CHAPTER I

FOREWORD

1.1 Latar Belakang

Earthworm cultivation is a side business that has been known to farmers,

especially in the province of West Java since 1990, however, the packaging
and sales of products from worm cultivation are still very limited. On the
other hand, the increasing issue of organic farming in agricultural countries in
general is a great opportunity for worm cultivators to be able to expand the
absorption of fertilizers fermented by earthworms or what is commonly
called vermicompost fertilizer. Utilizing online marketing and raising social
welfare issues, Indochemical Agrotech has slowly succeeded in opening the
marketing of vermicompost fertilizer both at the local and international
levels. The decent selling price and farmers share that are applied fairly in
indochemical Agrotech social enterprises have practically become an added
value in itself to save the agricultural ecosystem in rural areas around the city
of Bandung.

Unfortunately, the absorption of vermicompost fertilizer production at

the local farmer level is still limited by local cultures who prefer to use
artificial chemical fertilizers instead of organic fertilizers. Therefore, the
penetration of the export market to agricultural regions, especially in
Southeast Asia, which has paid attention to aspects of sustainable agriculture,
can be the key to the success of indochemical agrotech company
development in the future..

1.2 Vision
 Become the number one export-oriented integrated agricultural role
model in West Java in 2025
  Meets 5% of organic fertilizer needs for the plantation sector across
Southeast Asia

1.3 Mission
• Increase farmland productivity using integrated agricultural systems
• Conducting research and continuous innovation to produce organic
fertilizers that are suitable for the tropics
• Scale-up the organic fertilizer production system gradually until it
meets the export quota
1.4. Target
The targets to be achieved by Indochemical Agrochemicals Technology
in order to export organic fertilizers to the Southeast Asian region are:
1. Become a permanent supplier of organic fertilizer for the horticultural
agriculture sector in Malaysia amounting to 5 containers every year
2. Introducing vermicast fertilizer products as superior organic fertilizers
in the early days of hatchery and able to accelerate the growth of
leaves and roots of plants

BAB II
COMPANY AUDIT

2.1 Lingkup Bisnis

Indochemical Agrochemicals Technology is a small and medium

enterprise (IUKM) engaged in integrated agriculture by integrating animals,
plants, and other biota in a farming ecosystem that aims to increase the
productivity of agricultural land. The company was originally established
with the help of grants from an international NGO that focuses on the
economic development of people in Indonesia.

The company was founded by an engineering graduate from a

bioengineering education background. Recording a total turnover of more
than Rp30,000,000 in the first year this business was established in 2015-
2016, Indochemical Agrotech began to pioneer strawberry plantations to
become a demonstration plot of vermicompost fertilizer products. In addition
to making organic fertilizer as the main source of income, Indochemical
Agrotech also has processed food products from strawberry fruit for the local
market with the Strawberry24 brand in the form of strawberry dodol and
strawberry jam which are processed directly from local strawberry berries.
Figure 1 Strawberry Garden24 belonging to Indochemical Agrotech from vermicompost organic
fertilizer application

2.2 Product Profile

2.2.1. Vermikompos Fertilizer Products
The classification of vermikompos organic fertilizer products
according to the International Trade Centre is:
No. HS Code Product Description
31 Fertilizers

3101 Animal or vegetable fertilizers

31010099 Animal or vegetable fertilizers, whether

or not mixed together or chemically
treated; fertilizers produced by the
mixing or chemical treatment of animal
 or vegetable products (excl. those in
pellet or similar forms, or in packages
with a gross weight of <= 10 kg)

Organic vermicompost fertilizer or commonly known as vermicompost

is a fertilizer that is commonly used in flower plants and ornamental plants.
This humic acid-rich vermicompost fertilizer can specifically improve the
growth of roots, leaves, as well as increase the weight of plant biomass. Apart
from being a plant fertilizer, the application of vermicompost as an organic
fertilizer in shrimp ponds has been proven to increase plankton abundance and
minimize the growth of bacteria in the water.

2.2.2. Advantages of Vermicompost Fertilizer

can improve the structure of the space and
increase the activity of myroorganism in the
soil which can help accelerate growth and
increase the weight of plant biomass. In
applications as a pond base fertilizer,
vermicompost fertilizer can provoke the
growth of plankton and organic matter from
the bottom of the pond as
natural food of pond biota. The mixture of vermicompost sludge as the bottom
layer of the pool also helps in neutralizing the pH of the pool water.Some
Apllication of Fertilizer of vermikompos:
- Ornamental plants, tabulampots and leaf vegetables
- Plant hatchery media
- Bottom layer of fish ponds
- Shrimp pond bottom fertilizer

As for the content of micro and macro nutrients in vermicompost

fertilizer, it can be seen as follows:
Table 1 Essential nutrients contained in vermicompost organic fertilizer (vermicompost)
No. Nutrition Contain (g/Cg)
1. Nitrogen (N) 9.500
2. Phospor (P) 0.130
3. Kalium (K) 0.176
4. Iron (Fe) 19.730
5. Magensium (Mg) 4.900
6. Manganese (Mn) 0.016
7. Calcium (Ca) 0.276

Indochemical Agrotech's vermicompost organic fertilizer production

capacity can currently reach 2 tons / month with the number of active partner
farmers as many as 3 people and can absorb livestock waste of more than 40
cows in the Bojong Kawung area, Pasirjambu.
Figure 2. Indochemical Agrotech plasma land and farmers

Figure 3. Delivery of vermicompost fertilizer on a bull sc

2.2.3. Profil Produk Strawberry24

To optimize the export activities of agricultural products, Indochemical

Agrotech has a food category product that was just released in early 2017,
namely Strawberry24 (www.st24wberry.com). This product is the result of
our pilot strawberry garden in Ciwidey. Strawberry24 is a brand of processed
strawberry products that are processed directly from the strawberry harvest of
local farmers in the form of dodol and jam.

The advantages of strawberry24 products include a source of raw

materials that are guaranteed health and freshness because they are taken
from the harvests of local farmers and strawberry plantations owned by
Indochemical Agrotech located in Ciwidey. Although this product is still
relatively new, the export of strawberry product samples has been carried out
for our buyers in Malaysia with a fairly good response. Exports of products in
large capacities are still waiting for P-IRT permits and halal certificates that
are under management and are planned to be completed in August this year.

2.3 Company Management

Indochemical Agrotech as a beginner SME has a fairly lean
organizational structure as follows:
 Director

Manager

Farm Leader Production Head Strawberry24

3 Plasma Leader 1 Strawberry Farm Leader

The organizational structure of Indochemical Agrotech as a startup

engaged in agribusiness prioritizes the growth of the number of member
farmers in the first year. The position of director and general manager who
has a biological-based background strengthens the competence of companies
engaged in integrated agriculture. The human resources owned by this
company are as follows:

Number position education Background

1. Direktur S1 Bioengineering
2. Manager of S1 Bioengineering
Administration
3. Field Production Head SMA Local Farmer
4. Plasma Farmer SMA Local Farmer
 CHAPTER III
MARKET
AUDIT
3.1 Selecting Export Destination
The selection of NTE (Export Destination Country) for vermicompost
organic fertilizer products is determined based on the large percent
contribution of the agricultural sector to a country's GDP. This parameter is
taken assuming that the growth of the agricultural sector is likely to be
directly proportional to the need for organic fertilizers in the country.

Agriculture Contribution Percentage On GDP

18

16

14

12

10

0
Indonesia Thailand Vietnam Filipina Malaysia

% GDP

Here are the five countries in Southeast Asia that have a major
contribution from the agricultural sector to their country's GDP based on The
World Factbook CIA (www.cia.gov). It can be concluded that Thailand,
Vietnam, the Philippines, and Malaysia are potential targets that can absorb
large amounts of organic fertilizer every year. Furthermore, if referring to the
data on fertilizer imports for these four countries, the following results can be
obtained:
 COMPOST FERTILIZER IMPORT DATA 2012 -2016
Viet Nam Malaysia Indonesia Philippines Thailand

80

70

60

50
US$ MILLION

40

30

20

10

2012 2013 2014 2015 2016

If you look at the import table of the four countries above in the 2012-
2016 time span, information was obtained that the size of the compost
fertilizer market in the four neighboring countries ranged from US $ 5-10M.
Only 2 countries imported far below this figure, namely Thailand before 2013
and Vietnam in 2015-2016. In general, the curve of fertilizer imports that has
increased from year to year is in Vietnam followed by Malaysia in the second
order. It contains important information that in the next 2-3 years the demand
for imports of compost to the two countries is quite promising. Therefore, in
the next few years, Vietnam and Malaysia will become the main NTE of
transmigration organic fertilizer products produced by Indochemical
Agrotech.
3.2 Export Destination Country Profile 1: Malaysia

Amount of Community : 30,949,962

GDP and growth rate : $302.7 Billion - 4.2%

Farmer Area : 23.2%

Agriculture Commodity : Minyak sawit, cokelat, karet, dan padi

Agriculture Labour : 11%

Malaysia is one of the countries that has the title of upper income
community in Southeast Asia. This is inseparable from the country's policy
which has shifted since 1970 from producing raw materials to a multi-
sectoral economy. The country's strategic position also makes it possible to
expand the network of business cooperation with other countries such as
Thailand and Singapore. With soil texture and tropical climate that is not
much different from Indonesia, it will certainly facilitate the entry of
vermicompos organic fertilizer supply to Malaysia, which has a
vermicompost fertilizer price at the retail level of RM 6..

3.3 Export Destination Profile: Vietnam

Amount of Inhabitant : 95,261,021

GDP and growth rate : $200.5 Billion – 6.1%

Ahriculture Areal : 34.8%

Agriculture Commodity : Rice, coffee, tea,

spices, soybeans, sugar,bananas

Agriculture Labour : 48%

Vietnam is a developing country with a fairly dense population, most of
which work in the agricultural sector (48%). Some of the positives of this as
vietnam's primary NTE are due to the large number of young people, political
conditions that tend to be stable, and support sustainable development which
can be a rationalization for the number of organic fertilizer imports that have
continued to grow in the past 2 years. The main issues facing Vietnam related
to the agricultural sector are environmental problems, namely illegal logging,
forest burning, which results in a decrease in nutrients in the soil. Another
opportunity that can be taken advantage of from the country of Vietnam is
that it has the ambition to lead APEC in prioritizing food safety.

3.4 Regulation

Regulations related to the export of vermicompost organic fertilizers

that have HS Code 310100 are regulated in the EPA (Environmental
Protection Agency) standard as follows:

Regulated Things The Sound of

the Rules
Packaging Packed with fertilizer per
pack maximum capacity 10kg
Restriction There are maximum concentration limits for the
following types of minerals:
arsenic, cadmium, copper, lead, mercury,
molybdenum, nickel, selenium, and zinc.
The special permit for organic fertilizer products to enter malaysia must
be accompanied by a security test and approval from the Plant Biosecurity
Section, Kuala Lumpur. The series of tests will involve at least 3 government
agencies in Malaysia, namely:

 Department of Agriculture (Plant Biosecurity Division and Soil

Resources Management and Conservation Division)
 Department of Fisheries
  Department of Veterinary Services and Institute for Medical Research
(IMR)

Meanwhile, the costs needed for the three organic fertilizer sample tests
have been determined as shown in the table below.

Agency Name Cost Analyze Paid to:

Department of Agriculture RM 95.00 Steering Chair of agriculture

Malaysia
Department of Fisheries RM 115.00 Chairman of the Fish Health Management
Center and Kuarantin, Sepang
Malaysia
The complete procedure for testing organic fertilizers to be able to enter
Malaysian territory can be seen through the following flow chart (sample delivery is
only allowed through KLIA – Kuala Lumpur International Airport).

Complete the
Prepare 5 sets Fill out the Make a submission addressed payment and wait for
of samples EP-4A form to the Chairman of the the result from
containing 250g Agricultural Steering JKTPMOBO
Committee

3.5. Konsumen

Consumers of fertilizer products in Malaysia and Vietnam are divided

into consumers of plantation companies, household farmers, and home
gardens. With the difference in the characteristics of the use of fertilizer
products, different treatment is needed for the two types of consumers above,
including;
a. Agro-industrial Enterprises
• Packaging: Bulk using sacks with a unit capacity of 50kg
• Distribution Flow: Supplier → Exporter/Importer → Buyer
(Agroindustry)
• After sales service: Monitoring product usage periodically Petani
b. Household/Retail Store Landscaping
 • Packaging: Retail using bags with a unit capacity of 5kg
• Distribution Flow: Supplier → Exporter/ Importer → Wholesaler
(Distributor) → Retailer → Buyer (Individual Consumer)
 After sales service: Monitoring product usage periodically
Adapun trend impor pupuk yang dilakukan malaysia dalam beberapa
tahun terakhir dapat dilihat dari dokumen yang dikeluarkan oleh FIAM -
Fertilizer Industry Association of Malaysia pada tahun 2009.

From the results of the same research, it was also obtained the type of
fertilizer imported by the Malaysian state in the period 2004 - 2008..
Vermicompos fertilizer produced by Indochemical Agrochemicals
Technology can be categorized as organic fertilizer (speciality products),
which has a demand that tends to increase from a share of 9.3% in 2004 to
12.6% in 2008. This can be caused by Malaysian consumers who are already
educated enough to use organic fertilizers that are more environmentally
friendly than chemical fertilizers..

3.6. Competitor

Fertilizer competitors in the Malaysian market come from local fertilizer

producers as well as imported products from several fertilizer producing
countries. As for the country that imports fertilizer to Malaysia in the last 5
years, it can be seen in the diagram below.

Data obtained online from the www.trademap.org above shows that the
competitors of the largest organic fertilizer supplying countries to Malaysia
are the Netherlands, followed by the US and China in second and third
place. The competition of organic fertilizer products compared to chemical
 fertilizers can be seen in the following table

Table 2. Advantages of Organic Fertilizer according to Prof. Dr. P. K. Mani (BCKV University)

Parameter Chemical Fertilizers Organic Fertilizer

Raw materials Non-renewable Renewable
Energy sources Fossil/petroleum Sunlight
Reducing agent H2 Living things (organisms)
Catalyst Al, Fe Nitrogenase enzyme, microbes
Efficiency 40-45% 90%
Pollution Effects There is if overuse Pollution-free
Soil health Decreases over time Increases over time

Along with the trend in the international world that is increasingly

paying attention to environmental factors, the use of organic fertilizer
products can be projected to continue to increase and replace the use of
chemical fertilizers.

Based on market research conducted by Persistence Market Research,

the global organic fertilizer market, which in 2016 reached US$ 5.57 billion,
will reach US$ 10.23 billion by 2025 with Belgium, the Netherlands, and the
U.S. as the top three market leaders of organic fertilizer producers. There are
no countries in Southeast Asia yet as fertilizer producers large organic, of
course, can be a great opportunity for Indonesia, which is rich in the
agricultural sector and abundant with sources of organic matter to participate
in meeting the world's organic fertilizer needs in the future.

3.5 Distribution

The distribution of organic fertilizer products in general in Malaysia can

involve several parties including fertilizer importers, dealers (distributors),
and retail agricultural stores. A complete diagram of the distribution system
as well as fertilizer sales that have occurred in Malaysia can be seen in the
following diagram.
 Importer Importir

Direct to
other
Wholesalers Stock distributors

Dealers
Retailer Dealers

Costumer Farmers Plantation Farmers Plantation

Figure 5. Fertilizer distribution system according to FIAM (Fertilizer Industry Association of Malaysia)
.

CHAPTER IV
ANALYSIS
4.1 Target
The target to be achieved by Indochemical Agrochemicals Technology
in order to export organic fertilizers to the Southeast Asian region is:

1. Become a permanent supplier of organic fertilizer for the horticultural

agriculture sector in Malaysia amounting to 5 containers every year within the
next 10 months

2. Introducing vermicast fertilizer products as superior organic fertilizer to

Vietnam and Malaysia in the next 6 months

4.2. Analisa SWOT

Based on the market audit in the previous chapter, the results of the strength
analysis and Indochemical Agrotech's weakness of the company is
 Strength Weakness
Internal  Companies have  Do not have
Factors of the strong social values organic
Company  The company's vision certification
is supported by a  Permanent
scientific background workshop needs
 Production system improvement
free from the use of  Inexperienced in
chemicals large-scale export-
 Sufficient production import
capacity to meet
export needs
 Has product
development
potential
 other agricultural
products
Opportunity Threat
External Factors  Abundant source of  Vermicompost
(outside the raw materials and fertilizer is not yet well

company) human resources known at the industrial

 The need for level
organic fertilizers is  The fertilizer market in
increasing Malaysia has been
 Regulation of dominated by products
organic fertilizers to from the Netherlands,
enter the country Thailand, and China
Malaysia is not so
Complicated
4.3. Strategy

Indochemical Agrotech's strategy for organic fertilizer market penetration

in Malaysia will use indirect sales patterns through fertilizer agents and
distributors located in Malaysia. This is more likely to have a wider range of
consumers who can get to know in advance vermicompost-type organic
fertilizer products. In addition, fertilizer dealers can provide feedback on
fertilizer products and can help Indochemical Agrotech company to improve
products in accordance with malaysian market demand. The marketing
strategy of Indochemical Agrotech vermicompos fertilizer products is
planned as follows:

1. Product

Fertilizer retail packaging in Malaysia requires a maximum weight per

unit of 10 kg, this is in accordance with Indochemical Agrotech's
vermicompos fertilizer product which has a packaging of 5kg per sak.
With the target market of Southeast Asia, Indochemical Agrotech has
periodically adjusted and tested the specifications and compatibility of
this product for its application in the tropics. This will help make it
easier for vermikompos fertilizer products to enter Malaysia which has
strict procedures on the content of microorganisms.

2. Price
The determination of the selling price of organic fertilizers in Malaysia
is carried out based on the company's bottom-up and top-down
approach from the consumer side. Based on information from our
prospective buyers in Malaysia, the price of vermicompost fertilizer at
the retail level for consumers is at RM 6/kg (18,600 IDR) while from
fertilizer import transaction data in www.trademap.org, the bulky price
of organic fertilizer at the importer level for organic fertilizer ranges
 from US$ 0.6/kg (RM 2.58) to US$ 2/kg (RM 8.6). From the data
above, it can be concluded, the lowest FOB price of organic fertilizer
circulating in Malaysia is relatively at RM 2.5/kg (7,700 IDR). With
this FOB price, Indochemical Agrotech's profit simulation to see the
potential for vermicompos fertilizer exports to Malaysia can be seen
through the following table.

Price per unit (/cg)

Rupiah (IDR) Ringgit Malaysia (RM)

Harga Ex-works 2.500 0,80

Admin and Logistic Cost 2.000 0,65
Product Price Total 4.500 1,44
FOB Selling Price 6.000 1,93
Margin 34%

From the above calculations, it can be concluded that Indochemical

Agrotech can offer a fairly competitive vermicompos type organic
fertilizer price for the Malaysian market at a FOB price of RM 1.93/kg.

3. Place

Indochemical Agrotech production system, both vermicompost

fertilizer products and processed strawberry fruits are found in districts
Ciwidey, Bandung Regency. With the demographics of the population,
most of whom work as household-scale farmers and locations that are
included in the rural area of Bandung City, can strengthen the value of
Indochemical as an effort to empower local farmers. Adequate
transportation access is also one of the company's added values where
the nearest logistics lines that can be accessed are as follows:

 Air Line: Husein Sastranegara International Airport (± 2 hours)

 Sea Lane: Tanjung Priok Port (± 5 hours)

  Land Line: Bandung Station (± 2 hours)
As for the location of our agents who are in Malaysia living in the
Klang region, Selangor, one area with the port of Klang.

4. Promotion

The promotion carried out by the Indochemical Agrotech company

until now has utilized many online marketing methods ranging from
search engine optimization (SEO) so that www.cacing.id websites are
easier to find from certain keywords, Facebook advertising, and e-
commerce platforms such as Bukalapak, Tokopedia, Olx, and similar
websites. One of the issues raised by the company is the issue of fair
trade where Indochemical Agrotech provides decent profit sharing to
the assisted farmers without price games that can harm one of the
parties. In addition, consumers' full attention to environmentally
friendly products can also be a consumer attraction for Indochemical
Agrotech fertilizer products. The strategy that will be carried out in the
future to promote vermicompost fertilizer products to foreign markets
can be divided into two categories:
 Offline Promotion:
1. Agro-industrial exhibition in Malaysia to introduce vermicompos
organic fertilizer products
2. Delivery of fertilizer product samples to several strategic
agricultural industry stakeholders in Malaysia
 Online promotion:

1. Optimize www.cacing.id website with a target audience of

Southeast Asian countries including Malaysia

2. register on well-known e-commerce platforms in Malaysia

such as www.lazada.com.my
3. promotion through mainstream advertising media such as
 Facebook Ads with Malaysian target market and interest
in agriculture sector
4. Sales Canvassing via e-mail to several local fertilizer
exporter companies that have networks and foreign
markets such as PT Utomo, PT Visi Karya Agritama, and
PT Glory Persada Manunggal
5. Mutilizing Youtube media to display Indochemical
Agrotech company profile videos and introduce narratives
of agricultural products based on community
empowerment.

CHAPTER V

ACTION PLAN

The action plan for the implementation of Indochemical Agrotech organic

fertilizer export to Malaysia is as follows:

Month
No Job Description
I II III IV V VI VII VIII IX X
I Legal Business
Ii Product Certifications and Permits
Iv Working Capital Collection
V Scale-up Phased Production System
Nursery Site Installation
Expansion of plasma farmer network
Duplication of Production Systems
Vii Market Survey
Market Research
Buyer List Collection
Online and offline Sales Canvassing
Sample Delivery
Product Customization
 Vi Negotiation and Making of MoU
Export Contract Deal
Vii Prime Export Shipments
Vii Receipt of Remaining Payment

CHAPTER VI
FINANCIAL PLAN

Financial planning needs to be carried out to predict the business

prospects of Indochemical Agrotech in order to export vermicompost
vermicompost fertilizer to Malaysia. The production of agricultural products
from Indochemical Agrotech must have attractive profit projections so that
investors are confident to invest its shares or lend capital to support the
export of this fertilizer. Some of the economic parameters used include Net
Present Value (NPV), Interest Rate of Return (IRR), Payback Period (PBP),
and Break Even Point (BEP). The initial assumption needed in this
calculation is:

 All prices in rupiah (IDR) with rupiah exchange rate against Malaysian
Ringgit (RM) are Rp3,100.00 (12 August 2017)

 Depreciation of the company's fertilizer production system by 10% per

annum

 Total Income tax that must be spent is 15% of revenue company

With the above assumptions, it can be calculated the amount of
investment needed in order to export Indochemical Agrotech fertilizer to
Malaysia as follows:

Amount Unit Price/Unit Total Cost (Rp)

LAND 300 Rp20.000 Rp6.000.000

m2
FIXED CAPITAL
150 Rp150.000 Rp22.500.000
m2
 Warehouse
Tool danInstrument 1 set Rp25.000.000 Rp25.000.000
Factory utility 1 set Rp35.000.000 Rp35.000.000
WORKING CAPITAL
Cash on 1 set Rp50.000.000 Rp50.000.000
Hand Startup 1 set Rp25.000.000 Rp25.000.000
Plant
Total Capital Cost Rp163.500.000

With a total investment of IDR 163,500,000, in the first 5 years,

Indochemical Agrotech company's financial projections can be simulated
from the export of vermicompost fertilizer products to Malaysia according to
the following table.

Year to: 1 2 2 3 4

All the numbers below are in rupiah (IDR)

Capital (Depreciable) 25.000.000

Capital (Working) 50.000.000

Fertilizer Production (Kg) 36.000

Variable cost 90.000.000 90.000.000 90.000.000 90.000.000 90.000.000

Fix cost 90.000.000 90.000.000 90.000.000 90.000.000 90.000.000

Total cost 180.000.000 180.000.000 180.000.000 180.000.000 180.000.000

Income

Fertilizer Sales (Rp/kg) 6.000 216.000.000 216.000.000 216.000.000 216.000.000 216.000.000

Gross Profit 36.000.000 36.000.000 36.000.000 36.000.000 36.000.000

Income tax 0,15 5.400.000 5.400.000 5.400.000 5.400.000 5.400.000

Net income 30.600.000 30.600.000 30.600.000 30.600.000 30.600.000

Depreciation 0,10 2.500.000 2.250.000 2.025.000 1.822.500 1.640.250

Discounted cash flow 28.100.000 28.350.000 28.575.000 28.777.500 28.959.750

Cash flow 28.100.000 28.350.000 28.575.000 28.777.500 28.959.750

Accumulated net profit 0,00 -46.900.000 -18.550.000 10.025.000 38.802.500 67.762.250

With the economic parameters according to the table below.

Parameter Valu Unit
e
IRR: 19,8% persen
NPV: 67.762.250,0 IDR
Pay back period: 2,4 tahun
BEP produk: 84.629,9 kg