Takes from http://www.time.com/time/magazine/article/0,9171,1840577,00.html
Of the 4 million metric tons of wheat that the U.S. donates to struggling countries each year, a few thousand
bushels come from Keith and Marlene Kisling's farm in Burlington, Okla. The Kislings grow more than
3,000 acres (1,200 hectares) of hard red winter wheat, which is typically used in whole-wheat bread,
cinnamon rolls and other doughy treats. "It's the best quality wheat in the world," says Keith Kisling.
The very same wheat is also the main ingredient in instant noodles produced nearly 10,000 miles (16,000
km) away in a factory in Central Java, Indonesia. Noodles aren't as important as rice in the world's fourth
most populous country, but they can be found in the cupboards of almost every Indonesian household. That
wasn't the case a decade ago, however, when inflation and rioting following the fall of President Suharto's
32-year military regime prompted food prices to soar, caused factories to fail and led unemployment to
To help alleviate the crisis, the U.S. shipped some 30,000 metric tons of wheat to the struggling nation in
1999--and continued to do so until 2005. But rather than simply handing over the wheat to produce the
low-cost noodles, the U. S. Department of Agriculture (USDA) contracted with a fledgling nongovernmental
organization called International Relief & Development (IRD) to create a pioneering food-aid program
using a business model that has since become a template for projects in Cambodia, Niger and Sri Lanka.
Providing food aid has traditionally involved doling out portions to long lines of hungry people. And while
that still makes sense in emergencies, IRD proposed that the most cost-effective and sustainable approach
was to partner with and bolster existing businesses instead. "It's important for people not just to get
handouts of food but to work. We showed you could do it," says Arthur Keys, 63, a minister in the United
Church of Christ and former labor-union organizer who eventually started his own business advising
nonprofits on how to obtain grants. He founded IRD in 1998.
Despite the agency's novice status, IRD's proposal won its first USDA contract, in part because it was the
only group willing to go into Indonesia during such an unstable time. "IRD was very young, and in some
ways we were taking a risk with them," notes Pat Sheikh, deputy administrator for the agency's Foreign
Agricultural Service, which currently has contracts with 25 nongovernmental organizations, including
Catholic Relief Services and the World Food Program. Says Keys: "We had enthusiasm. Even though we
Back to Article Click to Print were new and small, we had key staff people who had worked in Indonesia and were known to USDA."
Tiga Pilar Sejahtera Food (TPS)--based in Solo, an industrial city about 300 miles (480 km) southeast of Jakarta
with some 700,000 inhabitants--is one of the beneficiaries of the program. The noodle factory employs 3,500 and
estimates its annual sales at $50 million. One of the country's largest producers of rice vermicelli, egg noodles
and wheat biscuits, TPS saw its production drop about 20% after the fall of Suharto as wheat prices doubled. TPS
vice president Budhi Istanto, whose family started the business in 1959, credits IRD with helping the company
"get back to its optimal capacity. We were not going to close, but we slowed production as the price of wheat rose
and people were buying less."
IRD, based in Arlington, Va., had to run both the logistics of getting wheat to TPS's central Javanese factory and
the program itself. That meant clearing customs in Jakarta, delivering the wheat to the millers and then
distributing the flour to the factories charged with producing the noodles. "Some factories did a better job than
others," says Keys. Among the problems: some had no bags to package the noodles, while others simply failed to
produce the agreed output.
To prevent fraud, IRD avoids paying cash up front for products and services. It also requires its for-profit
partners to reinvest any proceeds derived from IRD wheat. Instead, the millers who process the wheat are
reimbursed with a portion of the flour they make to sell at market rate. Factories get the flour free of cost but are
required to reinvest their proceeds into new production. IRD collects 66% of the profits, which it then uses for
other programs in the country, including a water-treatment facility, snacks for school children and health
services. IRD keeps 10% of all funding to cover its costs.
Quality control is its biggest challenge. On occasion, either the millers fail to produce the contracted grade of flour
or some of the factories fail to pay IRD its share of profits. IRD tests batches each month and refuses anything
that does not pass muster. If factories fail to pay on time, IRD sends bill collectors after them and threatens not to
renew their contracts. "We put the fear of the Lord in them," say Peggy Sheehan, adviser to IRD president Keys.
The USDA also sent inspectors to Indonesia to make sure its donations were being used as intended.
As an economic-development model, IRD has proved the concept. "We're satisfied," says the USDA's Sheikh.
Since 1999, the program has produced more than 78,000 metric tons of fortified noodles for about 4 million
low-income Indonesians. It has also produced hundreds of jobs in a country with 9.1% unemployment. "It was
difficult to provide for my family before I took this job," says a TPS worker named Suparti, who uses only one
name and has been working there for more than a decade. Although rising wheat prices have forced the company
to increase prices 30% and the USDA's free-wheat program has shifted to nations with more pressing food
shortages, for now TPS is back on solid financial ground.
So is IRD. It expects to distribute some $600 million in aid in 2008, making it one of the largest NGOs in the
world. Contracts with the U.S. Agency for International Development and funds from private donors are enabling
it to build roads in Afghanistan and provide grants to small businesses in Iraq, among other projects.
Despite a career spent primarily in public service--IRD's founder's first job was with the Amalgamated Clothing
Workers union--Keys has never stopped thinking like an entrepreneur. "You have to have a business plan and
invest wisely," he says. That's true whether you're a family farmer in Oklahoma or a nonprofit serving every corner of the globe.
Instant Noodles To see more of Kemal Jufri's photos of an Indonesian noodle factory, go to time.com/IRD
With reporting by With Reporting by Jason Tedjasukmana/Solo