Summary of SDSP cacoa reports 2015-2019

door Henk Krijnen

1. Introduction

In 2015 – 2019, SDSP has commissioned several visits to the Indonesian provinces of Papua and Papua Barat with the aim to explore the possibilities for improving cacao production and export. These visits were conducted by groups of students from the University of Amsterdam (SEFA – International Development Project) as well as by individual SDSP volunteers. Although none of the people involved were experts in cacoa, useful information was gathered in the form of reports and personal notes. This short document summarizes the insights obtained, without pretending the completeness or rigor that might be expected from a professional cacoa consultancy.

Nevertheless, SDSP intends to build on these exploratory visits by initiating small scale cacoa exports to the Netherlands and Belgium and by assisting with improving cacoa production in the area, where possible certified and organic.

This update summarizes the facts and insights obtained from the visits but does not include specific recommendations or an action plan for future projects or initiatives. For more detail reference is made to the reports.

2. Regions with cacoa production

In Papua Barat the larger regions with cacoa production include Manokwari, Sorong and Raja Ampat, with minor production near Fakfak, Kaimana, Wondama and Teluk Bentuni. In the province of Papua there are several cacoa regions near Jayapura: Genyem, Aimbe, Keerom and Sarmi. SDSP representatives visited both the Manokwari and Jayapura areas and developed a network in the cacoa sector; in Sorong no connections in the cacoa sector have been established to date.

In most areas cacoa production takes place on the basis of the smallholder farmers model. The exception is Ransiki, a little south of Manokwari. Near this village (7000 inhabitants) a plantation exists with a long and at times a troublesome history. Since 2017 the remnants of the plantation are run by a cooperative of local farmers, called Koperasi Ebier Suth Cokran, who stepped in after the plantation had been unoperated for more than a decade. Only some 200 hectares of rehabilitated cacoa acreage are currently being utilized whilst in better years the plantation covered over 1600 hectares. However, the plantation has good fermentation and drying facilities.

Recent reliable production figures are not available, but this is presumably in the order of fifty tons per year. The quality of the beans is high in principle. In the last few years deliveries have been made to Cargill, but recently a company named Dejan has presented itself as a potentially significant client, aiming to import regular cargos into the UK.

Apart from the Ransiki plantation there are other areas in the vicinity of Manokwari with historic cacoa production, both by native Papuans and by migrants. Pests have reduced the interest in cacoa, however.

In the Jayapura/Sentani region the smallholder farmer model is used exclusively. An individual farmer may have 1 to 2 hectares available for cacoa, sometimes in addition to other trees or crops. Farmers live together in villages, several dozen per village. Each village has a small nursery for cacoa seedlings. Farmers work in loose groups. In the village of Aimbe a cooperation has been established (PATO), but it is not very active at the moment. Other villages visited (in 2019) were: Klaisu, Sebeab and Yakutim. The farmers sell their beans to middlemen or NGOs. Hardly any fermentation takes place; most production is sold to the bulk market. Fermentation facilities are small scale and not well developed.

Several NGOs are active in the region with the aim to assist farmers in their development: WWF, Asia Foundation, IDH, UKCCU Climate Change, Ford Foundation and others. Kusnan Arief is a Jayapura based cacoa trader with substantial reach into various cacoa village communities, also having a role in developing and promoting new varieties. A variety typical for the region is Kerafat (also called Choklat Belanda), being planted and harvested in villages such as Aimbe, Klaisu and Sebeab. Other villages may be experimenting with new hybrids (clonals), testing resistance against pests. Total production in the Jayapura region is in the order of 1800 tons annually (in 2018). Companies that have been active to a lesser or greater degree include OLAM, ECOM, Mars and Cargill.

3. Issues

The revenues the farmers receive clearly depend on the global cacoa price levels, which fluctuate. Individual farmers are thus exposed to variations in income that are outside of their control but also of their comprehension. Moreover, in the first half of the previous decade the average price was quite a bit higher than in the second half, with a steep dip in H2 of 2016. This has demotivated the farmers.

Like elsewhere, cacoa harvests in the Papua provinces have increasingly been affected by pests, specifically CPB and black pod. This has resulted in farmers not maintaining their gardens or transitioning to other types of crop. Also, some farmer communities have turned to the use of pesticides, although the natural attitude of Papuan farmers is to stay away from that practice.

A problem has been the use of inappropriate and ineffective fertilization.

The smallholder model has the advantage in principle that the farmer can sell his/her beans to the highest bidding trader and supposedly take a share in the upside rent in a bullish market. In reality, the farmer’s market power is often limited. In addition, the implied independence of the farmer in this model also means that access to training and advice is absent apart from some support that may be offered by NGOs and authorities.

The smallholder model also complicates and disincentivizes investment in rejuvenating the cacoa production.

Some villages may have access to reasonable roads, but others have not. Transportation to collection centers and harbors thus represents challenges. New Guinea is a remote island. Transportation costs of cargos to relevant hubs in the archipelago (e.g. Surabaya, Jakarta) are high. As indicated, the Ransiki plantation has suffered from mismanagement when it was run by a private company up to 2006. Even though the current cooperation (as from 2017) is making a commendable endeavor to get things back on track, support for improved managerial capabilities and agricultural practices would be welcome.

Although the traditional cultural traits of Papuan communities have served them well in their historic habitats, in a world of business and entrepreneurship they are less effective. Aspects such as long- term planning, making investments, performing maintenance in a disciplined fashion and a continuous improvement mindset deserve more attention on the journey to become successful cacoa farmers.

As a result of the above issues (but mainly ageing trees and pests), production levels have fallen considerably in the last decade (for example, in the Jayapura region from 9400 to 1800 tons).

This has also been the case for other parts of Indonesia, the third largest global cacoa producer.

In addition, the provinces have suffered from social unrest in 2019 and get their share in the covid-19 troubles like the rest of the world.

4. Opportunities

Although there are initiatives ongoing by the authorities and NGOs, there are plenty of opportunities to improve the knowledge and skills of the farmers by taking a longer-term view in respect of training and guidance. This needs to be related to the way farmers are organized. Perhaps certain forms of contract farming could be considered, as a model in between completely independent smallholder farming on the one hand and a ‘plantation with labor’ approach at the other end of the spectrum.

The guidance and training may be provided by educated local instructors who in turn could be supported by external experts. Given the remoteness of the areas, it may be of interest to also experiment with (simple) technological solutions for coaching the farmers by using mobile phones. The connection between external experts and the local instructors can be maintained using video conferencing.

An approach that could potentially address multiple issues at the same time is a stronger emphasis on agroforestry. Cacoa trees need shadow trees anyway. This can be accomplished by placing cacoa trees in an agroforestry setting, together with a range of other trees and crops. As the cacoa trees are further apart, they will be less susceptible to pests. In addition, other productive trees will yield more revenues for the farmer, thus reducing exposure to fluctuating cacoa prices.

Training and education should expand beyond agricultural techniques. Individual Papuan farmers can also enhance their entrepreneurial skills through learning by doing, provided they are also guided in this respect. Almost all cacoa from the Papua provinces is destined for the bulk market. Yet the conditions are such that, according to experts, high quality cacoa beans can be produced. It would therefore be an interesting prospect to put more emphasis on fermentation and partly aim for the fine flavor market. It is worth noting that 90% of the cacoa production from neighboring Papua New Guinea finds its way to high end chocolate products. As beans that reach the fine flavor market command higher market prices, some compensation could be gained in this way for the higher logistics costs.

As Papuan farmers have a natural tendency to abstain from the use of pesticides, it would not be a great effort to convince them to focus on organic practices, provided alternative approaches to battle the pests are indeed effective (e.g. agroforestry). This could align well with the increased demand for organically grown produce in the Western world as well as elsewhere. Although there are good reasons to strive towards the use of existing (or newly established) cacoa processing and chocolate manufacturing facilities locally or regionally (this has been a strong focus area of the Indonesian government in recent years) , there is merit in including the option for limited exports of high-quality beans to other countries. From the perspective of SDSP this would in first instance be the Netherlands (and Belgium). Such a trading relationship could form a conduit for wider and longer-term collaboration, including initiatives that could target improved cacoa growing practices, a broader implementation of agroforestry
concepts, and a further development of sound management approaches.

It could be attractive to establish a high-quality Papua chocolate brand in the Netherlands and Belgium, and possibly expanding to other countries in Europe. This could enhance the visibility of the Papua provinces for the general public, also because of the somewhat ‘exotic’ image that the brand will likely carry. Such an initiative would be well aligned with the increasing popularity of the bean-to-bar concept, as well as with the higher demand for organic produce and fine flavor chocolate.

As the quantities that will be exported will remain limited, there may be options to implement some form of origin tracing that will allow ‘connecting’ the chocolate consumer with the region where the cacoa was produced using internet related techniques. This could enhance the value
of the brand.

5. Conclusion

As a result of the insights obtained from the various visits as summarized above, SDSP sees a potential role in assisting the further development of (certain parts of) the cacoa sector in West Papua in a sustainable way, benefitting the local population. SDSP’s network in the Netherlands, in West Papua as well as internationally can be instrumental to this effect. At the same time SDSP always views such activities in a broader context, making the connection to linked development areas such as agroforestry and other crops, eco tourism, education and health care.



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