Selasa, 12 Oktober 2010
1/. Internal (Indonesian specific) Barriers- Indonesia is a country with a huge potential 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 market is very small. The cities mentioned have a combined population of close to perhaps 40 million inhabitants. However our target market is middle to upper-class Indonesians and expatriates- making up perhaps a market as small as 1.5 million potential consumers. Of this number those interested or those whose buying decisions are based solely on our efforts to trade fairly with our partners is probably as little as 10,000 people or less.
Fair trade, relationship coffee and organic 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 form of certified or direct relationship with growers (fair-trade, organic, shade-grown, bird-friendly etc). In the Indonesian cewek panggil hotel telanjang market understanding of relationship coffee and/or fair-trade is weak. This is for a number of reasons- lack of education and understanding of the coffee market is perhaps one major reason. However apathy towards the agricultural sectors of the economy is also a very important reason. Most cewek telanjang bugil Indonesians view the agricultural sector as being both remote and removed from their lives. The closest many modern Indonesians come to being in contact with farmers is buying produce in Supermarkets. Wet markets are these days mainly the domain of the modern Indonesians house staff, where produce is purchased. This separation means that an out of mind-out of sight attitude is taken to farming. This dislocation affects all sectors of the agricultural community but most directly effects sectors where fair trade pricing could be easily implemented- coffee, chocolate, tobacco etc. While there is a general acceptance that organic, chemical free product has a place in the Indonesian market, the bridge to a fair trade product is harder to cross. Organic coffee is perceived as being good for the consumer (drinker). Shade grown coffee is seen as being good for the environment. Fairly trade coffee is actually good for the drinker, environment and community... so really the focus should be on fair trade. Paying the farmers a decent return for their product results in-
- farmers staying on their land instead of migrating to the cities. In the cities their skill sets are not suited to urban living- thus they end up un/underemployed.
- Great coffee. A problem in Indonesia is a lot of the coffee harvested ends up as poorly graded stock. This is because farmers are paid not enough to cover the time they should put into crop maintenance. As a result coffee is picked green or let on the trees until over ripe. It is then dried in a haphazard fashion. This means the taste is poor. With decent returns this cycle can be broken. Great coffee= higher demand= better returns to the farmer.
- Economic and social stability. Farmers staying on the land means skills are put back into agricultural practices. Best practices means using natural means to maintain quality crop in harmony with the village. Natural sprays for pest control (such as tobacco) are used to minimize damage to the cherries. Decent returns means the village can build facilities and diversify economic systems (introduce other crops, livestock etc)
- Also maintaining coffee crops, especially in a water catchment area, can help to reduce flooding damage further down on the flat, alluvial plains. In many areas Coffee can be grown under primary or even secondary forest canopy.
The Indonesian domestic market also has a topsy turvy view of local product vs. imported product. A survey we undertook (1) amongst Indonesian customers showed that nearly 85% of Indonesians preferred "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 then re-export the finished product. When questioned what is important to them as buyers of coffee, "fair-trade" rated 9th out of 10th in regards to importance (10th and of least importance was type of package- tin, box or sachet). In fact when asked about buying "espresso blend" coffee, 90% of all respondents said they would only buy Espresso blended in Italy. A further 9% said they would consider buying "Espresso" blended/roasted in Australia, New Zealand, Japan or China. Less than 1% said they would consider buying/using "any Espresso blended/roasted" in Indonesia. When asked to elaborate on the decision, it came back almost entirely to the fact that "the Italians grow the best coffee"!!! To most respondents important was flavor, followed by aroma, packaging, design. In a country where the minimal wage in rural areas may be as low as 300,000idr a month, it is difficult for Indonesians to see that fairly trading coffee is indeed a means to an end. It offers opportunities that benefit everyone through a complex supply chain- including of course the Jakarta based buyer of a cappuccino in Starbucks or Merdeka Coffee.
2/. Eternal Factors:. Fair trade is a principle of great importance for the present and future of coffee in Indonesia. From very positive beginning, in recent years the certification systems have become quite complex, as well as expensive to obtain. Certification itself has become more of a business rather than a service being offered to the developing countries that need it most. Certification through Transfair and similar organizations in the USA and Europe can be very, if not prohibitively expensive for small growers and small cooperatives. Fair trade (as well as 'organic' and 'shade grown') is actually monitored in the large USA market via the FDA. Unless certification is obtained through a FDA approved agency, the words "fair-trade" etc can not be printed on the packaging. In theory this is great, it keeps scalpers out of the system. However in reality it can prevent a small roaster or US broker from setting up a direct trade system which indeed pays recognized fair-trade prices directly to a grower. In the 15 or so years since fair-trade was established, only 3 Indonesian growers have obtained certification. This is an amazingly low number considering Indonesia is the world's 4th biggest coffee producer. Conversely Costa Rica, the worlds 14th biggest producer, has 75 certified FTL (Fair-trade Label) producers! The reasons for this are that fair-trade is not ideally suited to small-hold or even small cooperative growing groups. The Indonesian certified growers (such as PKGO in Aceh and Gayo Mountain in Aceh) have over 10,000 growers. The number of growers needed to obtain leverage for certification means that coffee ends up being 'pooled' or sourced from large growing areas. Instead of allowing the specific characteristics of coffee grown in a very small growing area to shine through, the big coop system dilutes the real perfection of small-holder grown coffee. This is a flaw with the current approach to fair-trade, one which was designed perhaps to work best with the Finca, or estate growing systems in Central and South America.
While the demands for Arabica coffee grow year on year, the ability of roasters in countries such as the USA to reach growers directly in countries such as Indonesia remain limited. Many growers in Indonesia are located in remote mountain areas. Many do not have telephone access, let alone internet connectivity and/or the ability to communicate in English. As a result most coffee exporters are located in the big port cities- Jakarta, Surabaya, Medan and Semarang. These exporters are not growers but brokers and/or finishers and packagers of raw green bean product. Buyers by default will often go through the contacts that they have in these export cities, not realizing often that these contacts are only exporter/brokers. Ultimately the growers never have a direct interface with the buyers. Currently even if they did, they would struggle to meet the quality demands of many of the overseas roasters. Most Indonesian coffee growers are producing anywhere from 1000-8000kg a year- in a cooperative/village situation. One container of coffee is 18,000kg of coffee. The coffee must be dried to a minimal moisture content, finished (can include being polished) and of course be packed free of stones, sticks, faulty beans by a pre-agreed screen size into 60kg sacks. While growing and preliminary drying can be achieved at village level, the additional finishing can not- as machinery, technology etc is not available to many communities. If the remote villages did have a direct access to the market and if the machinery to finish and ultimately ship from the growing location 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 excellent returns from coffee- due to its rarity, quality and appeal to specialty roasters is Europe, America and Japan.
Overall the domestic market in Indonesia is driven by branding. Branding itself can be split into two segments- the international and the local 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 globally roast extremely high volumes of coffee. The volumes they deal in often makes direct procurement using certified fair-trade systems impractical. This is not to say these brands do not have their own internal fair/equitable trade systems, however the volumes in question means that often they can not have a direct purchasing system from small hold growers in place, and they need to operate purchasing through a number of local partners and brokers. Therefore it is fairly rare to see retailers in Jakarta selling and educating their clients about fair and equitable trade with brokers. Also as the roasting industry in Indonesia is still mainly focused on producing bulk for the lower end/instant market, there are few roasters who are seen as being educators such as those who are found in specialty markets such as the US and NZ. Ultimately the specialty market in Indonesia is still in its infancy, the move to drinkers buying coffee product based on social issues rather than 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 appealing to a different segment of the market. This segment is very price conscious, and perhaps less well educated, less well paid than those who frequent the international brands. The local segment here is large, growing, but very competitive and perhaps less brand loyal than that found in the Premium Branding segment. Here as mentioned in the first paragraph, there is little concern about the welfare of the farmer and the growing community. The consumers want to enjoy a coffee, cake, meal and socialize. The local café brands also produce locally sourced coffee, so in theory they would be in the best position to champion fair-trade. However the bulk of the coffee blends sold by local producers are Robusta rich, mirroring the taste requirements of the local client base (mainly based on the finely ground Robusta kopi tobruk found in most Indonesian kitchens!). Robusta is still the main coffee type produced in Indonesia, and it certainly is an area where fair-trade struggles to make any impact. The historically flat prices for Robusta, combined with the lack of interest in the coffee from the more political active specialty coffee sector, means that Robusta remains a low price commodity, rather than a product that has value added by roasters skill. The squeeze on pricing for the local café chains, as well as Robusta's role in the equation, means that any concept of fair-trade would struggle in the local sector of the café market in Indonesia.
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