The Importance of Building Silos for Agriculture

Silo or farm tower for storing grain is an integral part of modern trading system. For an agriculture country like Indonesia that relies on the development of agribusiness systems, it is very important.

How important is the silo to our farmers?

Silos or granaries are well known especially by rice farmers. Silo is a part of food security in the past. The term is almost unknown among farmers who work on rotten plants, such as vegetables. But that does not mean vegetable farmers and fruits, farmers, and fishermen do not understand the meaning of food security.

Given the past economic crisis, rice farmers’ awareness of the importance of having their own silos started to rise again. In the framework of food security and reduce the price drop during harvest.

Besides farmers, traders are also fully aware of the meaning of food security. But it is related to business activities. Not many merchants are happy if the price is unstable. With relatively stable prices, it is easier for them to maximize long-term benefits in maintaining their existence.

How to link silos and food security?

In ​​South Sumatera, the role of rice milling is very prominent in carrying out the function of food security and price control. In order to control stock, rice mills provide free storage facilities for farmers. Of course with some conditions that benefit both sides. Given the relationship between rice mills and such peasants, rice mills can always serve market demand on a regular basis.

For farmers, this is also very profitable. Because the rice is safe in the rice mill warehouse. Besides, it could also be a mortgage to borrow money either to rice mills or other traders. How, by showing a proof that he has a certain amount of grain in one rice mill. Such a relationship has been in existence for a long time and the only glue is the mutual trust. Indeed, the rice mills must thoroughly maintain their credibility for the sake of their business continuity. More importantly, there is a healthy competition between rice mills and farmers.

It shows that in the community already have embryo a sophisticated food security system. Although not supported by sophisticated physical devices. The system has been less known and has not been upgraded to a more modern system. The system is much more efficient than leaving the warehouse as a source of cost or cost center.

Does the relationship model also exist in other countries?

Models of farmer relations and rice mills or such traders are also present in developed countries such as the United States known as the warehouse receipt system. Certificates issued by warehouse owners or silos, can be used as collateral to borrow money from banks. The existing system in developed countries is not only to serve agricultural products but also has penetrated the commodities of meat and fish. With sophisticated warehousing technology, meat can be stored for years without damaging the quality of the meat. This has led to food security systems in the country really reliable. What’s interesting is the farmer-owned cooperative that owns the system.

What can our farmers develop regarding modern barns?

So the modern barn is not just the physical form, but more important is the management system. That’s what we say as a warehouse receipt system. The dimensions of modern barns are the management of risks, commodity exchanges, and trust among participants.

Modern barns can grow from the bottom (bottom up), not necessarily from the top. That way, farmers can be invited gradually into the modern trading system that perhaps for them is just a dream that will never come true. Thus farmers are not always a loser but now have good bargaining power.