Inclusive Business Model Analysis: Pt. Kirana Megatara, Indonesia

Founded in 1964, Pt. Kirana Megatara is a public company responsible for sourcing and processing natural rubber and exporting dry rubber. KMG is the largest producer of crumb rubber in Indonesia with more than 18% (720,000 MT) market share nationally. In the Musi Banyuasin and Banyuasin districts, KMG intends to increase its direct sourcing (from individual farmers, farmer groups, UPPBs, and coops) to increase quality of sourced natural rubber, increase farmer loyalty, and improve traceability.

This report assesses KMG’s strategy and business model and identifies opportunities to establish an efficient sourcing model while mitigating business and farm-level risks. For KMG to run an efficient, inclusive, and sustainable business it should design and commit to long-term approach strategically working together with implementing partners, farmer organizations and intermediaries. We explore how KMG and partners could:

1. Prove there is a shared positive business case that has a clear incentive for KMG to invest while delivering on envisioned sustainability impacts
2. Design and implement an efficient supply chain management structure that allows for direct sourcing from smallholder farmers in a sustainable way.
3. Design and implement an effective service package that increases yields, quality, and loyalty, improves farmer incomes, and mitigates environmental impacts