Sustainable cocoa production in Indonesia

The situation ten years ago was quite promising: Indonesia was one of the world’s largest cocoa producers. At the same time, cocoa prices were rising on the global market. However, Indonesia was unable to exploit this potential to the fullest. The reasons for this included old trees, infestations, and inadequate farming methods. The core problem was farmers’ lack of knowledge about good agricultural practices.

This problem was addressed as part of Swisscontact’s Sustainable Cocoa Production Project (SCPP). A public-private coalition was commissioned with training the farmers. Private companies* partnered with development organisations to conduct the required trainings. Additionally, they developed a traceability system. The objective of both these initiatives was to increase productivity in the cocoa sector and facilitate farmer access to export markets for cocoa beans with a sustainability certification. However, these efforts were modest, sparse, and uncoordinated; thus, they could not create any visible structural change in the sector.

The collapse in global cocoa prices forced cocoa buyers to consolidate their supply chains, instead of expanding them. The desire to include more farmers in the supply chain was no longer feasible; the cocoa buyers were forced to focus on fewer farmers who were willing and able to provide better product, and help these farmers to become more efficient. Thus, the cocoa buyers needed to consolidate their investments in traders and farmers who had the best prospects for delivering the required cocoa reliably.

This required another, differentiated work method. Cocoa buyers needed to better understand and segment their farmers, increasing the trainings provided to select farmers and helping them to implement a more commercially viable and resilient cocoa farming in order to survive in the sector. To achieve this, the cocoa buyers were given support to work more closely with the farmers. Innovations in farmer trainings, traceability, and certification made this possible. The cocoa companies integrated the new services in their core business activities.

From that point on, investing in training cocoa farmers became part and parcel of the companies’ core business strategy. Stakeholders in the cocoa sector developed their own training programmes based on the project. Additionally, traceability services were no longer limited to the cocoa sector, but were now being offered commercially to clients in the palm oil, coffee, coconut, and rubber sectors – and this in at least 15 countries.

It has helped Indonesia to establish itself as a sustainable cocoa growing region. Around 15 percent of Indonesian cocoa farmers were trained in the project. Their average productivity increased by 50%, and 60% of them became members of certified and traceable cocoa value chains. Today the sector is many times more resilient than it was ten years ago.