Creating Collaborative Business

For Java Coffee Cooperative

Cibeber, West Bandung
Dani Riskayadia, Mustika Sufiati Purwanegara b
a
dani.riskayadi@sbm-itb.ac.id, School of Business and Management, Institut teknologi Bandung, Indonesia
b
mustika@sbm-itb.ac.id, School of Business and Management, Institut teknologi Bandung, Indonesia

Abstract

Indonesia is a developing country that has abundant natural resources. A sector that take an active role in
the national growth is agriculture sector, especially coffee. One of coffee producer in Indonesia is West
Java province. West Java province has Java Preanger coffee that is produced in West Java area with a
special flavour and aroma. It is one of Indonesian coffee having geographical indication that is registered
in directorate general of intellectual property. Most of coffee plantation area in West Java are owned by
smallholder farmers, one of them is coffee farmer in Halu Mountain belonging into Kopki Sariwangi
Preanger (Java Cibeber Coffee Cooperative).

The high coffee consumption in Indonesia and in the world faced with decreasing production and sales in
Java Cibeber coffee in recent years therefore needed research to solve the problem. The analysis of problem
is done through interview, observation, and logical framework analysis, as well as cooperative data. The
declining production and sales happened because unclear standard operational procedure for production
and cultivation, capital limitation in farmers and cooperative factory, and lack of marketing strategy for
Java Cibeber coffee. The inclusive business strategy used to solve problems due to it involved poor people
and to create the potential of inclusive business that offer business growth, innovation, and improve the
welfare of farmers.

Keywords: Kopi, Kopi Java Preanger, Petani, Koperasi, Kolaborasi, Inklusif Bisnis.

1. Introduction

Indonesia is a developing country that has abundant natural resources. A sector that take an active role in
the national growth is agriculture sector. The development of agriculture sector in Indonesia is needed
because it based on domestic resources, in which the use of resources efficiently and effectively are
expected to give a good contribution in the future.

One of the most popular agriculture are coffee. Coffee is one of the most popular beverages in the world,
both men and women likes it. A coffee culture have become a part of Indonesian character in every regions
and every activities, therefore coffee can be easily found in everywhere. Changing of people's lifestyles in
Indonesia and growing in middle class drives the domestic performance of coffee industry increased
significantly. According to International Coffee Organization (ICO, 2016), domestic consumption of coffee
increased on average more than 5 percent per year, while total domestic coffee production in 2015 is
691.500 tons

Indonesian coffee production can enhance national growth and Indonesian people welfare, because it has
an important role as foreign exchange earnings, job provider, source of income, and encourage the
development of agribusiness and agroindustry that is indispensable for national development. Indonesian
main export commodities are agricultural, industrial and mining products. Coffee is one of the main export

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commodities with large foreign exchange earnings from agricultural products. In 2015 foreign exchange of
agricultural products accounted US $ 5.6 billion with coffee foreign exchange earnings is more than US $
1 billion. (BPS, 2016).

Coffee that is produced in Indonesia is from two varieties, Arabica and Robusta, coffee in every region in
Indonesia have the own characteristics, because Indonesia has many ethnic and culture, so that it makes
Indonesia has many specialty coffees. There are some Indonesian specialty coffee that has been known in
the world with a distinctive flavour and aroma depend on the geographical indication. There are 13
geographical indication of coffee in Indonesia registered in directorate general of intellectual property,
including Arabica Java Preanger that are produced in Halu Mountain. Geographical indications program
launched by the government as a program to maintain the regional specialties and improve the
competitiveness of local products in the international market.

Coffee is not only an ordinary plant for farmers, but also have important economic significance. Since many
years ago, coffee has become a source of income for farmers. Coffee can grow good even without
maintenance, moreover if coffee is maintained and processed properly, it would generate more profit than
before. The growth of coffee plantation area in 2011-2015 tended to increase although it decreased in 2014.
However, the fluctuated production shows that there are constraints that occur on the field. The average
yield per hectare is 724,6 kg/ha can be improved if the coffee is maintained and processed properly. The
coffee plantation area in 2015 is 1.2 million ha, 96% of the land are owned by smallholders estates, while
in West Java 99% of the land are owned by smallholders estates, therefore coffee production is highly rely
on smallholders estates like coffee farmers in Halu Mountain which have limitations on the fund,
knowledge, and technology to manage their plants optimally.

2. Literature Review

Inclusive business concept generally refers to businesses engaging the poor throughout the entire supply
chain: as clients and customers, and also on the supply side as employees, producers, and business owners
(UNDP, 2010). Inclusive business can offers the potential to drive business innovation and growth for the
low-income farmers and producers. Inclusive business models conducted at the intersection of business and
development work. In many cases, private sector and development organizations collaborate as partners.
Cross-sectorial collaborations have the own challenges: different organizational motivations, expectations
and languages need to be bridged; different goals need to be united behind one project. Moreover, the
inclusive businesses can also pursue wider objectives socially inclusive. Inclusive business have to promote
sustainable development in all its dimensions; economic, social and environmental. Inclusive businesses
deepen investments in low-income people, improve access to quality products and service that are
affordable, increase productivity, and drives revenue and livelihoods opportunities. In doing so, they enable
the inclusive growth and continuous development.

Collaboration is a philosophy of interaction and personal lifestyle where individuals are responsible for
their actions, including learning and respect the abilities and contributions of their peers (Laal and Ghodsi,
2012). Through these activities, identified the behaviours of collaboration and put it in the appropriate
places. The concept of collaboration between small businesses with medium and large enterprises aims to
mutually beneficial development. Including counselling or coaching, capital assistance, agricultural input
assistance, and technology.

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3. Methodology

The method used in this study is a qualitative research method. The analysis begins by asking questions
related to the process that contained in the cooperative, farmers, and the coffee factory. This method is used
to get an understanding of underlying reasons and opinions to provide insight into the issues and developing
the ideas.

3.1 Observation

Observation involves to record the behavioural patterns of people, objects and events in a systematic
manner to get information about the phenomenon of interest (Malhotra, 2007). Observation conducted
directly in the Kopki Sariwangi Preanger, coffee production plant, and coffee warehouse. Observation is
intended to get primary data that is beneficial to support further analysis to be performed.

3.2 Interview

Interview was conducted by doing unstructured interview. The types of questions are open-ended. Interview
was carried out directly with Kopki Sariwangi Preanger as an object of research, especially the secretary
and cooperative chairman at the same time they are responsible in the production and the business of Java
Cibeber-Halu Mountain. The interview also was conducted with the factory employee and the some coffee
farmers who are members in the cooperative. Some of the specific questions were asked to get information
related to the problem will be analysed.

4. Finding and Analysis

Climate in Indonesia especially in West Java that cannot be predicted becomes a challenge and a threat the
coffee plantation and production. And also the geographic conditions of Indonesia that often occur natural
disasters such as floods, earthquakes, volcanic eruptions, landslides, forest fires, droughts and so on which
is not only resulted in the loss of life, infrastructural damage, but it also affects agriculture and plantation
sector. The environmental factors are constantly being changed with the times, making us have to be aware
with the environmental problems that can happen anytime. The effects of global warming and climate
changes are one of the factors of the environmental factors that could be bad for farmers. For tropical areas
like Indonesia, the levels of precipitation is an important factor for the growth and production of agricultural
sector. Besides rain, other climate elements that affect the plant are the temperature, wind, humidity and
sunlight. Unfortunately, the changing of weather and climate conditions with unpredictable wet and dry
seasons in Indonesia has caused the harvest of coffee cherries are not optimal and also drying of the coffee
beans are not optimum due to the weather factor.

It is also the Indonesia geographic conditions that often occur natural disasters such as floods, earthquakes,
volcanic eruptions, landslides, forest fires, droughts and so on which is not only resulted in the loss of life,
infrastructural damage, but it also affects agriculture and plantation sector. If the disaster prevention do not
strongly structured, it will threaten the domestic coffee production. A decrease in productivity of the coffee
plant led to a decline in income of farmers. Moreover, it can also affect the income of the state, considering
coffee is one of the main export commodity that has an important role to get foreign exchange earnings. To
develop the agricultural sector, the government should use industrial approach, not an agrarian approach. It
means that dealing with agriculture in industry, it is not depending on the natural factors. So that farmers
no longer depend on the uncertain weather conditions and it can improve the welfare of farmers.

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There are many coffee farmers in Halu Mountain that planting the coffee. Farmers in this research are the
coffee farmers in the Halu Mountain who are members of a cooperative that sells the coffee cherries to
cooperative factories. However, there are also coffee farmers in Halu Mountain who are not members of a
cooperative that sells the coffee cherries to cooperative factories. The farmers’ role is as a supplier of coffee
raw materials into cooperative factory, so they can easily to sell the coffee cherries to other factory based
on the highest prices offered. However, there are some farmers have limited capital to buy a good quality
seeds and fertilizers. In addition, unstable coffee harvest, sometimes it produces many coffee cherries or
slightly coffee cherries, making the income of farmers are uncertain. Therefore, it shows the lack of synergy
between coffee farmers and other stakeholders in Java Cibeber-Halu Mountain to develop and increase the
coffee production thus increasing the value added for farmers.

The cooperative adheres to the principle of family, so it began to gain the community trust in the
Mekarwangi village, especially the coffee farmers. Like most of cooperatives, the cooperative members
can save and borrow money from the cooperative, but they can repay the loan when the coffee is harvest.
In addition, the cooperative as an intermediary to other parties who want to join and assist in the
development of Java Cibeber-Halu Mountain. Moreover, unstructured task distribution and salary system
into cooperative staff makes the lack of a standard payment to the cooperative management and cooperative
staff. Although the coffee production unit is owned by cooperatives, the entire production process at the
plant did not reported into the cooperative annual member meeting, because it do not have funds and
resources that are qualified to run the plant, so the cooperative and cooperative factory have a separate
system. Therefore, it needs synergy between the cooperative and other stakeholders in Java Cibeber-Halu
Mountain to develop a good system that can benefit for all stakeholders.

Java Cibeber that is produces in the cooperative factory known as a good quality coffee in West Java. The
role of cooperative factory is running the whole production process and business process of Coffee Java
Cibeber-Halu Mountain. Although the factory is owned by the cooperative, the plant operational is separate
with cooperation operational, because it has limited funds to run the production and also limited funds to
purchase all the coffee cherries from the farmers. In addition, the decreasing sales is happened in recent
years. The decrease can bring bad effect to Kopki Sariwangi Preanger and the farmers if it not given a
proper solution. Unclear financial and administrative systems, making all factory income and expenses
managed by Mr. Asep as the fund owner. In addition, unstructured task distribution in the cooperative
factory creates the lack of supervision in processing the coffee, so that the reject product become
uncontrollable. Therefore, it should get special attention to develop a standard operating produce in order
to increase the production and to control the quality.

5. Discussion

Finding and result in previous analysis that there are some root cause that happened in Java Cibeber coffee
business. And then developing about business solutions considering the real business situations, so that the
solution will effectively solve the problem mentioned in the previous chapter. Furthermore, from a variety
of alternative business solutions, a recommended strategy for Java Cibeber coffee. As a result, it is
necessary finding the root cause in order to correct and to eliminate the cause and prevent the problem. The
capital limitation and unclear standard operational procedure are the main problem that happened in Java
Cibeber. While most problems of farmers are usually solved by them self, but they have limited resources
to improve the situation.

The problems can be solved by inclusive business. Inclusive business can offers the potential to drive
business innovation and growth for the low-income farmers and producers. Inclusive business models
conducted at the intersection of business and development work. In many cases, private sector and
development organizations collaborate as partners. Cross-sectorial collaborations have the own challenges:

4
different organizational motivations, expectations and languages need to be bridged; different goals need
to be united behind one project. Moreover, the inclusive businesses can also pursue wider objectives
socially inclusive. Inclusive business have to promote sustainable development in all its dimensions;
economic, social and environmental. Inclusive businesses deepen investments in low-income people,
improve access to quality products and service that are affordable, increase productivity, and drives revenue
and livelihoods opportunities. In doing so, they enable the inclusive growth and continuous development.

Creating business cycle that happened in the Java Cibeber-Halu Mountain important. Every activity in the
business cycle requires collaboration from every element to sharing resources and knowledge. Therefore,
they can compete in global business environment. Because the inclusive business plays an important role
in building competitive advantage in the future even though there are changes in the business environment.
They have to understand that the importance of collaboration with all stakeholders in any business activity.
All stakeholders in this inclusive business development have their own role, including the businesses.
A sustainable business is a necessity. Sustainable businesses attention are intended for the economy,
environmental impacts, and the community. Because the inclusive business is not only thinking about
the huge profits, but also trying to find new idea which can be beneficial for all parties.

The collaboration that should be done in Java Cibeber is collaboration with government and university
conducted to develop the coffee processing technologies and creating standard operational procedure to
improve the quality of the coffee itself. Second, collaboration with financial institutions and cooperatives
aimed to strengthen the capital aspects to run the business. Third, collaboration with industries and
customers to develop sustainable business through a formal contract and mutual beneficial collaboration.
Fourth, collaboration with coffee farmers also should be retained to maintain the coffee quality and to
improve the welfare of farmers. Collaboration with customers and farmers should have a formal contract
to ensure business sustainability. Although it sounds weird and taboo for farmers in rural area. However, if
the mind set of farmers unchanged, it will hamper the agricultural development and the welfare also. A
formal contract is a guideline for mutually beneficial cooperation between stakeholders. It aims to help
farmers or suppliers in a professional working for a sustainable business. Therefore, when farmers are able
to fulfil the contract, they will receive incentives and guarantees. Collaboration conducted to maximize the
performance of the overall business and to improve the welfare of farmers. To develop a good collaboration
needed trust between the stakeholders to create a long-term collaboration. It is important to have trust in
collaboration making the business survive against environmental changes. The main requirement in
collaboration is the awareness to believe that every person in the collaboration is a part of group to work
together for a goal. They should have a strong motivation to engage in collaborative rhythm and to be active
in solving the problems as well as a fair mutual collaboration. An effective collaboration manifested from
various maturity process on communication, cooperation, honesty, sincerity, and flexibility.

Coffee is processed differently all over the world; sometimes this is due to the tradition without an
understanding of its influence on the taste, while others using specific way to add or trot out the new flavours
of the coffee. Every coffee producers have their own way to handling the coffee production, causing every
regions in Indonesia have the distinctive flavour and aroma depending on how to handle it. As well as the
Java Cibeber coffee has its own process that gives a characteristic flavour and aroma. However, unclear
standard operating procedure (SOP) of cultivating and production process causes the whole process
becomes uncontrolled. Creating a clear Standard Operational Procedure is important for java Cibeber-Halu
Mountain to make sure the whole process will run properly. Starting from the process of cultivation,
maintenance, fertilizing, harvesting, processing, and the distribution of coffee.

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6. Proposed Business Solution

In this research, inclusive business is applied to solve the problem. It based on the collaboration strategy
between related stakeholders in the business. Discussing about the various solutions that should be run by
Java Cibeber-to solve the problem. The strategy needs collaboration from several stakeholder to execute
several strategies, as well as training and socialization.

6.1 Build a Good Relationship with Stakeholders

Running the business needs a good relationship between stakeholders in order to establish a good
collaboration, because a good collaboration makes everything to be possible. The stakeholder that is
important in the business and need to build a good relationship is government and university, customers /
industries, farmers / group of farmers, and financial agencies.

1. Government and University

A good relationship to government and university are needed to create collaboration with them. The
collaboration conducted to develop the coffee processing technologies and creating standard operational
procedure to improve productivity, to maintain the quality of the coffee, to maximize production and to
improve the welfare of farmers. Moreover, government support in the revitalization various supporting
facility, giving incentive, access to market, access to capital, and opening a new land for coffee plant are
needed to develop the coffee business in Java Cibeber-Halu Mountain. Developing the technology and
standard operational procedure for Java Cibeber-Halu Mountain need help from government and university,
because technology and standard operational procedure constructed with systematic research and special
planning, by considering the existing problems as well as opportunities and problems that may arise in the
future.

2. Customers and Industries

Developing a good relationship with customers and industries to develop sustainable business. The concept
of mutual benefit collaboration like sharing information about coffee business, developing a new way to
process a good coffee, and creating a formal contract. A formal contract is a guideline for mutual beneficial
cooperation between Java Cibeber-Halu Mountain and the customers. These strategies are strongly
recommended to develop sustainable business.

3. Farmers and Group of farmers

A good relationship farmers and group of farmers are needed to create collaboration with them.
Collaboration with coffee farmers and group of farmers is retained to maintain the coffee quality and
business, as well as to improve the welfare of farmers. It recommended having a formal contract to ensure
business sustainability. The collaboration agreements with cooperatives and farmers aims to help farmers
in a professional working for a sustainable business. Therefore, when farmers are able to fulfil the contract,
they will receive incentives and guarantees. In addition, collaboration between Kopki Sariwangi Preanger
and farmers could reactivated the production units of cooperative, because the farmers as members will
routinely saving their money to cooperative.

4. Financial agencies

To build a good relationship with financial institutions, Kopki Sariwangi Preanger develop trust with the
financial institution. Trust in collaboration making the business survive against environmental changes. The

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collaboration aimed to strengthen the capital aspects of Kopki Sariwangi Preanger to run the producing unit
and coffee business, as well as capital for farmers to grow the coffee plant. It is important to have trust in
collaboration making the business survive against environmental changes. The main requirement in
collaboration is the awareness to believe that every person in the collaboration is a part of group to work
together for a goal. They have a strong motivation to engage in collaborative rhythm and to be active in
solving the problems as well as a fair mutual collaboration. An effective collaboration manifested from
various maturity process on communication, cooperation, honesty, sincerity, and flexibility.

6.2 Creating a good standard operational procedure for producing coffee

Every coffee producers have their own way to handling the coffee production, causing every regions in
Indonesia have the distinctive flavour and aroma depending on how to handle it. As well as the Java Cibeber
coffee has its own process that gives a characteristic flavour and aroma. With training and socialization to
create a good standard operational procedure of cultivating and production process, controlling the quality
and quantity of coffee production. Because many individuals only could change their behaviour if they had
decent information about what to do, why and how. This information needs were not only to the farmers,
but also to Kopki Sariwangi Preanger. Farmers and cooperative factory adherence to the standard
operational procedure of cultivation and processing of coffee. Because standard operational procedure is
made to stabilize the coffee cherries harvest by how to handling the coffee plant, how to anticipate the pest,
how to take care the plant, and how to harvest the coffee cherries in a good way. As well as it is made to
maintain the quality and quantity of Java Cibeber-Halu Mountain. In addition, the training also provides
information on how to resolve the wastes of coffee pulp and parchment skin that is produced from
processing the coffee beans. The waste will be produced to be something more useful and having economic
value such as organic fertilizer, animal feed, cascara (tea of coffee pulp), bioethanol, and many others
alternative to utilize the waste, so it will get the zero waste of coffee processing.

7. References

Badan Pusat Statistik. 2016. Laporan Perekonomian Indonesia 2016. BPS-Indonesia. Jakarta.

Direktorat Jenderal Perkebunan. 2015. Statistik Perkebunan Indonesia 2014-2016. Kopi. Direktorat
Jenderal Perkebunan. Jakarta.

International Coffee Organization. 2016. http://www.ico.org/, accessed Oktober 2016.

UNDP. 2010. Assessing Markets. Inclusive Markets Development. UNDP. New York.

UNDP. 2010. Brokering Inclusive Business Models. Inclusive Markets Development. UNDP. New York.

Laal M, and Ghodsi S. 2001. Benefits of Collaborative Learning: Social and Behavioral Sciences Journal.
Procedia – Social and Behavioral Sciences.