The cluster approach has been identified as the best solution to support the farmers to gain the necessary competitive position to sustain their business, thereby creating more full-time job opportunities, especially in the rural areas where all clusters that will be supported are located.
A cluster refers to a group of small holder farmers who collaborates on group buying for input requirements, joint selling to the same buyer and joint negotiations and sharing of implements, whilst a central packing logistical system further contribute to such successful cluster formation. Such a cluster can also establish a cooperative as a legal entity.
By grouping the small holder farmers into clusters per product, the benefit of aggregation come forward, as well as reaching economies of scale. This makes the transaction cost lower and ultimately contribute to greater profitability and sustainability of these enterprises.