Indonesia

Beyond wet-hulled Sumatra


SCA Score

81.5 - 88.0


Farmers

5


Price (USD/kg)

$5.56 USD - $12.60 USD

Main coffee-growing regions: Sumatra (Arabica in the North at North Sumatra and Aceh provinces, and Robusta in the South), Sulawesi, Central Java, West Java, Bali, Flores 
Average farm size: 1 to 1.5 hectares
Number of coffee farms: 452,000 Arabica and 1,1 million Robusta 
Altitude: 900 m to 1,800 m
Yearly production: Around 11 million bags/season (10.63 million expected for 2021-2022)
Yield: Less than 800 kg/ha on average
Arabica/Robusta split: 25/75
Bag size: 60kg
Arabica varieties: Typica, Tim Tim or Timor Hybrid, Kartika (a type of Catuaí), S-795 (Kent + Liberica), Ateng and its variations, Sigarar Utang, P88 and Andungsari (Catimors)
Grading: Grade 1 to 5 according to defect count (to less than 5 to 150 per 300g sample)
Main processing method: Wet-hulled and fully washed
Main ports: Panjang in Lampung, Belawan near Medan in North Sumatra, Tanjung Emas in Semarang, Makassar in South Sulawesi

A revolution from cup to bean
Indonesian millennials and zoomers love coffee. The archipelago’s growth in production, twice as big as it was a decade ago and rising at a higher pace than other countries, is being absorbed by booming internal consumption. The number of coffee shops tripled from 2016 to 2019. The country’s coffee retail market is expected to keep growing faster than any in Europe and is flooded with cash. Google and you’ll find that, in 2019, rapper Jay-Z and tennis player Serena Williams invested millions of dollars in an Indonesian coffee chain. All this is having an impact on production. These very millennials and zoomers are bringing their passion from the coffee shop to their families’ farms and changing how coffee is produced and processed in the country. 

The archipelago of Indonesia has over 17,000 islands where a vast array of cultures coexist and languages are spoken. A complex supply chain is undermined by poor infrastructure, extension services and access to credit. Despite the growth in production and exports, coffee still lags behind palm oil and tobacco, two crops that end up getting more government support. More than 90% of the country’s coffee producers are smallholders with around 1 hectare of coffee or less mixed with a bunch of other crops like rice, cocoa, fruits, pepper and tobacco. For most, coffee is just another subsistence produce.  

The wet-hulled effect
Farmers also contend against heavy rains and wind at the fruit development stage, which makes them fall to the ground and compromises yields. The output is also low due to ageing plantations in need of renovation, lack of inputs and poor farming practices. The traditional processing method, known as wet-hulling or giling basah, can result in a large number of defects and has developed a bad reputation among high-end buyers. 

Wet hulled coffee, however, has had a safe place in the selection of traditional and commercial roasters that need a variety of origins. According to Troy Kiper of Bright Java Coffee, Algrano’s partner in Central Java, demand for wet-hulled is such that it drives internal prices high regardless of quality and adds a premium to commodity coffee. “The big exporters travel around the region of Lake Toba to collect wet parchment or gabah. Other islands, like Flores and Bali, never had a market. What used to happen – and still does – is that these buyers travel further when they need to fulfil big orders. They buy everything and sell as Sumatra”, Troy explains.

Read more here.

Youth to the rescue
Despite its internal challenges, young Indonesians and small businesses are driving the country’s efforts towards quality. There is a lot of potential to add value to Indonesian coffee to make it a more attractive crop. And during Covid lockdowns, more young people returned to their family homes and started engaging in farming, which can accelerate that trend. 

Currently, there is little diversification with nearly 70% of all coffee being produced in Sumatra. Few farms are organised under co-operatives or groups and only 7% of all production is certified. However, most coffee is grown in agroforestry systems and with little use of chemical inputs, farmers already receive around 80% of the exported value and their yields can be doubled, leading to a substantial increase in earnings. 

Indonesia is also seeing a shift in buying countries from Europe to emerging nearby markets such as Malaysia and Thailand and big regional economies like Egypt and Russia, where demand is growing stronger and specialty is on the rise. A fully liberalized country, Indonesia is setting itself up for direct trade thanks to local businesses. They are the ones driving new processing methods and better quality. They are the ones Algrano is supporting.

Sources: Bright Java, An Analysis of the Global Value Chain for Indonesian Coffee Exports, Global Coffee Report magazine, The Jakarta Post, USDA, Sustainable Coffee Challenge, Global Coffee Platform

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