Tech-based agriculture company TaniHub Group is eyeing expansion to Kalimantan, Sulawesi and Sumatra in the next few years, gunning for wider distribution for its products, as the firm’s operation passes its four-year mark, according to an executive.
“One of the challenging conditions is that some [farmers] do not have the capacity to distribute their produce across Indonesia,” CEO Ivan Arie Sustiawan said Monday in a virtual presser.
“Imagine if there is a big harvest, say, for mangoes in East Java,” he added. “If we can distribute this product evenly not only to Java but also to Sumatra, Sulawesi and Kalimantan, the price will become more stable and there will be no drastic drops in prices simply because of the harvest.”
Established in mid-2016, TaniHub, which sells the agricultural produce online, partners with more than 30,000 smallholder farmers and operates five distribution hubs across Indonesia. The service has seen increasing demand since the COVID-19 outbreak, as consumers shift to shopping online.
However, farmers have been facing difficulties in selling produce as the country imposes large-scale social restrictions to prevent the spread of the virus. Farmers’ terms of trade fell below the key threshold to 99.47 in May, according to Statistics Indonesia (BPS) data, with value below 100 indicating farmers booked deficits.
The farmers’ terms of trade has since rebounded to 100.09 in July.
Although some of its merchants have been forced to close, the tech company stated that it also relied on its operations in small cities with fewer epidemic-related restrictions compared to those in big cities, according to Ivan.
With increased online shopping, the company also plans to recruit more staff.
TaniHub Group announced in April that it had secured US$17 million to expand its services to up to 100,000 farmers by 2021.
The new investment, which is an extension round of its series A funding, brings the total equity funding raised by the company to $29 million since 2016.
TaniHub Group operates three business arms: online food marketplace TaniHub, peer-to-peer (P2P) lending platform TaniFund and supply chain services unit TaniSupply.
Despite the ongoing health crisis, the company has developed its first packing and processing center (PPC) in Malang, East Java. It will officially launch the facility on Sept. 24, the company announced.
“We developed the Malang PPC to respond to the needs or challenges with regard to fast production and processing, as well as uniformity in processing,” said Vincentius Sariyo, the director of TaniSupply.
The facility, to be operated by TaniSupply, uses machines that can sort fruit products based on texture, size and weight. It is expected to reduce processing by two days, according to Sariyo.
TaniHub Group also plans to develop such a facility in Majalengka regency, West Java and Medan in North Sumatra in the near future, as the start-up wanted to develop the facility in every province, he added.
TaniFund also recorded 250 new farmers and 43 new farmer groups registered for its services.