Cocoa in Sulawesi, Indonesia

Cocoa in Sulawesi, Indonesia

Working towards sustainable, certified cocoa in collaboration with Mars.

The big chocolate companies (Nestlé, Mars and Barry-Callebaut) are warning of a future shortfall of 1 billion kg cocoa by 2020, caused by rising demand for chocolate in new markets such as India and China and reduced crop production due to climate change. There is a global need to create a more sustainable form of cocoa production that will boost productivity so that future demand can be met. Small-scale farmers, who are responsible for 90% of global production, are therefore key to this revolution.

Indonesia is the world’s third biggest cocoa producer with 849,875 tons a year, most of which comes from Sulawesi. Sulawesi produces huge amounts of cocoa: South Sulawesi alone produces 70% of Indonesia’s total cocoa production. The majority of the cocoa is produced by small-scale farmers with low productivity due to a lack of knowledge regarding pests and diseases and how to treat them. Poor post-harvest techniques also lead to low quality fermented beans. Farmers have very limited access to credit and farmers’ organisations lack the necessary thrust to transform their cocoa production into a profitable business.

The overwhelming majority of cocoa farmers in Indonesia are not organised so as to be able to collect and sell a consistent quality and volume of their members’ products effectively and efficiently. Most of these farmers do not understand quality, volume and product safety standards. Their weak negotiating position is the result of the inability of the farmers’ organisations to build business relations and negotiate with the private sector. Therefore, only a handful of private companies believe that farmers’ organisations can be professional business partners and are able to provide good quality, sustainable cocoa. Examples are PT Mars and PT Armajaro, which have developed business models involving smallholder farmers such as the Amamah farmers’ organisation in Polewali Mandar and Masagena in North Luwu. These private firms buy certified cocoa beans at premium prices, provide training on product certification according to UTZ standards, facilitate access to credit from financial institutions, and develop inclusive business models with farmers’ organisations.

Challenges

  • Low cocoa production at farm level due to ageing plantations, pests and diseases such as cocoa stem borer
  • Many farmers use subsidized chemical fertilizer
  • Poor quality of fermented beans due to poor post-harvest processing
  • Farmers’ organisations lack expertise in cocoa business management
  • Farmers have very limited access to financial institutions

Our strategies

  • Increase productivity by planting superior varieties which are resistant to pests and diseases
  • Organic farming practices such as producing organic fertilizer
  • Promote sustainable agricultural practices, such as inoculation techniques and the renewal of ageing plantations to improve cocoa productivity
  • Farmer Field Schools to carry out experiments, observation and group analysis. Farmers visit other FOs to exchange knowledge and seek inspiration
  • Post-harvesting techniques such as drying
  • Set up a system to obtain market information (such as price) on a regular basis
  • Training to strengthen the management and organisational capacities of the farmers’ organisations. We coach them in recording their activities and thorough accounting.
  • Sustainable contracts with private partners. Set up clonal gardens (field research centres) with Continaf and Mars.

In the region, many farmers still use subsidized chemical fertilizers on their cocoa farms. VECO and WASIAT supported farmers to shift to organic fertilizers. Farmers have been encouraged to raise goats in order to sell their manure and urine to Amanah. Amanah produces foliar fertilizer based on this manure. Farmers can buy fertilizer under different purchasing systems: cash, paid with cocoa beans or on credit (paid for later with cocoa beans).They also produce goat fodder from fermented cocoa husks mixed with herbs. Amanah has established a separate business cooperative for the fertilizer business, and plans to build a bio-compost/urine treatment facility in each sub-district where it works.

  • Beneficiaries: 7458 (6562 men/896 women)
  • Budget: €379,499

Results achieved

  • Production has risen to 1.3 tons/ha thanks to regular harvesting, pruning, fertilizing and sanitation (P3S)
  • 821 tons of dry beans sold through collective marketing
  • Growing number of farmers contributing to the organization, positive annual balance sheets
  • Amanah and Cahaya Sehati concluded negotiations with Mars to obtain the Rainforest Alliance certification
  • Mars offered the above organisations a premium for their pre-certified beans six months before they obtained certification
  • Cooperation contracts between Mars and Amanah, Masagena and Cahaya Sehati
  • Amanah, Masagena and Cahaya Sehati hold their own certificates
  • Parimo had their cocoa beans accepted by Mars as good quality beans meeting RA standards
  • Farmers have additional income sources thanks to cocoa bean snacks and seedlings (Masagena), rice-based snacks (Cahaya Sehati) and corn and ginger as intercrops (Parimo).
  • Farmers sell organic pesticide ‘Fertitop’ (goat urine and faeces)
  • 3600 farmers received training in sustainable cocoa farming with organic inputs
  • 2 clonal gardens and nurseries; the nursery in Pongo produced 100,000 seedlings
  • 35 young farmers were trained as cocoa doctors, from cultivation to supporting businesses (seedling nurseries and integrated cocoa/livestock farming)

Long-term results

  • Members of the Indonesian Cocoa Sustainable Partnership (government, private sector, NGOs, research institutions, etc.) implementing inclusive business models with Farmers’ Organisations to support the professionalism of FOs
  • Mars’s experience should inspire other cocoa-processing companies to make their sourcing policies more inclusive for small-scale farmers:
    Facilitate access to micro-finance for local farmers and their sustainable agricultural products, and offer a fair price for cocoa products.
    Inform farmers about market requirements (quality, volume, price, form), support them in achieving these requirements and participate in dialogue with other chain actors.
  • The global Cocoa Trade will be secured thanks to a more sustainable form of production that will be capable of overcoming the challenges of climate change and ensuring a fair price for family farmers.

Peni Agustijanto, Field Coordinator
Telephone: +61 811 385 4464
Email: peni [at] veco-indonesia.net