Analysis of the coffee market and supply chain in Indonesia

Serikat Paguyuban Petani Qaryah Thayyibah (SPPQT) is an Indonesian cooperative established in 1999 with the aim to improve the situation of the farmers in Central Java. SSPQT currently represents approximately 18,000 members.

Coffee production is an important source of income for many farmers in this region. Over 8,000 farmers from 13 districts in Central Java supply approximately 4 tons of coffee annually. However, the coffee producers sell their coffee to middlemen who define the (relatively low) coffee price. Farmers are not capacitated to access the market directly and perceive a power misbalance. In addition, they do not add value to their coffee. No sorting or grading is done and knowledge of the market and consumer demands is lacking.

SPPQT does currently not play an active role in supporting its coffee farmer members and in collective marketing. It lacks up to date knowledge on the coffee value chain its members are part of. They would like to explore the possibilities for a viable business plan for collective marketing, meeting the demand of the consumers and for improving the livelihoods of the farmers by providing them with more expertise, skills and, therefore, power.

With ESFIM a clear understanding of the coffee value chain a profound value chain analysis has been generated, incorporating the current position of the farmers, the consumer demands and the potential role of SPPQT in supporting its members and in defining a strategy to improve the livelihoods of the coffee producers in the region.

Main outcomes

It is learnt that there are still plenty of coffee smallholders who do not have adequate knowledge on post-harvest handling including processing their coffee product to add its value, as the result the price they get is much lower compared to the price at potential buyer level. Therefore, the role of cooperative is really essential in helping coffee smallholders to improve their income by facilitating training programs to improve the product quality as well as connecting farmers to the potential markets.

Furthermore, the results of this research have given a clear description about a series of characteristics of the coffee business actors starting from the farmers to the final consumers. All of this information has helped us to consider what steps we should take in order to be able to improve the welfare of our farmers as well as the coffee business atmosphere.