INDONESIA – MAMA Cooperative advances the welfare of smallholder cocoa farmers

The Amanah Farmer Organization and the Mitra Agribisnis Mandiri Amanah (MAMA) Cooperative, as a forum for cocoa producers in Polewali Mandar Regency, West Sulawesi, are actively innovating for farmer welfare. This innovation program is supported by the Aliansi Petani Indonesia (API) (Indonesian Peasants Alliance) with support from the APFP-FO4A program. Total cocoa production in West Sulawesi is 119,408 tons per year; the market potential for premium fermented cocoa throughout Indonesia is 516,814 tons per year; the total demand for fermented cocoa that has been supplied is 344,542 tons per year. There is still a market share potential that can be targeted by the MAMA cooperative of 172,271 tons per year. Indonesia is expected to be able to take advantage of market opportunities that are still quite open in the future. Based on the trend of export market needs, Indonesia’s cocoa export opportunities in the 2022-2026 period are around 300,000 to 400,000 tons per year.

Cocoa (Theobroma cacao L.) is one of the commodities that has an important role in Indonesia’s economy, especially for smallholder farmers in the Polewali Mandar District. In the 1930s, Indonesia was known as the most important cocoa bean-exporting country in the world. In 2010, Indonesia was the third largest exporter of  cocoa beans in the world with dry bean production of 550,000 tons after Pantai Gading (1,242,000 tons) and Ghana with production of 662,000 tons (ICCO, 2011).

In 2022, of the 1,497,467 hectares of cocoa plantation area in Indonesia, around 1,392,644 hectares, or around 93%, are smallholder cocoa plantation areas (Statistical Data, 2022). This indicates the important role of cocoa both as a source of employment and income for farmers. Meanwhile, the total area of cocoa plantations in West Sulawesi is 139,974. The average cocoa land ownership in this area is 1 hectare/farmer, so that more or less 139,974 farmer households depend on cocoa for their subsistence needs, which 70% is from cocoa and 30% comes from other sources.

The main export market destinations for Indonesian cocoa beans include China 13.52%, India 13.17%, Malaysia 14.61%, America 12.28%, Philippines 5.34%, others 41.08% including the European Union. Meanwhile, domestic needs, based on installed industry capacity, from 2022 to 2026 will reach 300,000 to 500,000 tons per year, requiring more or less of 1,400,000 tons of cocoa beans to 1,800,000 tons per year as raw material. 

Market opportunities and growth in demand for cocoa at the domestic and international market levels have not been able to be matched by increased productivity and improved quality of cocoa beans at the farm level. This is caused by the fragility of the system of coaching farmers and production arrangements. The cocoa marketing value chain is also still very long. Farmers’ dependence on middlemen is still a problem in the field.

Challenges for Cocoa Plant Cultivation

From 2010 to 2020, cocoa productivity in Polewali Mandar, West Sulawesi, was very low. This was influenced by several factors of plant cultivation, including old cocoa trees; the majority of cocoa trees in farmers’ gardens were 15-25 years old, therefore, the quality of cocoa seedlings was also less superior. In addition to very low productivity, old cocoa trees were also susceptible to diseases, such as VSD (vascular streak dieback) and root fungus. The increase in cocoa pests and diseases, cocoa pod borer (CPB), Helopeltis, stem borer, and VSD were the main threats to cocoa productivity in Polewali Mandar. Climate change, changing weather also greatly affected cocoa productivity, as well as long dry seasons and high rainfall caused many cocoa flowers to fall off.

In addition, many farmers had not rehabilitated their plants using seedlings with high productivity. They were worried that rehabilitating old cocoa plants would disrupt production and the seedlings they used turned out to be unproductive. Most farmers thought there was no guarantee whether the seedlings or grafts they used were more productive or not.

While at the same time, most farmers still sold raw cocoa beans to middlemen. Whereas if cocoa beans were processed by fermentation, the price would increase by Rp.3,000 to Rp.5,000 per kilo (USD .17 – USD .28). The lack of post-harvest processing and dependence on middlemen made the price of cocoa beans at the farmer level tend to be low, and farmers had no good bargaining power against middlemen. Not to mention the very long marketing chain, the price of cocoa beans at the farmers gate became low.

The Mitra Agribisnis Mandiri Amanah Cooperative (MAMA Cooperative) is an Agricultural Cooperative movement organized under the Aliansi Petani Indonesia (API). In 2023, the MAMA cooperative received USD 20,000 from APFP-FOA4 program for its business plan on the marketing and processing of sustainble fermented cocoa beans.

Through the APFP-FO4A platform, MAMA Cooperative has been supported through capacity building and the Challenge Fund (CF) program. The support aims to strengthen economic institution led by FOs and to provide an investment and  working capital to develop agricultural enterprise with a cooperative business maturity. In addition, the API, as the National implementing Agency (NIA) of APFP-FO4A, provided capacity building, technical assistance and business incubation to MAMA Cooperative Management and member including assistance of policy advocacy through lobby, policy dialog, multistakeholders’ consultation.

The Asia-Pacific Farmers’ Program (APFP) – Farmers’ Organizations for Asia (FO4A) was implemented by the Asian Farmers’ Association for Sustainable Rural Development (AFA) and La Via Campesina (LVC), with funding from the European Union (EU) and the International Fund for Agricultural Development (IFAD). The program aimed to strengthen the capacities of farmers’ organizations to provide economic services, advocate for enabling policies, and promote sustainable livelihoods for small-scale family farmers across Asia.

Support for Farmer Group Capacity Increases, Productivity Rises

To increase cocoa production at the farmer level and address the long marketing chain, it is not enough to just provide fertilizers and agricultural equipment so that all cocoa problems can be solved. We need sustainable assistance, until farmer groups/cooperatives can carry out business activities and serve members independently.

The Aliansi Petani Indonesia (API) strengthens farmer organizations that are members of the MAMA Cooperative in terms of institutionalizing the cooperative, post-harvest processing, and collective marketing of cocoa beans. With support from the APFP-FO4A program, through the facilitation of API regarding cooperative management assistance, Amanah Cooperative was linked to with institutions that work in the field of farmer group capacity building to build an inclusive and special cocoa market share.

The core business organized by the MAMA Cooperative is the development of the cocoa value chain and collective marketing in Polewali Mandar Regency, West Sulawesi. MAMA Cooperative have been marketing through collective marketing approach by a brand “Cocoa Bean Value Chain”.

The business process operated by MAMA Cooperative are as follows:

1. Organize cocoa producers’ farmers members and Improvement of farmer’ cocoa plantation yield;
2. Procuring wet cocoa bean from farmers to be processed,
3. Conduct quality control to cocoa bean that produced
4. Conduct a processing to wet cocoa bean to be fermented cocoa bean or non-fermented refer SNI standard,
5. Organize collective marketing to cocoa beat that produced to potential buyer to increase bargaining position of farmer.

The mission of those business services are to:

1. Become an effective value chain of cocoa produced by farmers;
2. Strengthen the collective marketing strategic to improve price bargaining position in cocoa value chain;
3. Increase farmers’ income and welfare by effective value chain;
4. Strengthening of Famer-led agricultural enterprise in the rural areas, particularly MAMA Cooperative.

To realize cocoa producer’ farmers welfare in Polewali Mandar Regency, MAMA Cooperative was supported and mentored by API through an APFP-FO4A program. The program support is to strengthen farmer organizations in running cooperative programs and businesses. With the expectation of realizing the welfare of cocoa smallholder farmers. For example, through cocoa cultivation and post-harvest programs, collective marketing.

By strengthening collective marketing, MAMA Cooperative has successfully brought farmers closer to their consumers. On the other hand, collective marketing can also bring the cocoa industry closer to farmers as producers. Thus, the flow of goods can be controlled by all actors in the chain. Farmers receive higher prices and incentives, while companies get a quality and sustainable supply of cocoa raw materials. Collective marketing of cocoa beans through cooperatives can increase prices at the farmer level, as well as provide education and improvements for farmers. The collective marketing scheme with private companies provides an incentive of Rp.600 per kilogram to the cooperative, in addition to the agreed price. Through this incentive, Amanah Cooperative can finance the assistants needed to increase the productivity and quality of cocoa they produce.

The APFP-FO4A Challenge Fund program is implemented in Polewali Mandar Regency, where there are 13 sub-districts, spread across 30 villages, with a total of member of 1.431 members (consist of 1,001 men, 
204 women, and 227 youth). At the same time, the support provided by the NIA BDSO and API BDS include capacity building, technical assistance and business incubation which resulted in several outputs such as 
Sustainable cocoa cultivation business model development plan with flagship product “fermented cocoa beans”, Cocoa Processing Unit to produce Cocoa Bean Fermentation, information and learning sharing session between plantation actors and farmers, standard fermentation boxes for the fermentation process, build 
drying house with the capacity of 5 tones once process, purchase drying machinery for cocoa bean drying with capacity operational of 150 kg per hour, trained youth farmer on Cocoa Seed Breeding, Capacity 
building MAMA Cooperative BoD and Staff on Financial mangement and accounting system, stock controlling form, colective marketing mechanism and quality control system for wet cocoa beans in MAMA cooperative, link to potential buyer such as PT. Unuka, PT. Bumi Surya, improvement of farmer groups’ skill to operate wet cocoa bean and purchasing mechanism and quality in the groups.

Impact and Learning

The support from APFP-FO4A to the Local Economic Development of Mitra Agribisnis Mandiri Cooperative as a Business Development of Cocoa Value Chain Improvement and Collective Marketing in Polewali Mandar Regency has been improving to economic ecosystem in rural areas. This program contributes to improvement of income generating and improve sources of livelihood for smallholders’ farmers, food and nutrition security and family farming safety in Polewali Mandar regency. In this case, agricultural cooperative led by FOs can become important actor to role in development of economic ecosystem in rural areas. As a case, it indicated by economy turnover of Rp.2.537.709.900 (USD 169.181) that achieved by MAMA Cooperative.

APFP-FO4A support improved income of 1776 peoples including smallholder’ farmers: male, female and youth. The strengthened the MAMA Cooperative in Polewali Mandar Regency has been contributing to increase additional income for smallholder’s farmer and other people. While at the same time, it keep stability of cocoa bean price on farm gate, even during 2024 the price of cocoa beans tends to increase.

Opportunities To Increase Business Scale and Employment for Rural Communities

The installed capacity of the cocoa industry in Indonesia is 469,000 tons per year, and only 278,000 tons per year are fulfilled. Meanwhile, the annual export volume of cocoa beans is 382,712 tons. The demand for dried cocoa beans as raw material is
1,722,712 tons per year, with a total potential production of 1,102,136 tons per year.

In 2022, the number of members of the MAMA Cooperative is 1,423 farmer households, the consolidated land area is 1,432 hectares, and the total production is 1,023 tons per year. The existing market links are Macoa, Modco (Malang), Onuka (Makasar),
Koko Luayi, Mason Cocolate (Bali), MONGGO Yogyakarta, RAPIO America, and PT. Trading cocoa beans (Mr. Dejan Holland).

Business expansion has great opportunities to involve young people and women as well as the formation of youth cadres to be directly involved in the agricultural sector, such as: expansion of post-harvest processing, innovation and diversification of
processed products, integration of livestock. There are many opportunities within the cocoa business ecosystem to attract young farmers and women. In this regard, young farmers, women, and rural communities can leverage agricultural inputs such as organic/natural fertilizers or the supply of cocoa seedlings.

Hassani, Head of the Sustainable Cocoa Development Unit of the MAMA Cooperative, stated that the cooperative’s presence allows farmers to sustainably manage and develop cocoa, including developing derivative products. This management includes,
for example, integrating cocoa with goats and other agribusiness commodities.

“Our goal is for the cooperative to be a learning platform for farmers and a platform for collective marketing of commodities grown by both existing and new members,” Hassani continued. “West Sulawesi has approximately 146,000 hectares of cocoa plantations. If only 1,431 farmers are involved, that means approximately 1,431 hectares are already members. However, our cooperative cannot yet purchase all of their products due to limited capital”.

Some other innovations that have been carried out by the cooperative include the formation of cocoa clusters in each region
to determine the taste and quality of grade AA, Grade A or Grade B cocoa according to market demand.

“We’ve also changed the system that farmers had previously used, from simply selling their harvest to now fermenting the
cocoa beans,” Hassani added. “We also use cluster fermentation to determine which beans produce grade AA, grade A, and
grade B.”

In the future, Hasani continued, the marketing sector still needs to be emphasized for cocoa. This innovation is being implemented so that farmers can meet and partner directly with buyers through cooperatives. So far, market segmentation is still done by middlemen. When transacting with farmers, these traders downgrade the quality of cocoa.

Despite having distributed cocoa outside the city and even outside the island, Hassani, the former chairman of the cooperative remains optimistic that the Amanah Cooperative can raise cocoa commodities to compete in the global market through
exports to Europe, America, and the Netherlands, where market segments are considered more promising, thus improving the welfare of farmers.

“Our ultimate goal is farmer welfare. And farmer welfare isn’t just a slogan; it can bemeasured by the ever-increasing added value of their cocoa sales,” said Hassani.