Designing business models for rural agroindustry to increase the added value of coconut

Abstract

Indonesia is the world’s largest coconut producer, where smallholder plantations play a significant role. Income-generating from coconut farming currently very low because there is no by-products processing. The integrated coconut industry is a strategy to produce processed products with added value by utilizing all product components. However, implementing a rural-based integrated coconut industry faced several constraints. This paper aims to analyze the constraints of increasing coconut added value and identify the integrated coconut industry’s business model, followed by a support system analysis. The constraints faced include raw material, processing, human resource capacity, and support system. These constraints are not only related to technical problems but also managerial aspects. Therefore, the required approach must be system-based, where the development of a business model with its supporting system is a strategic step to overcome. Three business model patterns can be built, distinguished by business model structure, role sharing, and risk management. The development of a business model requires an innovation system that allows the transfer of knowledge and technology. It focuses on capacity building, technology transfer, market access, and financial support. The system will involve small-medium enterprises, local government, research institutes, coconut associations, and financial institutions.