Context and background
Cocoa is one of the most attractive crops for farmers around the equator because of the specific climate and the certainty of income in the long term. The Indonesian cocoa sector has experienced tremendous growth during the last 25 years and is now the third biggest cocoa producer with about a 15% share of the total world cocoa bean production. Cocoa is cultivated in Indonesia on over 1.5 million hectares, providing the main source of income for over 1,400,000 smallholder farmers, generating over USD 1.2 billion in exports annually. The country’s cocoa plantations are among the most productive in the world, with each hectare able to produce between 400 and 800 kilograms of cocoa. Up to now, smallholders contributed 93% of national production.
Despite the importance of cocoa cultivation in Indonesia’s economy, productivity, bean quality and farm profitability have declined. This declining trend is being reversed the last few years with on-farm investments in tree rejuvenation, replanting and sustainable farming practices. Such investment did not happen earlier due to the limited access to credit, to knowledge on sustainable farming practices and due to poor transmission of quality price signals to farmers. This latter failure is due to the fragmentation in Indonesia’s cocoa supply chain, with over 90% of the cocoa production on smallholder farms that sell into poorly regulated and highly competitive marketing chains.
The population of Flores is growing and farmers are owning increasingly smaller plots of farmland, incomes are steady while costs are increasing. There is hardly local knowledge about cocoa farming, because cocoa is not endemic to this region. The farmers of the districts Ende and Flores Timur have organized themselves in small farmer organizations. They were informal groups of farmers, setting up credit systems for their members. The farmer organizations function as facilitators, helping their members gain access to information and to provide small amounts of working capital.
VECO Indonesia is the Indonesian branch of the Belgian NGO Vredeseilanden working on Sustainable Agriculture Chain Development. Its mission is to enhance the position of the organized family farmers. VECO Indonesia started in 2009 with the funding and strengthening of the organizational capacity of JANTAN and in 2010 with the partnership with PT Mars. PT Mars is one of the biggest companies in the global cocoa industry and results of the VECO-PT Mars partnership illustrate how working together with the private sector can create new opportunities and resources for farmers.
JANTAN is a business-oriented farmer organization in Eastern Flores. They focus their activities on the cocoa and copra commodities. The overall aim of the organization is the realization of good (economical) quality of life for the communities of East Flores district, through the development of collective marketing of potential commodities, backed by a strong and independent organization.
SIKAP is a newly established farmer organization founded by 9 village in Ende district. The overall aim of SIKAP is the achievement of a fair and sustainable welfare of cocoa farmers by strengthening the bargaining position of farmers receiving a fair price. From the start they had good relations with the local government and were able to secure support from the government in the form of a warehouse and a drying facility of Cocoa managed by the new Processing Unit (UPH).
Main bottlenecks/problems faced by the cocoa farmers in the chain
First there is the problem of poor quality of beans and low productivity of the trees. Low productivity is mainly caused by limited micro-credit and very little knowledge on improved technologies. Furthermore, farmers have very little knowledge of the right processing techniques, which results in low quality of beans. The second problem is the very weak bargaining position of the farmer in the chain. This is caused by the limited capacity of farmers groups to organize collective marketing.