Developing sustainable cocoa

By Fitrian Ardiansyah, COKELAT magazine, 12th Edition, January – May 2016, pp. 44-46. For the complete pdf version of the magazine (4MB), please click: post-LKipG-majalah-cokelat-2016-08-05-10-54-45-ID


IN recent years, the cocoa sector in the world and also in Indonesia, has been working to be transformed into a more sustainable, environmental, and socially friendly while continuing to improve productivity. The biggest challenge in building a more sustainable cocoa sector is developing business models at the farmer level, which does not only focus on improving productivity, but also encourage an entrepreneurial farmer and cooperative management as well include elements of environmental protection.

With cocoa production level at more less 350,000 tons per year (2014/2015), Indonesia currently ranks third in the world. Cocoa is one of the most important export commodity for Indonesia. Commodities are also important to the rural communities because the majority of the production of cocoa is produced by small-scale farmers. Currently, Indonesia has at least 1.5 million hectares of cocoa plantation, especially in Sulawesi, North Sumatra, West Java, Papua, and East Kalimantan. With so many cocoa production produced by small-scale farmers, cocoa sustainability aspect can not be achieved without the involvement of them.

In order to ensure success in establishing a sustainable cocoa sector, there should be additional efforts to encourage the option in developing sustainable livelihood for the communities where the cocoa farmers live, and to help farmers in increasing entrepreneurial capacity. Without the innovations that help the capacity of farmers (especially in the context of increased productivity, better land management, and funding for farmers organizations or cooperatives) it will be difficult to ensure the sustainability of the cocoa sector.

In addition, due to the situation of export markets today which has been increasingly asking for a commodity to be produced with more attention to environmental and social protection, the development of sustainable cocoa in Indonesia should include aspects of local community development, women empowerment, poverty and malnutrition alleviation, and land management that does not cause fires, environmental degradation, and deforestation. In the realization of a sustainable cocoa sector, the development of a model or proof-of-concepts initiated jointly by industries, nonprofit organizations, farmers, and government institutions becomes important. Due to the model is expected to be replicated or developed on a broader scale to ensure coverage for the cocoa sector sustainable concept adopted by many parties.

Innovations in the land productivity improvement and farmers financing

Compared to other commodities, one of the challenges to achieve sustainable cocoa sector is low productivity of the cocoa crops, particularly production of farmers with unit of per hectare. Due to this, a large number of cocoa farmers trapped in a cycle of poverty that causes them to be significantly indebted continuous and heavily. Low input which then produces a low output (quantity and quality), chronically detain the growth of cocoa commodity. The scheme to help farmers in the provision of better inputs, still do not have the same standards.

Meanwhile, funding for the farmers in managing land better is often not available on the grounds because the bank institutions are still assuming that it is a high risk to assist farmers in managing their cocoa farming, so farmers still depend on informal donors with only provide limited funds and in a short time, and of course, with high interest rates. This condition is exacerbated later by the aging plants, and unclear form of funding scheme for rejuvenation and rehabilitation.

Even so, there are actually several initiatives that have been developed in several places to overcome the cycle of low input-low output. For example, the support of a company that acts as a partner for farmers who could then guarantee a low price in the purchase of fertilizers that help farmers to ensure the availability input of fertilization. The development of certification and traceability (tracking in the supply chain) also helps to strengthen the relationship between companies/buyers and farmers, and it can help in identifying the components at the farm level that needs to be strengthened, including in terms of agricultural input. Funding schemes and risk sharing in the provision of fertilizers and truck rental, can also be supported as an innovation that will help input certainty. In addition, the electronic banking systems (mobile banking) also continues to conceive as an innovation that will put farmers as actors who can be trusted to get help in the supply of inputs.

In reaching a broader scale of the innovations that have been made, the cooperation between the various stakeholders (local authorities, local banks, and international parties) becomes important. This cooperation is required mainly to generate various funding schemes with medium or long term that encourage the availability of funding support in the provision of inputs to farmers, land ownership or land rental, and financing of other operations. In succeeding this approach, the formation and the effective organization of farmers and cooperatives is crucial. In the absence of effective former organizations or cooperatives, it will be difficult for banks to approve funding due to a risk to the financing scheme is higher if distributed to individual farmers.

In order to help farmers and their organizations, or cooperatives, to be more bankable, mentoring and empowerment as well as efforts to increase their capacity are necessity. Farmers and their organizations are expected to be introduced with the modules that will help them to manage their finances more efficient and reliably. Obviously, this can only be achieved if there are advocacy organizations at the local level, in cooperation with local banks or financial institutions, which is experienced in financial management in the region or village. Such cooperation can foster trust between the institutions and farmers can ask for facilitation and improve themselves and the institution. In turn, when farmers and their organizations can better manage their finances, farmers’ bargaining position with the banks become bigger and stronger.

Innovations in the protection and fulfillment of social rights

One aspect that is important in the development of sustainable cocoa sector is social protection or the fulfillment of the rights of society. For Indonesia, the components that need to be considered among them is the empowerment of women, improved nutrition, and public access to activities in the supply chain that have been done mostly by the industries. The context of women empowerment is strategic because cocoa farming is perceived as a sector dominated by men. This has hampered women’s access to land and resource use associated with the cultivation of land, and of course funding. Therefore, various innovations needed to provide an opportunity for women to be involved. For example, in the training provided, the portion of women’s involvement will be increased, or the percentage of agricultural credit for women farmers. Or other things that can be tried to increase the capacity of women is to engage them in entrepreneurial endeavors in cocoa sector, to become a leader in the farmers organization and cooperatives.

In the context of malnutrition, there are some breakthroughs that need to be done. Cases of child malnutrition, physical growth interferences, and poor sanitation can be overcome by combining the productivity of farmers’ program with an increased intake of nutrition for families and children. One model that could be applied is to introduce the cultivation of plants that are useful for the improvement of nutrition, nutrition education, and changes in dietary components for farmers, and better family financial. Better family financial management certainly will help farmers to set aside some funds to meet nutrient intake for the family.

Innovations in better land management and prevention of deforestation

Although it is not like any other commodity that is more expansive, preventive aspects of environmental degradation, including the prevention of deforestation in the cocoa sector has become an integral part of market request. Prevention of environmental degradation and deforestation involving various parties and interests, especially in the management of space and land, which is quite complex. Most of the challenge is also associated with good or poor governance where the cocoa is developed.

In other place, cocoa could also be considered as a buffer, which in turn can protect the forest for looted or converted into other commodities. However, the development of cocoa in the buffer zone should be productive and add value to cocoa farmers to keep them from extending coverage into forest or replace cocoa plants into other plants that are more expansive.

Development of a model that balances between increasing productivity while protecting the forest (production-protection) is relevant to the condition of Indonesia that still has beautiful natural forest. Productive cocoa farmers who care to environment, in turn, can be a very effective forest guards. If the model production-protection developed with other concepts, a kind of agroforestry, it could be interesting for non-conventional investors. Such investors can provide funding for their carbon uptake or protection of biodiversity, or value-added. It could be categorized as an additional income for farmers.

This kind of model can be effectively developed when planned at a landscape scale, which would require the involvement of local governments. The involvement of stakeholders from other commodities also become important for better objectives of landscape management should be supported by all business actors, farmers, and governments. The landscape approach can also provide economic stability to the region because it does not only depend on a single commodity, as well multi-commodity development synergies can be achieved.

Balance in sustainability

In the development of sustainable cocoa sector, it is clear that the aspect of increasing productivity along with social and environmental protection should be encouraged in a balanced manner. The involvement of relevant stakeholders is also important because it can help ensure the realization of a sustainable cocoa in the field. Partnership in developing the model needs to be improved further in a higher or larger scale, such as at the landscape level. Indonesia, as the third largest cocoa producer country in the world, has the opportunity to transform the cocoa sector, which of course can only be done if the innovations and models mentioned above can be developed and implemented in the most important centers of cocoa across the country.



The writer is Indonesia Country Director at IDH-The Sustainable Trade Initiative. Email: