3c Indonesia - Maja Wallengren

Country: Indonesia
GTECs and Gquality Coffee Integration Meeting
Poços de Caldas, Minas Gerais, Brazil
© By Maja Wallengren
Independent Analyst and Global Coffee Reporter
GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

Coffee harvest and drying
(Describe the processes used)



How important is Coffee compared to other local crops?
Of 23 mln hectares planted agricultural area (000 ha)
Crops Value Production Ha

(in mln $) (in 000 MT)
Rice 17,935 66,412 11.9 mln
Palm oil 9,369 21,534 7.2 mln
Natural Rubber 3,189 2,788 3.5 mln
Cassava 2,451 23,909 n/a
Coconuts 2,284 20,655 1.78 mln
Corn 1,798 18,364 3.2 mln
Banana 1,638 5,815 74,750
Tropical fruit 896.3 2,193 n/a
Sugar 870.2 26,500 478,200
Coffee 860.1 801 1.34 mln
Source: FAO, ICO

Main coffee growing regions
Indonesia’s coffee regions

Aceh
Mandheling
Sulawesi
Borneo
Lampung
Java
Bali
Timor

How do growing regions and farmers look like?
Pictures of the origin
(pictures that represent the regions and farm types)


Coffee In Indonesia - Overview
Year Production Area Yield Domestic Consumption

(starting) (000 60-kg bags) (000 Ha) (Bags/ha) (in 000 60-kg bags)
1990 7 400 950,000 7.8 1.242

2002 6 700 1 100 000 6.0 1 779
2003 6 400 1 100 000 6.0 1 833
2004 7 550 1 150 000 7.0 2 000
2005 9 150 1 150 000 8.0 2 500
2006 7 500 1 200 000 6.5 2 833
2007 6 250 1 200 000 5.2 3 333
2008 9 600 1 250 000 7.7 3 333
2009 11 380 1 300 000 8.8 3 400
2010 9 150 1 340 000 7.0 3 500
2011 8 750 1 340 000 6.5 3 600

Coffee “robusta” production – historic data
Year Production
(starting) (000 60-kg bags)
1990 6 700
2002 6 000
2003 5 650
2004 6 500
2005 8 150
2006 6 600
2007 5 450
2008 8 250
2009 9 730
2010 7 750
2011 7 400

Coffee “arabica” production: historic data
Year Production
(starting) (000 60-kg bags)
1990 700
2002 700
2003 750
2004 1 050
2005 1 100
2006 900
2007 800
2008 1 350
2009 1 650
2010 1 400
2011 1 350







Coffee farms profiles
Planted Area Number of Total

(ha) farmers Hectares % of total area
0.5-1 2.0 mln 500,000 37%
1-5 1.6 mln 500,000 37%
5-10 200,000 200,000 15%
10-50 200,000 100,000 7.5%
100-2000 5-10 4-5000 3.5%




Technology Level
Coffee plantations age: 20 to 30 years
Main varieties: Canephora, typica, catimor

3*3 meters, average tree density
Planting spacing: 1200-1500 trees/ha
Pruning types and frequency: Stumping but no regular frequency
Fertilizers Dosage / ha / year

78 kilograms per hectare in cases
where fertilizer is used but less
than 10% of farmer use fertilizer
Mechanization Irrigation
Farms don’t use mechanization Irrigation is not used in Indonesia

















Coffee Certification
 % of coffee produced that is certified:
 less than 5 percent and mostly in the arabica
 Main Certifications organizations:
Rainforest Alliance
UtzKapeh
Fair Trade
 Key requirements for certification:
Same as required by certifing agents for all other producers

Commercialization
• The Commercialization is still involving many

intermediaries
• Most producers are forced to sell to private buyers

that will make the trip to the producing region
• Even though local infrastructure is good for a

developing country the distances travelled are often
long
• Indonesia does not have a strong co-op culture
• As a result the real purchasing price paid to

producers is still significantly below the market price

Coffee classification X Average earnings in 2011
Classification/types of coffee Average prices paid to growers in 2011

Grade 1: 11 defects per 300 gr $1.10-$130/lb for naturals-60-80 c/lb for robusta
Grade 2: 12-25 defects per 300 gr

Grade 4a: 45-60 defects per 300 gr
Grade 4b: 61-80 defects per 300 gr

Sources of funds used in the coffee production
 % Growers: There is no real funding available to growers
 % Banks: Some banks provide small loans
 % Incentives
• Government:
• NGOs: A few NGOs are involved in Aceh
• Importing countries
• Others: Some pre-harvesting financing from exporters
Are there any government incentives or programs to induce planted

area growth or quality improvements? Please describe
• The Indonesian Coffee Exporters Association has continued to

promote increasing arabica coffee to account for 20 percent of
the total production. Focus is on renovation rather than new areas

Coffee Crop Production Swot Analysis
Strengths Weaknesses
*Unique Arabica quality *Disorganized

*Established export market *Inconsistent
*Low population growth 1.07% *Un-ambitious
*Good rural infrastructure *Low productivity, small plots
Opportunities Threats
*Huge local market *Industrial growth

*Increasing middle class *Pressure on land
*Market demand *Competition for labor
*Tourism industry *Tourism industry

Trends for medium/long term (Up to 2020)
Planted area: 1.3 mln ha to 1.5 mln ha if prices remain

high
Technology level: To remain relatively low across Indonesia

• Replanting: 10% to 20%
• Fertilizers: 10% to 50% if prices remain high
• Pruning: 20% to 50%
• Agrochemicals: 10% to 20%
• Mechanization: None seen in development, not likely to
change
• Irrigation: None seen in development, not likely to
change
Beverage quality: Continuing to improve in bean quality and

variety
Domestic consumption: Continuing to grow at 3-4%





Trends for medium/long term (Up to 2020)
Domestic consumption: Continuing to grow at 3-7% a year for

next 5-10 years
 A very similar story to that of Brazil but with a considerable

larger consumption of 240 million people
 More than 25% are people below 25 years of age
 Consumption is likely to rise to between 4 million and 5

million bags by 2020 from about 3.5 million bags today.
• Coffee shops have increased by 5-10% a year since 2008


Country: Indonesia
GTECs and Gquality Coffee Integration Meeting
Poços de Caldas, Minas Gerais, Brazil
© By Maja Wallengren
Independent Analyst and Global Coffee Reporter

Main coffee growing regions
Indonesia’s coffee regions

Aceh
Sulawesi
Mandheling Borneo
Lampung
Java
Bali
Timor

Production Costs - Robusta
Item % of total cost

Labor
Fertilizers
Agrochemicals
Maintenance (pruning, replanting, etc)
Transportation
Electrical Power
Depreciation
Coffee processing
Other operations
Mechanization
Taxes
Others (..........)
Total Cost (U$ / bag or Ton)

Production Costs - Arabica
Item % of total cost

Labor
Fertilizers
Agrochemicals
Maintenance (pruning, replanting, etc)
Transportation
Electrical Power
Depreciation
Coffee processing
Other operations
Mechanization
Taxes
Others (..........)
Total Cost (U$ / bag or Ton)

Plant Protection Issues and Management
Technology Level
Number of applications/
Main Diseases Products used to control year
Number of applications/
Main Pests (Insects) Products used to control year

3c Indonesia - Maja Wallengren

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Country: Indonesia

GTECs and Gquality Coffee Integration Meeting

Poços de Caldas, Minas Gerais, Brazil

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(Describe the processes used)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(Describe the processes used)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(Describe the processes used)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

Crops Value Production Ha

Source: FAO, ICO

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

Indonesia’s coffee regions

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

Year Production Area Yield Domestic Consumption

1990 7 400 950,000 7.8 1.242

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(Describe the processes used)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

Planted Area Number of Total

0.5-1 2.0 mln 500,000 37%

1-5 1.6 mln 500,000 37%

5-10 200,000 200,000 15%

10-50 200,000 100,000 7.5%

100-2000 5-10 4-5000 3.5%

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(pictures that represent the regions and farm types)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

Coffee plantations age: 20 to 30 years

Main varieties: Canephora, typica, catimor

Pruning types and frequency: Stumping but no regular frequency

Fertilizers Dosage / ha / year

Farms don’t use mechanization Irrigation is not used in Indonesia

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(Describe the processes used)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(Describe the processes used)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(Describe the processes used)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

(Describe the processes used)

GTECs Café e Gquality Integration March 7 – 9, 2012 / Poços de Caldas - MG

Unique Arabica quality Disorganized

Huge local market Industrial growth