Each of the cooperatives, located in 17 provinces, will combine individual farmers’ holdings to form at least 100 hectares of managed land. The government will begin the pilot project this year in partnership with nongovernmental organization Sustainable Coffee Platform of Indonesia (SCOPI).

The two entities are still in talks to develop a plan and to find a location for the program to be launched.

“Our problem stems from the limited land owned by individual farmers, which makes it difficult for them to improve their production,” said Cooperatives and Small and Medium Enterprises Minister Teten Masduki during a public discussion in Jakarta on Jan. 30.

Statistics Indonesia (BPS) data shows that out of the 1.2 million ha of coffee plantations in the country, about 90 percent are owned by smallholder farmers.

Robusta coffee plantations account for about 70 percent and the remaining 30 percent are Arabica coffee plantations.

Indonesia’s coffee production is estimated to have increased slightly to 729,000 tons last year from 722,000 tons in 2018, according to ministries data compiled by the Cooperatives and Small and Medium Enterprises Ministry. The figure made the country the fourth-largest coffee producer in the world after Brazil, Vietnam and Colombia.

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“The cooperatives will provide the seeds and control the planting process so the farmers can increase their productivity.”

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The government is hoping to increase the country’s coffee production to 1 million tons in 2024, Teten said.

“Farmers should focus only on planting,” he said. “The cooperatives will provide the seeds and control the planting process so the farmers can increase their productivity.”

The cooperatives will also handle the bean-processing facilities and enhance farmers’ access to financing, according to the government.

“Farmers need cooperatives to access loans for their daily needs,” said Ayi Sutedja, a coffee farmer who serves as an adviser to three cooperatives in Bandung, West Java.

Coffee farmers could benefit from the government’s subsidized microcredit program (KUR) loans to micro, small and medium enterprises (MSMEs), said Riza Damanik, a specialized staff member of the cooperatives and small and medium enterprises minister.

As part of an effort to increase the disbursement of KUR loans to the productive sector, the government has lowered the KUR annual interest rate from 7 percent to 6 percent this year, the lowest since 2008. The interest rate is almost a half of those of conventional loans offered by commercial banks.

Last year, about 48 percent of total KUR spending was channeled to businesses in the trade sector. Twenty-six percent was allocated to the agricultural, forestry and hunting sectors, 16 percent to the services sector, 8 percent to manufacturing, 2 percent to fisheries and 0.2 percent to construction.

“Indonesian coffee farmers face issues like difficult access to financing, limited access to the market and a lack of knowledge about good agricultural practices,” said SCOPI chairman Irvan Helmi.

About 96 percent of Indonesia’s coffee production comes from low-productivity land owned by small-scale farmers, he said. He added that such plantations could only produce 700 kilograms of beans per hectare due to farmers’ lack of awareness about good agricultural practices.

“So now, the biggest challenge to improve productivity lies with the upstream sector [the farmers],” he said. (dfr)

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