Fair-trade, Fair and Equitable Trade and Relationship Coffee in Indonesia- a Merdeka Coffee view:
1/. Internal (Indonesian specific) Barriers- Indonesia is a nation with a huge possible internal consumer base. However at this stage the consumers we target are based in Jakarta, Medan, Surabaya, Yogyakarta, Bali and Bandung. Outside of these cities, the marketplace is extremely small. The cities pointed out have a combined population of near perhaps 40 million inhabitants. Our target market is middle to upper-class Indonesians and expatriates- making up maybe a market as small as 1.5 million potential customers. Of this number those interested or those whose purchasing choices are based solely on our efforts to trade relatively with our partners is probably as low as 10,000 individuals or less.
Fair trade, relationship coffee and natural partnerships play an important part in the retail coffee market overseas. As much as 38% of the coffee market in the USA is engaged in some type of certified or direct relationship with growers (fair-trade, organic, shade-grown, bird-friendly etc). In the Indonesian market understanding of relationship coffee and/or fair-trade is weak.
- farmers remaining on their land instead of moving to the cities. In the cities their capability are not fit to city living- hence they end up un/underemployed.
- Great coffee. A problem in Indonesia is a great deal of the coffee collected ends up as poorly graded stock. This is due to the fact that farmers are paid not enough to cover the time they must take into crop Kode diskon maintenance. As a result coffee is chosen green or let on the trees till over ripe. It is then dried in a haphazard fashion. This means the taste is bad. With decent returns this cycle can be broken. Fantastic coffee= higher need= much better go back to the farmer.
Best practices indicates using natural means to keep quality crop in harmony with the village. Good returns indicates the village can construct centers and diversify economic systems (present other crops, animals etc).
- Also maintaining coffee crops, especially in a water catchment location, can assist to decrease flooding damage further down on the flat, alluvial plains. In lots of locations Coffee can be grown under primary or perhaps secondary forest canopy.
The Indonesian domestic market likewise has a topsy turvy view of regional product vs. imported product. A survey we carried out (1) amongst Indonesian clients showed that almost 85% of Indonesians chosen "coffee grown in Italy" to "coffee grown in Indonesia". Italy grows no coffee. They import green coffee from producing countries such as Indonesia, India, Vietnam etc, roast and after that re-export the completed item. When questioned what is very important to them as buyers of coffee, "fair-trade" rated 9th out of 10th in concerns to significance (10th and of least significance was kind of bundle- tin, box or sachet). In reality when asked about buying "espresso mix" coffee, 90% of all respondents said they would only purchase Espresso mixed in Italy. An additional 9% stated they would consider buying "Espresso" blended/roasted in Australia, New Zealand, Japan or China. Less than 1% said they would think about buying/using "any Espresso blended/roasted" in Indonesia. When asked to elaborate on the decision, it came back nearly completely to the truth that "the Italians grow the very best coffee"!!! To most respondents essential was flavor, followed by scent, packaging, style. In a nation where the minimal wage in backwoods might be as low as 300,000 idr a month, it is challenging for Indonesians to see that fairly trading coffee is undoubtedly a way to an end. It provides chances that benefit everybody through a complicated supply chain- including obviously the Jakarta based purchaser of a cappuccino in Starbucks or Merdeka Coffee.
Fair trade is a principle of fantastic importance for the present and future of coffee in Indonesia. The number of growers needed to get utilize for accreditation indicates that coffee ends up being 'pooled' or sourced from large growing locations. Rather of allowing the specific qualities of coffee grown in a very small growing location to shine through, the huge cage system dilutes the real excellence of small-holder grown coffee.
While the demands for Arabica coffee grow year on year, the capability of roasters in nations such as the USA to reach growers straight in nations such as Indonesia remain restricted. Numerous growers in Indonesia lie in remote mountain areas. Numerous do not have telephone access, not to mention internet connectivity and/or the capability to interact in English. As an outcome most coffee exporters lie in the big port cities- Jakarta, Surabaya, Medan and Semarang. These exporters are not growers however brokers and/or finishers and packagers of raw green bean item. Buyers by default will often go through the contacts that they have in these export cities, not recognizing typically that these contacts are only exporter/brokers. Ultimately the growers never ever have a direct user interface with the purchasers. Currently even if they did, they would have a hard time to fulfill the quality demands of a lot of the overseas roasters. The majority of Indonesian coffee growers are producing anywhere from 1000-8000kg a year- in a cooperative/village scenario. One container of coffee is 18,000 kg of coffee. The coffee should be dried to a very little moisture material, completed (can consist of being polished) and obviously be loaded devoid of stones, sticks, defective beans by a pre-agreed screen size into 60kg sacks. While growing and initial drying can be attained at village level, the additional completing can not- as equipment, technology etc is not offered to lots of communities. If the remote towns did have a direct access to the marketplace and if the machinery to end up and ultimately ship from the growing area was available, then a direct for of fair-trade would for sure be more than a possibility. There are cases in Central America where small-holders can make outstanding returns from coffee- due to its rarity, quality and interest specialty roasters is Europe, America and Japan.
Summary:.
In general the domestic market in Indonesia is driven by branding. Branding itself can be split into 2 sectors- the global and the regional brand names. Premium branding is seen as being the foreign coffee labels and cafes (Illy, Maxwell House and Lavazza for coffee and Starbucks, Coffee Bean and Tea Leaf etc for cafes). These big brand operators worldwide roast very high volumes of coffee. The volumes they deal in typically makes direct procurement utilizing certified fair-trade systems not practical. This is not to state these brand names do not have their own internal fair/equitable trade systems, however the volumes in concern implies that typically they can not have a direct getting system from small hold growers in location, and they require to run purchasing through a number of regional partners and brokers. It is fairly rare to see merchants in Jakarta selling and educating their customers about fair and equitable trade with brokers. As the roasting market in Indonesia is still primarily focused on producing bulk for the lower end/instant market, there are couple of roasters who are seen as being educators such as those who are found in specialized markets such as the US and NZ. Eventually the specialty market in Indonesia is still in its infancy, the transfer to drinkers purchasing coffee product based on social problems instead of brand awareness is perhaps still at least 4-5 years away, if not longer!
Local Brand operators such as Excelso, Regal, Kopi Luwak, Brew and Co etc are interesting a different sector of the marketplace. This sector is really price mindful, and perhaps less well educated, less well paid than those who regular the worldwide brands. The local segment here is large, growing, however very competitive and maybe less brand faithful than that discovered in the Premium Branding sector. Here as pointed out in the first paragraph, there is little concern about the welfare of the farmer and the growing community. The consumers want to delight in a coffee, cake, meal and mingle. The local café brand names likewise produce in your area sourced coffee, so in theory they would remain in the best position to champion fair-trade. However the bulk of the coffee mixes offered by regional manufacturers are Robusta abundant, matching the taste requirements of the regional customer base (mainly based on the finely ground Robusta kopi tobruk found in many Indonesian cooking areas!). Robusta is still the main coffee type produced in Indonesia, and it certainly is a location where fair-trade struggles to make any effect. The historically flat prices for Robusta, integrated with the absence of interest in the coffee from the more political active specialty coffee sector, implies that Robusta stays a low rate product, instead of a product that has value included by roasters skill. The squeeze on rates for the regional café chains, along with Robusta's role in the formula, indicates that any concept of fair-trade would struggle in the local sector of the café market in Indonesia.