Aug. 1, 2021
PemPem builds software that helps structure, optimize and legitimize the operations and finances of micro-enterprises in commodity supply chains so that they are able to make better decisions as PemPem increases their access to market and financing.
Four out of five companies in the world are informal micro-enterprises. Their operations and finances are often unpredictable, unstructured, and undocumented, especially in agricultural sectors. As a result, they are not able to make informed decisions that maximise their revenue. This is coupled with the fact that their access to market and finances are limited, making it even more difficult to expand their business.
The PemPem initiative is about changing this.
PemPem builds software that helps structure, optimize and legitimize the operations and finances of micro-enterprises in commodity supply chains so that they are able to make better decisions as PemPem increases their access to market and financing. This is done by interweaving four key pillars to improve the efficiency and sustainability of agriculture:
- Buyer-seller marketplace to have access to prices, buyers, quality seeds and fertilisers.
- Micro-enterprise business management to organise their finances and measure the productivity of their land
- Accessing finance & using digital payments to provide access to credit and digital payment
- Formalization of farmers to provide direct support
Building a Marketplace
Through PemPem's app, buyers can upload prices of commodities to reach thousands of farmers. This in turn broadens market access for farmers to select an ideal price that maximises their income. What is revolutionary about PemPem’s marketplace is the concept of “community price” where sellers can share their fruit’s purchase price so that other fellow sellers can use that as a benchmark.
Going forward we will also encourage farmers to upload their fruits in PemPem for buyers to bid for a higher price and create an input marketplace where farmers can also access quality seeds and fertilisers at an affordable price.
Micro-Enterprise Business Management
As sales are recorded in the app, the data is organized so that farmers can evaluate their sales performance and plot productivity so that they can choose where to optimize. This also serves as ‘income slip’ which enables them to be eligible for formal loans with better credit terms.
Transition to digital payment
Buyers and sellers can also pay each other digitally through PemPem's app. The innovation behind PemPem’s digital payment is our ability to bridge the banked and unbanked seamlessly that enables middlemen to pay farmers digitally who in turn pays their harvester/driver. Digital payment thrives when the entire chain is in this ecosystem, so that cash doesn’t need to be withdrawn. This not only brings convenience, but more importantly safety and minimises the risk of miscounting cash when millions of Rupiah is being passed on along the value chain. This transition is also an important step to reduce operational costs of loan provision so that farmers get better credit terms.
Formalisation of Famers in national records
As PemPem builds a network of farmers, we facilitate the formalisation of farmers into national records so that more support and targeted programs can be given to them. One way we do this is by working with SPLP (Siak Pelalawan Landscape Program) to accelerate the adoption of farm permit certificate STDB (Surat Tanda Daftar Budidaya) by digitising the application online in our platform. Farmers who obtain this permit would then be able to sell their fruits at a higher price to ISPO registered buyers.
PemPem is focusing on the palm oil supply chain in Indonesia first given the urgency of making improvements in this sector. We have now onboarded more than 11.000 palm oil micro-entrepreneurs in the past year, providing them access to more than 200 prices a day. In time to come we hope to also expand to other commodities to benefit millions more agriculture microenterprises through our app.