Sulawesi Indonesia Cocoa Sulawesi

Implications for scaling

Cocoa prices rose to a 32-year high in New York in early 2011. High cocoa prices are beneficial for traders like Armajaro because they receive a fixed margin for the trading. High prices also keep farmers motivated and trading volumes higher. Prices are expected to remain high in years to come since demand outstrips worldwide cocoa supply. The confectionery industry needs all the cocoa produced, including the produce of smallholder farmers.

Of course, prices do fluctuate a lot at the stock market in New York because of trading activities as well as unstable situations in producing countries such as Ivory Coast. The fact that fluctuations are transmitted in real time to the Sulawesi market greatly assists them in negotiating prices with buyers and in making decisions about whether or not to accept the price offered.

On Sulawesi, at least half a dozen international traders buy beans from smallholder cocoa farmers. However, the farmer groups are largely price takers and cannot significantly influence the prices these traders offer. To date, AMANAH is the only strong farmer organisation working on cocoa in Sulawesi, and there is no strong national federation to protect cocoa farmer interests. Therefore, farmer organisations need to get stronger and better organized at both national and local levels to improve their bargaining capacity. This is a key priority of the VECO program in coming years.

Another priority is to keep up scaling production. The president of Armajaro has declared that he wants to continue the project with VECO, in order to increase production. Results for up scaling so far have been excellent, resulting in a cocoa production of 0.5 tons per hectare. Through capacity building in cooperation with VECO, Armajaro aims to double production per hectare in the years to come. Farmer prosperity will continue to rise and cocao production in Polman will be more sustainable, should this targeted production level be achieved.