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COFFEE PRODUCTION IN INDONESIA: EXPERIENCE FROM SMALL-SCALE PRODUCERS, NORTH SUMATRA

I. Nadvornikova, V. Verner, V. Valesova

Abstract

Coffee is a well-known commodity with an extensive value chain. Recently, consumers started to explore the disproportion in money allocation. While farmers receive only minimal price for their product, gains go up to the top players. This is evident for Indonesia, which nowadays belongs to the top global coffee producers. Particularly region of North Sumatra is region with unique, world-known, coffee brands such as Lintong and Mandheling coffee brands. Thus, the aim of our survey was to analyze the situation of the small-holder farmers in the North Sumatra province and to examine their role in the coffee value chain. By revealing the power relation in-between the farmers and next levels of local value chain, various options of their empowerment will be determined with emphasis on farmers' livelihood, production and coffee processing opportunities. Data were collected via semi-structured interviews with farmers in July and August 2012, descriptive statistical analyses were applied in order to examine small-holders' role in the coffee value chain at North Sumatra and determine possibilities of farmers' empowerment appropriate due to local conditions and situation. For the local farmers, coffee cultivation showed the highest economic profitability and low amount of inputs. This finding could explain increasing adoption of coffee among especially poor farmers. However, farmers were largely dependent on their own capacities and they did not receive much support from government authorities to compete poor-quality fertilizers supplies, low and fluctuating purchasing price and poor access to credit. Moreover, entry of new market players has been changing the traditional coffee value chain towards the newly emerged global one based on large multinational companies. From different methods of increasing the share of total price in favour of coffee smallholders, the most widespread at North Sumatra is variety specialty and certified coffees. Small number of interviewed farmers are already profiting from these kinds of coffee marketing with the growing tendency among the other smallholders. It is very suitable method within the special conditions at North Sumatra when the Arabica coffee, they are producing, already reached various certification or specialty criteria and is still sold at the global market as a normal coffee for average prices. It is the easiest possibility for the rural poor to reach sustainability in the value chain and it promotes their social and economic security as well as natural heritage conservation.

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DOI resolver: doi.org/10.5593/sgemsocial2014/B23/S7.011

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