production
Man Woman Men Woman
Labors Labors
1 Decision on Seed to Discussed and decided together by husband and
2.0 2.0 0.0 0.0
be planted wife. However more male as decision maker.
2 Buying Inputs Join Decision but percentage of male as decision
4.0 0.0 0.0 0.0
maker is higher.
3 Land Preparation Mostly done by male labors. The female do that
4.0 0.0 0.0 0.0
However, when the husband is overseas.
4 Planting Mostly done by female labors. But in some areas
0.0 4.0 0.0 0.0
done by male
5 Weeding 0.0 4.0 0.0 0.0 Both but Mostly done by female labors.
6 Fertilizing and Spraying mostly done by male and caterpillar
4.0 0.0 0.0 0.0
Pesticide Spraying picking by female.
7 Harvesting 1.5 1.5 0.0 1.0 Both. It’s about the same percentage.
8 Drying 2.0 2.0 0.0 0.0 Both. It’s about the same percentage.
10 Transporting 4.0 0.0 0.0 0.0 Mostly done by male labors.
11 Financial Some areas said that this activity done by female
Management 1.0 3.0 0.0 0.0 but some said by male. The money from sales will
most likely be managed by the female.
32
(AIP-PRISMA)
Gender in Decision Making – Decision making in shallot production.

Seed Input GAP
Decision Maker
Male 55% 65% 61%
Female 14% 11% 15%
Both 31% 24% 24%
Breakdown of labor cost & male-female composition
Cost Man-days Male Female

Job
(%) (%) Man-days (%) Man-days (%)
Ploughing 15.32% 12.88% 94.33% 5.67%
Planting/Transplanting 17.19% 20.16% 26.73% 73.27%
Fertilizing 2.55% 2.34% 88.99% 11.01%
Spraying 13.11% 15.89% 100%
Irrigating 9.40% 6.96% 93.83% 6.17%
Weeding 20.21% 20.18% 28.72% 71.28%
Reaping 14.56% 14.77% 44.19% 55.81%
Transporting 1.13% 1.46% 70.59% 29.41%
33
(AIP-PRISMA)
Drying 6.53% 5.37% 57.60% 42.40%
34

Shallot Sub-Sector Growth Strategy IN West Nusa Tenggara

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Shallot Sub-Sector Growth Strategy IN West Nusa Tenggara

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Australia-Indonesia Partnership for

Promoting Rural Income through

SHALLOT SUB-SECTOR GROWTH STRATEGY

August 18, 2015

Tables & Figures

Year August 2014 - June 2015

The planned focus for July 2015-2016 is on:

Year August 2017

Figure 2. Shallot Production Centre and Farming Land

There is market opportunity to stimulate higher availability of domestically produced

• Promote higher quality planting materials (including more productive varieties)

3.1 Sector profile

3.1.1 Overall context

2010, the harvested area 950,000

8.8 to 9.6 tonnes/ha. A 700,000

As a key condiment in Indonesian cuisine, demand for shallots is high. Consumers

Figure 4. Shallot Demand Trend in Indonesia (2008-2015)1

Yearly Shallot Demand in Indonesia

With demand outstripping supply, Indonesia is reliant on imports to satisfy domestic

1 Data from ACIAR Report

the first five or six months of 15000

March each year.

3.1.2 Local context

Shallot is an important component of household livelihood portfolios in many rural areas

shallots. Outside production areas, significant employment is created in the transportation,

60,000 prevent shallots from rotting.

3.2 Sector dynamics

3.2.1 Market overview

3.2.2 Sector map

(15) BPR (10) Local

Big Distributors (250) Indofood,

Government Regulation Association Government Program

Business Enabling Environment

3.2.3 Core value chain

7 Based on 2015 Impact Assessment

Post-Harvest Handling, Trading and Processing

3.2.4 Supporting functions

3.2.5 Supporting rules and regulations (enabling environment)

4.1 Problems and underlying causes

4.2 Services, enabling environment, and weaknesses analysis

5 Strategy for change

5.1 Market potential

There is market opportunity to stimulate higher availability of domestically produced

Table 2: Business potential in target area

Total Business in the

5.2 Vision of change

5.3 Intervention areas

Approved, on-going, or completed

Intervention Area 2: Promote technologies to counter pest and disease problems

Intervention Area 3: Establish sustainable storage facilities

5.4 Sequencing and prioritisation of intervention areas

5.5 Sector vision of change logic

M4P Strategic Shallot NTB Vision of Change Logic

Access to better quality Access to pest and disease

Sustainable storage facilities

Promote higher quality Promote technologies to

Annex 1: Intervention Logic Analysis Framework (ILAF)

Annex 2: Gender table

No Activity In Task Division Remarks

Gender in Decision Making – Decision making in shallot production.

Breakdown of labor cost & male-female composition

Cost Man-days Male Female