Fighting poverty in the Spice Islands

Coastline in the Maluku Islands with small boats lining the shore

Recently, I was fortunate enough to visit the beautiful Maluku Islands of Indonesia. The breathtaking scenery — abundant hillsides, sparkling beaches, rich foliage — rivals that of well-known Bali, but the remote islands remain unexplored by most tourists.

Perhaps that’s because there is a history of struggle behind that natural beauty. Known as the Spice Islands, the Malukus have historically been and continue to be an important hub of the Indonesian spice trade. But 34 percent of the population is living in poverty (compared to 14.15 percent nationally). Widespread communal violence displaced over half of the 1.5 million residents a decade ago, and the economy has been slow to recover. Today in some regions of the islands, families live on less than 36 cents a day.

And yet, the islands’ rich agricultural productivity and the abundance of valuable spices have tremendous potential to lift these communities out of poverty. Our Spice Up the Deal program aims to turn that potential into reality.

The two-year initiative, funded by the Ford Foundation, is addressing many of the key challenges that prevent clove and nutmeg farmers in the Malukus from fully benefitting from their hard work. Working in five villages, we’re helping 1,500 farmers get tools that were previously not accessible in remote areas; training that helps them produce despite weather challenges; and support from additional agriculture extension workers to increase the quality of the spices.

Most importantly, we are working at every level of the value chain, from local farmer cooperatives to regional traders to international exporters, to develop trust and refine their coordination. The result is increased sales and higher incomes for the individuals at the source of it all.

Halima is part of the farmer cooperative in Lateri village who kept losing most of her clove crop to an outbreak known as "tree cancer." Thanks to a Mercy Corps training she now knows how to treat the disease naturally and is already seeing higher production and quality from her trees. Photo: Matt Styslinger/Mercy Corps
The Indonesian province of Maluku is the origin of both nutmeg and clove (pictured). The Dutch built vast fortunes on the wealth that came from their spice empire here. Today we're helping local farmers benefit from the abundance in the Spice Islands. Photo: Matt Styslinger/Mercy Corps

Nearly 18 months into the project, people are happy. In Lateri village, a cooperative of 50 nutmeg farmers is getting higher prices for their spices from exporter PT Ollop, allowing them to invest in new storage facility. That facility will, in turn, allow them to sell higher volumes. This is a common story here and throughout the other four villages where Mercy Corps is working.

PT Ollop is a Dutch-owned spice processing and export company based in the tiny town of Hila, Maluku. Established in 2006 by a couple with origins in the town, PT Ollop’s entrance to the spice market has raised clove and nutmeg prices 4-13% by guaranteeing the cooperatives a purchase price. This has forced other traders to meet this price increase, which has enabled the cooperatives to get a consistently higher price for their spices.

The owners’ son and brother gave me a tour of the facility, pointing out strict hygiene practices that protect the quality of the spices. They proudly told me of their fair employment practices that provide insurance and encourage employee savings programs.

We connect farmers with locally-based exporters like family-run PT Ollup who guarantee a fair price. Fahmi Ollong and Gani Ollong and their employees ensure high quality with strict hygiene standards. Photo: Rae Lyon/Mercy Corps

Family is important to PT Ollop, a value that has demonstrated positive returns. Local farmers are getting higher prices for their spices, the company’s employees are receiving fair wages and access to savings, loans and employment advancement opportunities, and PT Ollop is able to sell higher quality spices to the more demanding — and lucrative — European market.

With support from the Ford Foundation, Spice Up the Deal is a prime example of how we work with local companies to bolster the economy and improve lives for an entire community long after we’re there.

By ensuring consistent quality and traceability to the valuable Malukan place of origin, PT Ollup is able to sell nutmeg to more expensive markets in Europe — and pass the profits down to farmers by paying higher prices for their crops. Photo: Matt Styslinger/Mercy Corps
Damyad owns a nutmeg plantation that has been in his family for a century. "We've learned about the difference between high and low quality nutmeg and the technique for sorting for the buyer. Through this connection we can get better results for our work...and improve the living conditions in our area." Photo: Matt Styslinger/Mercy Corps

Mercy Corps’ program manager, Tri Somono, is working to make these market linkages sustainable. Tri is partnering with the Government of Maluku and the Indonesian Spice Council to host a spice conference in August 2013 with the goal of formalizing a lasting market system that allows Malukan spice farmers to directly export their product. We’re also working to get organic certification and raise the visibility of Malukan spices with new branding and labeling standards.

The farmers, meanwhile, are working hard with new tools and knowledge to produce quality spices. Together with so many cooperative partners, we can ensure their efforts yield a meaningful return — better quality of life.

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