Agros’ Post

Transcript

Hi everyone welcome back to the program. It is 7:10 in the AM and it's time for our first discussion of the morning and today we're going to talk about sustainable agriculture. Now many of us know that sustainable agriculture plays a vital role in reducing emissions and mitigating climate change impacts on farming systems especially across Southeast Asia. Yes, but adopting eco friendly practices and technologies farmers can significantly reduce their. Carbon footprint while maintaining or even enhancing crop yields and overall productivity. Agros is one of the companies leading the way offering sustainable agricultural solutions to small and medium sized farmers all across Southeast Asia, including us right here in Indonesia. Yes, the company also strives to raising awareness on sustainable agriculture practices to help farmers increase profitability, make communities more resilient to changing. Climate conditions and cut carbon emissions. And to find out more about Agros and their efforts towards sustainable agriculture, let's now introduce our first guest who is Agros Founder and CEO, Max Nellen. Max, good morning. Thank you for being here today morning. Thank you, Paul. Thank you for having me. Welcome to the show. So let's first talk about US Indonesia as a country. We're in agrarian country that is heavily reliant on agriculture for economic growth, but many farmers continue to face challenges in growing their businesses, implementing new ideas. Methods as well. First off, what do you think are the best ways to address this these issues immediately, right? I don't think I have the magic wands. That's just to start off. But I think that you can take a step by step approach that that kind of makes sense. First of all, just just to put it in perspective, right, Indonesia has more than 10 million hectares of lands on average. A farmer only owns about a hectare, OK. And and so first of all, I think it's about segmenting that lands, you know, and there's not just a thing like 1 farmer, one problem, right? So it's like you look at crops, which different crops are there chili shallot? Potato What are their problems? And then each Java versus South Sumatra will have different problems, different climate conditions, different soils. And that's the first step. Second step is then really engage the community. And so we have, we built teams on the ground, boots on the ground to really understand their issues. And then thirdly, solve their biggest more tangible problem 1st and then start solving their other ones. So either they're spending too much on fuel or their solace heavily degraded. Or they can't get a good price for their produce. If you solve that first, you create that trust that then you can solve their other problems. So those are those issues that you just mentioned. Are they some of the more common problems that are correct, Correct. Correct. Yes, Yes, yes. Why are farmers should consider towards sustainable agriculture despite from what I mean compared to what they have been doing traditionally? Yeah. So I think as as you can see already now with El Nino, which is really. A very present topic these days. Farmers are seeing changing conditions, so either farmers rain fat or was using a polluting diesel pump to irrigate well. Once you have solar, you can actually use it whenever you want, as long as there's sunlight right then, so you become more climate resilient. And then there's other things like knowing your soul. The soul is getting heavily degraded, so I think it's about. These climate events are going to happen more and more, unfortunately. And so how do we equip farmers now to, you know, become more climate resilience while still increasing yields so that we can produce food for the global population? And that will work as an incentive for them to change because, you know, some of the old school generations, they don't like change, right? So you have. Right. You said to them in a more attractive way. And that leads us to our next question. Tell us about Agros and what exactly. Yeah. So Agros is actually Greek for farmland. And so that's our core and. That's why we call it across. And then when you look at our logo, it's water, sun and soil and those are interconnected. You create agricultural magic, if you will, by combining those three elements. And so where we focus on is keeping that balance across those elements. So we want to provide sustainable alternatives to irrigation. We want to provide sustainable alternatives to sole management, input management as well as crop protection, for example, how you stop spraying pesticides. To just keeping protecting your and so for us, we're a pioneering climate smart agriculture and setting the scene here and I think our expansion in Tunisia is very exciting as well. So can you tell us what solutions do you offer to answer all these challenges faced by Indonesian agricultural sector also by the farmers. So on the one hand we have a design and affordable solar water pump that that farmers use and today farmers are using polluting diesel or gas. Pumps that are spanning between 500,000 to 1,000,000 rupiah a month and so you can remove that entire fuel bill by switching to solar. And these solar water pumps are designed to last 15 to 20 years on the farm. So it's really great. And now on the other hand, we have our input in a box if you call it. So we test the soil and based on the sole test similar to healthcare where you go to the doctor, you do a health check and then you get a prescription of medicine. So we want to do the same, right. And so we want to give them the inputs that they need, but by educating them. Right. And showing what the soul looks like, what nutrients they are missing. And then say, hey, here, you can buy this from us now and then. So a lot of farmers are not really even aware of the conditions of their soil, no? Well, yes and no. But maybe they don't want to be aware, OK. It's like you're a smoker. Yeah. People tell you stop smoking gun. But it's like, so you need to give them a little incentive, right. So that's why our solutions are designed that they can increase yields up to 25%. And if you can offer that upside to them as well as then provide them a payoff to harvest, say like OK, don't worry, follow my solution. You increase yields and then you pay me after harvest driving increasing yields. Obviously this is a right up your alley. It's a very attractive incentive. But at the same time, I'll just compare it to my own experience when we first wanted to switch to a a solar water heater and the upfront cost was a little bit heavy, but everyone was saying look, you just pay the upfront cost is a little bit heavier, but you're going to save money in the long run. Right. It's gonna be better for your water bills, electricity bills. So is there a heavier upfront cost when it when in regards to these farmers making some of these, implementing some of these changes and how much of a challenge and how do you tackle the challenge of being able to convince them to do so. So in theory, yes, it's a higher CapEx, but we give a lower down payment and then we work with local financiers and banks to finance that, you know credit periods which can go up to 24 months, but usually they pay it back within 24 months and so if you offer them. And then I think the key is the pay after harvest, not a monthly payment. So you manage their cash flows like a shallot. Farmers would be every 65 days, Chile maybe 90, tomato as well until you match that rice would be almost 120. Yeah. So I have that for my house payments, yeah, correct. So that's how you make it a more accessible to farmers, so when they can start. Experiencing or realizing oh this is a good measures to apply this new sustainable agriculture to their form. Yeah. So we target 1st the more younger more tech savvy farmers that can influence on the community. So you have these Agri entrepreneurs we call them and so you make them. We have a program, former champion program. So this is our first adopters. They developed our they're using our technology. We give them you know a hat, the T-shirts. They get Commission on every farmer they refer and that create deeply rooted because there's nothing stronger than a farmer to farmer testimony of course, right. And so we could deploy as many agronomists as we want. In the end it's the farmer is going to listen to the farmer. So that that's our go to market strategy if you will. OK. Now in regards to carbon emissions, how do you track in regards to the progress or in regards to you know the numbers when it comes to carbon emissions and what sort of impact that you're going to be having looking ahead? This was bigger than I initially expected. So for example, a solar water pump reduced around 5 tons of CO2 per year, which is the equivalent of two cars. Wow. So that's, that's quite big. And then on the input side, it's also around 3 to 4 tons per hectare. And so that's from reduced pesticides and reduced chemical fertilizers. OK. Now in regards to Agros, it's still we talked earlier, you just basically expanded into Indonesia, right. So what was the reason? The thinking behind expanding into Indonesia and what is the plan going forward as you as Agris is now obviously prevalent here for farmers. Yeah, so it's it's obviously the size, I mean as I said, more than 10 million hectares here in this country that needs to, you know, go switch towards smart farming. It's still a heavy subsidized industry as well. So there's optimizations as well for for people to like stop spending on things that that they're not supposed to be spending on in the next 20-30 years. But as well as like when I, when I'm here in Jakarta, you see the rapid development, all buildings, very exciting and then you go in the rural areas, it's still very underdeveloped, right, if you compare it to Vietnam or Thailand. And so I think there is now an amazing moment for us to be the pioneer in this kind of change and show like you know the world that we can actually build a sustainable agriculture in Indonesia being the potential food borne of the world. Yeah, Indonesian farmers seems like we rely. Heavily on fertilizer subsidy and I think maybe that's one of the policy has has been carried out for so long. So how can Indonesia start effectively build its food security because our President has mentioned like in numerous time that we need to build and develop the food security in Indonesia. I think it's it's a complex topic. Of course Agros will only play its part in it, but I think high level. It's more R&D. And when I say R&D, it's not sitting in a lab and researching is being on the farm, talking to the farmers, understand what their problems are. So that's one. Second one is then, yeah, attracting more local as well as international entrepreneurs who bring change because entrepreneurs are great are bringing change even if it's not like to cover all the 10 million hectares, but at least to to spark chains across the government or across other public institutions. And then thirdly is building infrastructure. Whether it's financial access to market because you can grow the yields, but if there's no access to a market either locally or internationally, it's difficult to off take that produce. Alright, so let's you mentioned speaking and discussing with farmers. Has there been and what has it been like for the feedback for the farmers that you have reached so far in the time that egress has been in? Yeah, well farmers are paying us, which is already the greatest time. They believe in it. They believe in it. Farmers are quite stingy. You have to say, yeah. And they only give you money if they really like you or they believe in your product. So that's a good thing. So that's fine. But in general, I think they're, they're quite excited also bit confused because they always saw like for example on the solar, they see it as like electricity for households, right. And then they say, oh, actually this can power water. Wow, this is amazing, right. And so they get, they quite, quite excited about that as well as you know, so understanding, they know they see it. But what they usually do is they grab the soil and they go like old school. But now it's like, wow, this is actually a report that comes out of it and can know what I what I do. So it's it's, I think it's. It's shifting. Farmers do get excited about these things, right? Yeah. And I think there's been a huge shift in the farmer's thinking. Like we always think of farmers wanting to stick with and a lot of these are generational as well. So they're just doing things that past generations have done. But you see things now like applications that farmers rely on like we wouldn't see that back in the day as well. So I think they're slowly starting to be that shift. And I perhaps across is playing. Yeah. And Indonesia we have seen some startups also in the agriculture sector. So what are your target for Indonesia? It's quite big. So we want to be 1000 farmers by the end of this year and then 100,000 in the next 5. So that's starting East Java, then moving Central West and then probably S Sumatra and other islands. Yeah. So it's, it's quite exciting journey, 100,000 farmers, it's not, it's not little pretty big number. So any plans as well because we do know the government as Alan mentioned plays a big part in the agricultural sector here in Indonesia. So are there any plans looking ahead to perhaps work together with the government in order to advance? I think we, I think we have to like there's not like you cannot do this on your own. I've see for now we're just focusing on you know, building the business case, building the traction. But once you hit a certain number, then you can go in and talk, right, and say like, look, we've done this now in East Java, let's replicate this across the country. And I think regional governments would be very interested in that. If they see their neighbors, wow, you guys are producing a lot more. We're already doing a lot of events with with local governors and regencies and they they like it, they're promoting it to their things. They can have more influence on their farmers. Show sustainable longevity in their programs. Yeah, it's a domino effect, isn't it? Correct. So few of them get going. It's right. Right from there. Yeah. Alright. Yeah. So thank you so much for coming by. Thank you for having me across 100 to be about. More about Agros, by the way, via website. Yeah. Website. www.egosglobal.com. Facebook, LinkedIn, YouTube. Where? Everywhere. Perfect. Thank you so much. Thank you. Thank you. Right. We're going to take a short break here on the program, but when we return, we will bring you some of the latest updates from around the world here only on the SEA morning show. Stay tuned.