IMPLEMENTING INNOVATION MANAGEMENT ON MARKET ATTRACTIVENESS AND UNIQUE RESOURCES TO ENHANCE BUSINESS PERFORMANCE ON ORGANIC FERTILIZER INDUSTRIES IN INDONESIA.

Author:Ramli, Yanto
Position:Report - Abstract
 
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BACKGROUND

Indonesia is an agricultural country where most of the people are working in the agricultural business or as a farmer. Indonesia is endowed with natural supported conditions, large area of lands and abundance of biodiversity and also located in the tropical area which are sufficient to support the growing of plant and agriculture throughout the year.

Agriculture is the process of using biological resources by human being to produce food, industrial raw materials or energy resources, as well as to manage the environment. The event of utilizing biological resources is included in the agricultural cultivation or farming. Indonesia has along historical story since the colonial time until this decade which is inseparable from agricultural and plantation sectors, as these sectors contributed a great significance in determining the formation of various economic and social realities in different regions of Indonesia.

Fertilizer, basically is also part of the history effect of agriculture and is estimated to be utilized since the beginning of human being starting to know farming, which is approximately 5,000 (five thousand) years ago. Fertilizer is utilized as the growing media for plants to provide the necessary plant nutrients so that they can produce accordingly. The resources of fertilizer can be either organic or non-organic (synthetic). Fertilizers are different from food supplements normally given to plants, fertilizers contain raw materials that are needed for plant growing and developing, while food supplements such as plant hormones only help to smooth the process of metabolism.

There are two types of fertilizers circulated and traded around the agriculture sector as we know which are namely chemical fertilizer and organic fertilizer. Chemical fertilizer is widely spreaded and traded because of the advantage of the usage that can be measured precisely according to the requirement for plants and the usage are more appropriate and provide prompt effect compare to organic fertilizer. The disadvantages are that Chemical fertilizers do not contain micro nutrients; therefore the usage of chemical fertilizer must also include organic fertilizer because it contains micro nutrients. The other disadvantage of chemical fertilizer is when the chemical fertilizer is excessively used, it may harm the soil nutrients and also deficient the growth of plants.

Organic fertilizer is normally made up of natural materials such as: weathering of plants, animal waste, industrial waste, rubbish and so forth. The advantage of organic fertilizer is proven to improve the structure of soil and nutrients, because it contains macro and micro elements to form the process of organism. Organic fertilizer contains both macro and micro nutrients, but the level of nutrients are not as high as chemical fertilizers and the growing process of organic fertilizers for plants is also considered to be slow compare to chemical fertilizers. But in order to maintain the soil with fertility and contain nutrients, chemical fertilizer must be properly controlled and organic fertilizer must be properly utilized to balance the nutrients of the soil.

Indonesia Government has started to persuade agriculture department to implement using organic fertilizer as one of the media crop for organic farming. This has triggered a huge business opportunities that is widely opened in Indonesia, this may also incur a huge demand of organic fertilizer throughout the Indonesia territory along with the community awareness of demanding healthy food. This statement is supported by the Table 1 shown below based on the projections demand of organic fertilizer from Data Media Research done in 2011 (Figure 1).

Looking at the projection organic fertilizer market opportunities from Media Data Research done in 2011, it shows that the demand of organic fertilizer is increasing significantly from year to year, starting from year 2011 which almost reached 8.7 billion rupiah, then increased to 10.1 billion rupiah in 2012. In 2013 it increased again to 11.6 billion rupiah and in 2014 it touched 13.2 billion rupiah. From the analysis of fertilizer market share, organic fertilizer will continue and remain to be huge opportunities for market share and the requirement for organic agriculture are still widely open from 6.86 billion rupiah in 2011 to 8.60 billion rupiah in 2014.

This research is done on the organic fertilizer industries registered in the Ministry of Agriculture in Indonesia and from the preliminary survey done earlier, it was detected that a lot of organic fertilizers industries are unable to survive the business due to the bad performance and even some of them have closed down the business. Actually the decision of closing down the business of the industries in producing organic fertilizer is very tough, as the process of obtaining the production license from the Ministry of Agriculture must go through a long process until the license can be approved.

The process of obtaining the production license starts from the registration of the product brand to the Ministry of Law and Human Rights. The process will be followed with the laboratory test on the contents of the organic fertilizer and then continue with the testing of the organic fertilizer product on several commodities of agriculture to verify the competences of the organic fertilizer tested on the plants. This process is based on the regulations No. 08/Kpts/SR.140/2/2001 pertaining the term and procedures for registrations and regulations No. 28/Permentan/SR.130/5/2009 pertaining the term and condition of organic fertilizer, biological fertilizer and soil repair materials.

In accordance with the regulation of Ministry of Agriculture, No.70/Permentan/SR.140/10/2011 pertaining on Organic Fertilizer, Biological Fertilizer and Soil Repair, the organic fertilizer are classified into two types of organic fertilizers: Solid Organic Fertilizer and Liquid Organic Fertilizer.

From the list of "Chemical, organic and soil repair and biological fertilizer" printed in 2010, the number of organic fertilizer producers which was registered in the Ministry of Agriculture are consisted of 519 producers of chemical fertilizers and 654 organic fertilizers producers. And from the List of "Chemical, organic and soil repair and biological fertilizer" printed in 2015, the number of organic fertilizer producers was 440 chemical fertilizers producers and 676 organic fertilizers producers, so the total number of 676 producers is consisted of 3 types of organic fertilizer: Liquid, Powder and Granular. And this research is only focus and analyzing the phenomenon problem on powder organic fertilizer.

Based on the above information, it was detected that from the number of 113 organic fertilizer producers registered in the year 2010 that only 61 producers was re- registered on the List of "Chemical, organic and soil repair and biological fertilizer" printed in the year 2015, the rest of 52 producers was not on the List. This occurrence may be the effect of low businesses and unable to survive through hard times. However, on the List of 2015 there are 44 new producers registered which make the total of registered organic fertilizer producers become 105 producers in 2015.

Based on the survey, observation and interview done on the site at the organic fertilizer factories, the researcher obtained several findings from the production managers of each of the industries such as: (1) the basic resources of productions are almost similar, (2) the...

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