Evolution of the initiative
In 2006, Armajaro began giving financial incentives to AMANAH to promote collective selling by the farmer groups. AMANAH received a fee of IDR 50 per kg. sold to Armajaro. These funds allow AMANAH to reach out to other villages. From 2007 onwards, Armajaro raised the fee to IDR 100 per kg. if the quality is good and IDR 50 per kg. if the quality is below expectation.
1. In three years’ time, AMANAH earned IDR 30 million (USD 3,500) and used this money to buy fertilizers and other inputs for its members.
2. In 2006, the farmer groups also received pre-financing from Armajaro amounting to 70% of the value of their projected sales. However, this was later stopped because the farmers also sell their cocoa to local traders when they receive better prices or have borrowed money from them (local traders can offer individual farmers credit in emergency situations and claim a longterm commitment in return). Although Armajaro no longer offers pre-financing to individual farmers, it does offer guarantees to enable farmer groups to access bank credit.
3. Until mid-2008, Armajaro collected the cocoa to transport it to Makassar – an eight-hour drive away. Farmers had little market information and the quality control was done at the destination in Makassar. It regularly happened that the quality assessment in Makassar was below the farmers’ own assessment – which bred discontent. In 2008 Armajaro agreed to put a warehouse in Polman district and to organize quality control there in the presence of the farmers. Transparency and trust increased between farmers and the company.
4. Starting in 2009, Armajaro began sending daily mobile phone text messages containing cocoa market price information to the farmer group leaders, and has continued to do this up to now.
5. In 2010 Armajaro began supporting the certification process to enable AMANAH farmer groups to meet UTZ Certified requirements for Nestlé. Armajaro’s next priority will be to explore opportunities to access Fair Trade and Rainforest Alliance certified markets. For the farmers in Polman district, Armajaro has proven to be an important lead buyer whose increased proximity has facilitated better prices, terms, and flows of market and quality information. Armajaro would like to see 50 -100% of its total volume procured through this mode of sourcing by 2020.
6. Recent developments and achievements Improved monitoring for improved performance Cocoa production volumes and quality vary a lot among groups and among farmers within the same groups. AMANAH has worked on mapping farmers’ production by collecting data from the different farmer groups since 2005. AMANAH’s farmer groups also routinely record elementary data for themselves as well as traceability-related data for Armajaro. Based on these data, the best-performing members today produce an average of 750 kg/ha per year, which exceeds the average of 500 kg/ha for Sulawesi, but falls far below the potential of 2000 kg/ha.
In mid-2011, 67 AMANAH farmer groups qualified for UTZ certification of the unfermented cocoa beans they produce after a rigorous 10-month process. Armajaro will begin purchasing certified cocoa from AMANAH in the next harvest period of October to December 2011.