The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank
(ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their
use. Terminology used may not necessarily be consistent with ADB official terms.

The Impact of Involvement in Global Value Chain

to Coffee Farmers in Indonesia:
Case Study of Margamulya Coffee Producer Cooperative, Bandung, Indonesia

Amzul Rifin and Dahlia Nauly

(Bogor Agricultural University, Indonesia) (University of Muhammadiyah Jakarta)
 Thousands Ton

0
100
200
300
400
500
600
700
800

1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
Source: ICO, 2019
Background

2006/07
2007/08
2008/09
2009/10
2010/11
Indonesia’s Coffee Production, 1990-2018

2011/12
2012/13
2013/14
2014/15
2015/16
2016/17
2017/18
 Thousands Ton

0
100
200
300
400
500
600
700

1990/91
1991/92
1992/93
1993/94
1994/95
1995/96
1996/97
1997/98
1998/99
Export 1999/00
2000/01
2001/02
2002/03
2003/04
2004/05
Source: ICO, 2019

2005/06
2006/07
Domestic Consumption

2007/08
2008/09
2009/10
2010/11
2011/12
2012/13
2013/14
2014/15
2015/16
Indonesia’s Coffee Export and Domestic Consumption, 1990-2017

2016/17
 Private
3%
Government
enterprise
Arabica
2%
28%

Robusta
Small 72%
Holder
95%

Coffee Producer and Type in Indonesia, 2018

Source: Ministry of Agriculture, 2018
Coffee Supply Chain in Indonesia
Source: Arifin (2010)
 Finish Finish Post
<25 Finish D3 Finish
0% D1/D2 Undergradu Graduate
1% 0% ate 0%
>65 25-34 1%
Finish
9% 11% Senior High Not Finish
School Elementary
School
55-64 12%
24%
Finish
20% Junior High
35-44 School
17%
29%

Finish
45-54 Elementary
School
30% 46%

Coffee Farmer’s Age and Education

Source: Statistics Indonesia, 2014
 14
12
10
8
%

6
4
2
0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 >30
Year

Coffee Tree Age in Indonesia

Statistics Indonesia, 2014
 2.00- 4.00- > 5 Ha <0.1 Ha 3.00-
2.99 4.99 2% 7% 3.99 Ha
Ha Ha 4%
Others 4% 1%
Rent 13%
7%
1.00-
1.99 Ha
19% 0.1-0.5
Ha
38%
Owned 0.5-0.99
80% Ha
25%

Coffee Farmers Land Ownership and Land Area

Source: Statistics Indonesia, 2014
 6000
4875 4871
5000 4515 4271
Yes

Respondents
4000
19% 3000
2000
1000 435 443 301
65 9941 11925
0
No
81%
Free Subsidized No

Government Assistance to Coffee Farmers

Source: Statistics Indonesia, 2014
 5500 5112
4500
Respondents

3500
2500
1500 1247
936
500 278 47
-500

Problems Faced by Coffee Farmers

Source: Statistics Indonesia, 2014
Margamulya Coffee Producer Cooperative
Bandung, Indonesia
Marketing Channel of Coffee Farmers in Margamulya Village

Exporter

Farmers Cooperative Café/

Domestic Market

Foreign
Consumer

Green Bean
Exporter
PT Taman Delta •60 ton
Semarang
Central Java •every shipment of 2 tons

PT Samosir •60 ton

Sumatera
North Sumatra •every shipment of 15 tons
Problems
Continuity
• Minimum in one month to fill the container is 18 tons
• Must store much (harvesting March-August)
Quality
• To fulfil the demand, must purchase from non-member which
quality cannot be assured met the quality required by foreign
buyers.
Margin and Profit on Marketing Institution
(Bank Indonesia, 2018)

Marketing Channel 1
Farmer  Farmer’s Group Processing Enterprise  Consumer

Marketing Channel 2
Farmer  CooperativeExporter Consumer

Marketing Channel 3
Farmer  Farmer’s Group Wholesaler Exporter
Consumer
Margin and Farmer Share of Coffee in Bandung Regency 4 Processing Enterprise
(Bank Indonesia, 2018) a. Purchasing Price 15,698
b. Transportation Cost 75
No Activity Marketing Channel
1 2 3 c. Processing Cost 2,083
1 Farmer d. Packaging Cost 667
a. Selling Price 8,350 8,350 8,350
e. Rent 208
2 Farmer’s
Group/Cooperative f. Selling Price 25,117 - -
a. Purchasing Price 8,350 8,350 8,350 g. Profit 6,385 - -
(Cherry) h. Margin 9,419 - -
b. Selling Price 15,698 15,030 11,690
c. Processing Cost 360 300 185 5 Exporter
d. Transportation Cost 0 0 25 a. Purchasing Price - 15,030 14,028
d. Profit 6,988 6,380 3,155 (greenbean)
e. Margin 7,348 6,680 3,340 b. Selling Price - 22,545 21,042
3 Wholesaler (peeled (greenbean)
cherry) c. Other Cost - 150 150
a. Purchasing Price - - 11.690 d. Profit - 7,365 6,864
b. Selling Price - - 14.028
c. Processing Cost - - 225 e. Margin - 7,515 7,014
d. Profit - - 2.113 Total Margin 16,767 14,195 12,692
e. Margin - - 2.338 Farmer Share 33.24 37.04 39.68
 The cooperative Function
(Djuwendah et.al, 2017; Djuwendah et.al, 2019)

Procurement of farming inputs

Production process

Coffee processing

Marketing,

Financial services

Minimization of farming risk

Human resource development & Research and development

The High quality coffee seedling
Benefit of
cooperative
member The market guaranteed

Training for improving the coffee

productivity and quality
Dividend at the end of every year
 Conclusion
• Margamulya Coffee Producer Cooperative has played an
important role in connecting farmer into the global value
chain through exporter or export directly.
• Farmers received much benefit from the involvement into
the global value chain, such as guaranteed market, high
quality seedlings, trainings and annual dividend.
• The cooperative must conduct direct export which needs
much requirements such as capital and storage facilities.