On the forefront of developing sustainable, community enhancing food systems in Bali
Expats Ben and Blair Ripple left their organic farming jobs in Washington and moved to Bali, Indonesia, in the late 90s. Since then, they’ve been become somewhat famous in their efforts to bring artisinal Indonesian products to a larger market and to establish and grow sustainable agriculture in a land that has been drenched in unregulated pesticides for decades. Their company, Big Tree Farms, now provides specialty products such as Balinese sea salt, Javanese honey and coconut sugar to western markets, all while developing innovative ways to protect the land and enrich the farming communities that create the products.
I spoke with Ben over coffee in downtown Ubud about the sustainable food movement in Indonesia.
Bali seems to have changed dramatically in the past few years. Especially in Ubud, you can’t turn a corner without seeing an organic restaurant or health food store. And overnight Ubud has become the raw food capital of the world.
The changes that you can physically create here, positive changes that one person can start driving forward, are so big and so pleasing. It’s a wonderful feeling to see this big sea change and feel like you are part of this wave.
Fifteen years ago, that community that you’re talking about wasn’t here. Ten years ago, that community wasn’t here. Five years ago, that community was just the first drop in what was starting to come. Within the past five years, it’s taken off.
It’s great because in the past three years, individuals that have experience and who are really driven have started showing up and they are creating things like The Hub. There’s been a lot of consolidation of available information.
I think for a long time what has created a sort of static dimension here is people’s expectations of the Balinese. People wanted the Balinese to be a certain way. They wanted them to be gracious, and to bow and to carry the ceremonies through the streets, and live in simple houses with ornate carvings.
But the new recruits, or the individuals who have been called here and are helping to drive the positive change forward, they don’t have any preconceived notions of what Bali was 15 years ago, 20 years ago…you know, that precious concept of a primitive community.
There’s very little sense of needing to keep the Balinese in a box. Now it’s more about how we engage the Balinese, how can we show them what’s worked and what hasn’t worked elsewhere so that we can protect the island.
And we are really lucky it’s an island that has a very powerful sense of self. We’re sitting here in the midst of seventeen thousand islands, but Bali may be one of the few islands where you could create this giant sea change and a global example. Because the Balinese are so proud of their history, their island, their culture, and they’re really open to change and making things better.
So it’s been really fast, it’s definitely been exponential…the changes Blair and I have seen over the past fifteen years. I think overall it’s very exciting. We’re in a place that’s like a country under a microscope. We can see things happen very quickly and find out what works and what doesn’t.
Was organic farming very different here, or were you able to use your experience as a template?
Blair and I had a farm in western Washington, and when we came here and we had the opportunity to do sustainable agriculture here we replicated what we knew. Ninety percent of it was an immediate fit and then we needed to get out the micrometer and spend five years dialing in changes in how we plant, how we do successive plantings because we were dealing with a different climate. We had to figure out what crops worked and what crops didn’t, and at different elevations, and what crops simply won’t go to seed because they don’t have the triggers they have in different parts of the world. So there’s the fine tuning that makes up most of the differences in the locale. But initially you rough it in, and then start to fine tune.
I’m a big fan of replication. We do it with Big Tree, it’s like the meat of our success as we’ve worked with different supply chains, different commodities, different groups of farmers, different cultures and different languages…all across Indonesia, Sri Lanka, Cambodia, Philippines. But it’s the same template. We figured out a template that works and we move it around and fine tune it.
The real exciting point for Bali comes when we greatly reduce the use of plastic, stop burning plastic, figure out better systems of separation between organic waste and non-organic waste, traffic controls, quality of access to health care, basic rights like access to clean water. But those have all been done before so we can learn from what’s happened elsewhere. Once those things get dialed in here, then the real exciting experimentation will happen.
And what’s going to drive these changes?
I don’t think that governments change unless consumers demand the change. Whether you’re a business or a government, you change based on the demand of your consumer, and in today’s world I don’t see a lot of governments breaking the waves with innovative leadership for sustainability. There are exceptions, certainly there are, but it’s definitely not the norm. So I think we have to look towards leaders in the community, and there are certainly lots of Indonesians who are charismatic leaders in their communities.
I don’t know if you’ve had the chance to speak with Made Chakra. He is really involved in permaculture. Which is really interesting because the traditional Balinese food forest really is permaculture.
What about efficiency? Don’t we need vast monocropped fields and giant companies to feed the world? Small or Big?
First of all, you have to define sustainability. The way I define sustainability is a balance between economy, ecology and social benefit. So you have the cash bucket, the environment bucket and the community bucket. Sometimes sustainability is just used to mean something is viable. These two meanings can be interchangeable and I think that confuses a lot of people.
In terms of efficiency, there’s cost efficiency, and then there’s the energy efficiency of a system, particularly in agriculture. In agriculture, energy efficiency is more of a solution to the concerns of famine and creating enough food to feed the world population.
How much energy is used per available land in order to produce a sustainable meal for an individual? And that leads to the fact that it takes thirteen acres to produce enough feed of one head of cattle that can feed a family of four for a year vs one quarter of an acre that can produce enough produce to feed the same family of four for a year.
Another example is permaculture. I’m not of the camp that permaculture can save the world. I’m of the camp that permaculture is a treasure and within the box of permaculture food forests is this incredible array of really high value traditional wisdom which teaches us how things go together and how to create canopy systems, but the system overall and the way it’s been used needs to be updated to the realities of confined growing spaces and the need for maximizing productivity in an environmentally and socially sustainable way.
There is scale efficiency and cost efficiency, and I think those two are very closely related. This is the concept of consolidating small farmers and acquiring mass tracks of land in order to stay competitive, in order to feed the world with enough grains. To me that’s really completely off track. It doesn’t solve any issues. We don’t have an issue with lack of food in the world, we have a food allocation issue in the world. The prices of commodities are false. We don’t have an issue with raising real prices of grain in the world and having people be able to afford them, we have a cash allocation problem.
It’s allocation, and who holds what and how available is it to others. Subsidies are going into the wrong places. They are not solving the roots of the problems, they are solving the symptoms of the problems. I have nothing against subsidies. I think that subsidies pointed towards root problems, like fair allocation of resources that are inalienable, can do good.
When I was growing up it was, ‘America yay! Rah rah!’ Now we finally are realizing that America is only as stable as all of those countries that are producing for America. Five percent of the world uses the vast majority of available resources and none of the developed economies could stand if they didn’t have functioning developing countries, producing countries, and so that becomes a real issue. The old model doesn’t work. It’s not sustainable to grow on the backs of others. And so we have to think about new ways we interact with individuals and new modes by which we can have direct, transparent trade.
And that’s really how we built Big Tree, trying to create a new paradigm, albeit, on a micro level. For Big Tree, our focus is the communities where we work and how we can improve livelihoods through transparency, education and leveling of the playing field.
And what sort of cost efficiencies does that give us? Because it definitely reduces our margin. By being fair, you reduce your margin. If you’re going to be fair, you have to share. That’s always been a taboo piece of business, you know? You don’t want to give away your points. And that’s the self-defeating part of business, I think.
At Big Tree we haven’t focused on maximizing profitability, in fact we’ve pretty much on and off had more unprofitable periods than we’ve had profitable periods. Though we have an investor base that’s really focused, as we are, on getting to the core of what this new paradigm is. How do you reduce costs elsewhere by playing fair today and allocating those margin points to others to ensure the future?
At Big Tree, we rely completely on the capacity of a small farmer to produce a product in line with the spec and quality and consistency that we need. That’s very close to the reality of the United States relying directly on the production of the small farmer, but in that case the small farmer is a whole country of small farmers. And if we don’t ensure that we completely understand their perspectives, their realities, their needs and their break even points…if we don’t understand that, we can’t hope to ensure they’re profitable and viable. And if we can’t do that, we’re just running blindly until the wheels fall off the bus.
So that’s the concept for us of direct transparent trade. We play with that concept at Big Tree Farms, with cacao and coconut and cashew and sea salt. But we think that it’s a model, a concept that applicable on a larger scale.
Is it difficult to get all these small farmers certified? Isn’t that costly in both time and money?
You know, it’s not just about getting a small farmer certified, because a small farmer can’t just be a small farmer. If you want to succeed, you have to look beyond your farm. If you want to be viable these days you can’t just farm; you have to be involved in the business of farming. I don’t mean that you have to leverage off other people’s work, but you do need to understand the opportunities of where your produce can go, and proactively search out where is the best market for your goods. And that’s a step that most small farmers haven’t taken and don’t understand.
I spend more time in the office than with a hoe in my hand, but when I was setting up and running our farm, fifty percent of my time was spent on the market side, and finding the market and talking to people. The naïve farmer is a bankrupt farmer. That’s one of the reasons why when we [Big Tree Farms] go into a community, we don’t work with individual farmers. We take those small farmers and communicate with them all together in their village, and we suggest they create a group, a membership community. It’s essentially a co-operative, but co-operatives have a very bad history here in Indonesia, rife with corruption; t’s very difficult to get a chairman of a co-operative out once he’s in. So we call them farmer associations, and it’s a prerequisite to selling to Big Tree.
We set it up, and it usually takes us a few months of active education and programs to get a group of farmers into an association. We help them in the beginning. We have trainers from our accounting department who teaches them about some very simplified concepts of inventory, cost control and selling price, and how to determine each as they go through the different seasons. We have an individual from our quality department who does trainings with the association to ensure that if they’re going to hold on to product in a warehouse, they need to be sure they know how to keep it stable. And this is still all about raw materials.
Only after we’ve started buying raw materials from the association, we start talking about value addition, and the whole concept of risk vs reward. Think about revenue. Revenue increases as the transaction dollar value increases. And the transaction dollar value increases as you move up the value chain. Your margin may remain the same, but the total transaction value increases. But as you move further up the value chain, your risk increases, your exposure increases because there’s more processing, there’s more handling, there’s more potential for the product not to meet specifications. In which case, you lose. That concept, of risk vs reward, usually takes us six months. We have a whole module where we teach farmers about it so that they understand that you can lose a lot of money if you dive into value addition.
We use examples of other farmer associations, because now we’re getting so much data built up from our experiences with other farmers. We show them how Big Tree got to the point where we no longer accept the loss when an association has decided that they want to take on that risk. It used to be that Big Tree would take their loss. They would send us cashews that were infested with bugs, and we’d have to reject them, but they wouldn’t take them back. We’d write it off on our books.
So we do all of these small educational steps to take the naivete out of the farmers and teach them that in order to succeed, they need to protect their product all the way through to the transaction. And that’s all part of direct transparent trade: making sure that each of the stakeholders can look up and down the value chain and see what’s best.
Creating your business with sustainability as a core principle from the start as opposed to adding it later, because it can be very difficult when you add it in a patchwork and then you’re freaked out by the cost. Wheras if you build it in from the start you’re not disturbed by these things because it’s built in, not added on. And you build the system to work that way as opposed to having to patch it.
About six months ago we were just finishing up our series C round of investment in Big Tree Farms. One of the big potential investors coming on board, who are wonderful people, they started pushing back against the valuation. We value ourselves very highly, and frankly we don’t need the money but we value attractive strategic partners and that’s why we’re making the offer. We’ve got an incredible board. Our investor base is one of the most dynamic and wonderful, I think, in the US natural organic industry. All of us…it’s not lip service. We really value a triple bottom line, and we factor it in. We run qualitative and quantitative metrics to understand the impact that our supply chains have and impacts that our upstream processing has in Indonesia and we create margin points based on that, value based on that. But this one couple in particular felt the valuation was too high. They said, Look at your gross margin. You’ve got good growth, every year your running about seventy percent year on year growth, but your gross margin is only 18-19 percent. And we knew immediately that these individuals did not understand us at all. At all.
Because wrapped into our cost of goods structure is the eco fund that goes into every single community. On top of the actual price that we pay, we pay a certain amount per ton into an escrow fund for every community that we work with. At the end of every year, we sit down with those communities and decide what to do with the money.
We also have our Fair Trade per kilo premiums that go into a different account that goes directly to the farmer associations. It’s not held in escrow.
And then we have our development projects that we run in tandem with NGOs. For example, right now we’re running a two and half year program with Oz Aid in tandem with Swiss Contact and SNV to develop diversification within our coconut supply chain. We’ve got five thousand farmers out of our seven thousand certified organic coconut farmers that are in this program called Prisma. We’re going to create new processing centers for virgin coconut oil, coconut flour and coconut water so that the farmers don’t have to just rely on coconut sugar, depending on what the market prices are.
That’s costing us a hundred and forty grand over two and a half years. Maybe a third of that is in-kind, but the rest is just cash spent and we just add it to our cost of goods.
I say this to agree with you that companies that try to add sustainability as an afterthought are probably not going to have success. Their investor base is not going to have grown into it, grown up with it.
The economy, and employment in particular, has been slow to recover in the United States. I think that is creating an environment where a lot of people are starting their own businesses, creating their own jobs. And I’m excited because there is an opportunity for this new wave of small businesses owners to start off with sustainability as a natural and core principle. But their aren’t a lot of role models for this. If anything, there are many who would say that’s very idealistic, but in the end, it’s cut throat out there and in most cases that idealism doesn’t really pay. I think the next ten years are going to be really interesting, in a very different way than the last ten years have been.
Yeah, I think it’s just as you say, we’re coming into a period of heavy entrepreneurialism, again. Which is so good for America, which was basically founded on entrepreneurialism. I think Americans have felt shame faced because we haven’t had it for so long. We’ve been living in our past glories and then suddenly we’re awakening to the fact that those past glories are now rusted out in the backyards of bankrupt housing communities, and there are needles on the ground, unhappiness and people are in debt.
People are realizing, ‘you know what, I’ve just got to do this thing for myself’. And the new opportunity is the social and environmental opportunity. Which is exactly what’s going on here in Indonesia. So much opportunity exists around positive concepts.
I think that’s why you see so much organic product or cafes. Frankly, that’s not as much heavy lifting. But eventually, as those populate, people are going to realize that if they do the heavy lifting, they’re going to have a huge opportunity to fulfill the needs of all of these clients.
So what’s the biggest challenge right now for you?
The biggest challenge right now would be discipline for myself and my partner. We both love to create new products, new supply chains, travel and adventure. But we’re at a point right now where we’re responsible for so many individuals. There are over ten thousand farmers in our supply chain, we’ve got 422 employees and the weight of that responsibility and the need to make sure we dont’ do anything too drastic that might cause cash flow problems, financial loss. We don’t have, and never had, a big fat pillow to bounce along on. We’ve always been bootstrap. And so that’s difficult right now.
And you hit on it before, Big Tree is growing. It used to be that a few years ago when we had 80% growth in a year, we were still really small. This year our projection is 65% growth, and that’s a huge jump – it puts us as a company in a very different place than we were at the beginning of the year. Our needs are different, the constraints are different.
We’re also going through a period right now as a company where all of the foundation, everything we’ve created before, we’ve grown out of. So I started in 2012, that was the moment I started beating the drum for leadership change, focus, discipline – between Frederick and I but then also we started a major recruitment program, globally. And we started a whole new commitment to our social programs. Because previously, it’s really just been me driving it. ‘That sounds great, let’s do that. This sounds great, we’ll do this.’ Now we’re really building a guarantee within our financial structure for how much we allocate towards that, and making sure it’s not less than we’ve done in the past, making sure that it’s a percentage so that it continues to grow, but making sure it’s in line with what we’ve done in the past. We’re getting together the committees and systems to find out what’s best. Making sure we’re not the ones driving it, because that’s the worst. Making sure we don’t go building a statue of ourselves in the village green.
I don’t think a statue would be necessary. You’re kind of famous around here. Mention organic agriculture and your name comes up everywhere. All roads lead to the Blairs.
We’ve been actively engaged here in agriculture for fifteen years, at least. And there aren’t a lot of people doing really dedicated ag work. There’s a lot happening further up the value chain, but in terms of doing on the ground work, at the farm level, that’s usually left to the NGOs. I think they do a terrible job of it, frankly. Not because their bad people, but because they have no focus, there’s no specialization there.
Speaking of growing out of all our systems, one of the steps that we have in regenerating our systems is to build a formal foundation that will be capitalized by Big Tree, but that will run these programs. Because we know that we can leverage what we do if we separate what we do from the corporate entity. And it also memorializes it, and makes it very hard in case…well, we do have shareholders. And today they like what I’m doing, but maybe in the future they won’t. Maybe I’ll become too drastic, they’ll want more profit and they’ll send me packing. At least right now Blair and I are still the majority shareholders. But we want to formalize the commitment that Big Tree has for social development,but also build a vehicle for that social development that’s not scrutinized as much as it has been in the past. We set up a new program every 24 months or so through a major international development group. But we’ve got to go through serious hoops to get these in place. And there is so much money out there that if these grant organizations knew there was a separate entity that was overseeing the work and the allocation of those finances, of making sure the money isn’t going to benefit the corporate structure, I think we could do even more than what we’re doing now. I think we could really take the mdoel that we started creating and show the next iteration of it.
So are you a philanthropist or in agriculture? You’ve mixed these things so seamlessly.
I don’t know. I’m just doing it the way it feels right.
We’re starting to get comments that Big Tree is getting too big. But I don’t believe that either. If anything, from where we were in 2012 to where we are now, we have vastly improved on our commitment, on our mission, we’re so much more on track than we were then. Back then the fast growth of the company was swallowing us up.
It was our adolescence, we didn’t know who we were. And I feel like everybody in the company now has a very clear idea of who we are, and we’ve crystallized our mission, and what our corporate culture is. We’ve made huge strides in becoming a formal social enterprise, and to me, that’s great, and that’s what we need to be doing. We were bursting out of our hand-knit stockings, and now, in all the various areas of the company, whether it’s financial systems or software systems or social development, we’re in this process of insuring that all areas of our business are in line with who we are and what we are trying to accomplish.
We have what we call the Five Pillars of the company: Health Forward, Innovation, Economic Viability, Environmental Sustainability and Social Development. Any time we go into a new product, product development or supply chain development, we have to go through all the criteria of each of these Pillars before we move ahead, to make sure there is a net benefit in these areas.
Take cashews for instance. It may be as simple as the fact that Indonesia is the second largest producer of cashews in the world, and their the 18th in the world for processing. Meaning that virtually no farmers on the seventeen thousand islands of Indonesia have any idea how to crack a nut. And that cracked nut yields 190% increase in value to the price of the cashew.
The social development angle is fun. Usually it’s directly related to improving livelihoods. But then, for example, we’re already in coconut sugar. And we want to get into making stable low glycemic syrup for the beverage industry. So we already have improved livelihoods for our coconut farmers, and this is the same product that goes into our nectar, so we didn’t want to rehash just the same things so we could fill in the Pillar statements.
So we talked about the fact that we’re setting up improved cookstove program to run alongside the syrup program. Because when the farmers harvest they have to boil it for twenty minutes. Those twenty minutes, based on the fact that they need to heat the stove first with firewood and then get the product to a certain temperature before they boil it… all that for only twenty minutes. It’s this ridiculous, inefficient, horrifically environmentally unsound process.
So we linked up with a local NGO and we determined that the syrup push was going to be to improve this whole process. We have a program where we will be giving out about a thousand super high efficiency cookstoves, a few into each community. But more than that, the goal is to create the market for the cookstoves and then to seed, through direct investment or micro loans into each of these communities, an entrepreneur who will set up and make available these units. And the first thousand are really there to prove the cost efficiency, the improved margins.
Could you have done this in the States?
Probably not the first part. For the first ten years of the company, we probably, realistically went bankrupt ten times. And there is no way we would have been given the same flexibility and understanding from our employees, mostly. From our farmers and suppliers, secondarily.
We would have been shut down. There were periods when I didn’t pay myself for fifteen months in a row. We had employees who would forgo their salaries for a few months. As for farmers, there were times we would go and talk to them, saying, ‘oh my god, you know this person hasn’t paid yet, but if we don’t keep processing we’re all going to hit this total cash flow wall. I know that we usually buy cash in hand but do you trust us enough to keep producing anyway.’ And they did. They did trust us and they wanted us to keep going.
So without that hyper trust that existed, and I feel it existed because of that concept of transparency and authenticity, without that we never would have survived. And I don’t know that we could have pulled that off in the States. It’s like we all went through a Masters program and instead of paying at university we just sort of paid through financial losses.
Visit the Big Tree Farms website to learn more about their products.