Fair-trade, Fair and Equitable Trade and Relationship Coffee in Indonesia- a Merdeka Coffee view:
Internal (Indonesian specific) Barriers- Indonesia is a country with a substantial possible internal consumer base. Outside of these cities, the market is extremely little. Our target market is middle to upper-class Indonesians and expatriates- making up possibly a market as little as 1.5 million possible consumers.
Fair trade, relationship coffee and organic collaborations play a vital part in the retail coffee market overseas. As much as 38% of the coffee market in the USA is engaged in some kind of accredited or direct relationship with growers (fair-trade, natural, shade-grown, bird-friendly etc). In the Indonesian market understanding of relationship coffee and/or fair-trade is weak. This is for a number of reasons- illiteracy and understanding of the coffee market is maybe one significant factor. Lethargy towards the agricultural sectors of the economy is likewise an extremely crucial reason. Many metropolitan Indonesians see the farming sector as being both remote and removed from their lives. The closest many modern Indonesians come to being in contact with farmers is purchasing produce in Supermarkets. Wet markets are these days mainly the domain of the contemporary Indonesians home personnel, where produce is bought. This separation indicates that an out of mind-out of sight attitude is required to farming. This dislocation impacts all sectors of the agricultural community but most straight effects sectors where fair trade rates could be easily carried out- coffee, chocolate, tobacco and so on. While there is a general acceptance that natural, chemical free item has a place in the Indonesian market, the bridge to a reasonable trade item is more difficult to cross. Organic coffee is viewed as benefiting the consumer (drinker). Shade grown coffee is viewed as benefiting the environment. Fairly trade coffee is in fact helpful for the drinker, environment and neighborhood ... so actually the focus ought to be on fair trade. Paying the farmers a decent return for their item results in-.
- farmers staying on their land instead of migrating to the cities. In the cities their capability are not suited to metropolitan living- therefore they wind up un/underemployed.
- Great coffee. A problem in Indonesia is a great deal of the coffee gathered winds up as badly graded stock. This is since farmers are paid not enough to cover the time they need to take into crop upkeep. As an outcome 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 good returns this cycle can be broken. Great coffee= greater demand= much better go back to the farmer.
- Economic and social stability. Farmers staying on the land implies abilities are returned into farming practices. Best practices means utilizing natural means to keep quality crop in harmony with the town. Natural sprays for insect control (such as tobacco) are used to decrease damage to the cherries. Decent returns indicates the town can construct facilities and diversify economic systems (introduce other crops, livestock etc).
- Also keeping coffee crops, particularly in a water catchment location, can kupon assist to lower flooding damage even more down on the flat, alluvial plains. In numerous locations Coffee can be grown under primary or perhaps secondary forest canopy.
The Indonesian domestic market also has a topsy turvy view of regional product vs. imported item. A survey we undertook (1) amongst Indonesian customers revealed 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 ended up item. When questioned what is essential to them as buyers of coffee, "fair-trade" ranked 9th out of 10th in regards to significance (10th and of least value was kind of plan- tin, box or sachet). When asked about purchasing "espresso mix" coffee, 90% of all participants stated they would just buy Espresso mixed in Italy. An additional 9% stated they would think about buying "Espresso" blended/roasted in Australia, New Zealand, Japan or China. Less than 1% said they would think about buying/using "any Espresso blended/roasted" in Indonesia. When asked to elaborate on the decision, it returned almost completely to the reality that "the Italians grow the very best coffee"!!! To most respondents crucial was flavor, followed by scent, product packaging, style. In a country where the very little wage in backwoods may be as low as 300,000 idr a month, it is difficult for Indonesians to see that fairly trading coffee is certainly a means to an end. It offers chances that benefit everybody through an intricate supply chain- including obviously the Jakarta based purchaser of a coffee in Starbucks or Merdeka Coffee.
Fair trade is a principle of terrific value for the present and future of coffee in Indonesia. The number of growers needed to get leverage for accreditation indicates that coffee ends up being 'pooled' or sourced from big growing areas. Instead of permitting the particular attributes of coffee grown in an extremely little growing location to shine through, the big cage system waters down the real excellence of small-holder grown coffee.
While the needs 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. The majority of Indonesian coffee growers are producing anywhere from 1000-8000kg a year- in a cooperative/village circumstance. One container of coffee is 18,000 kg of coffee.
Summary:.
Overall the domestic market in Indonesia is driven by branding. Branding itself can be split into 2 sectors- the worldwide and the local trademark name. 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 huge brand name operators worldwide roast very high volumes of coffee. The volumes they deal in often makes direct procurement utilizing licensed fair-trade systems not practical. This is not to state these brands do not have their own internal fair/equitable trade systems, however the volumes in question suggests that often they can not have a direct purchasing system from little hold growers in location, and they need to operate buying through a number of local partners and brokers. It is relatively uncommon to see sellers in Jakarta selling and educating their customers about reasonable and fair trade with brokers. As the roasting market in Indonesia is still generally 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 discovered in specialized markets such as the US and NZ. Ultimately the specialized market in Indonesia is still in its infancy, the relocate to drinkers buying coffee product based on social concerns rather than brand awareness is possibly still a minimum of 4-5 years away, if not longer!
Regional Brand operators such as Excelso, Regal, Kopi Luwak, Brew and Co etc are attracting a different section of the marketplace. This sector is really rate mindful, and maybe less well informed, less well paid than those who regular the international brands. The local section here is large, growing, but really competitive and possibly less brand faithful than that discovered in the Premium Branding segment. Here as pointed out in the first paragraph, there is little issue about the well-being of the farmer and the growing neighborhood. The consumers want to enjoy a coffee, cake, meal and mingle. The local café brand names also produce locally sourced coffee, so in theory they would remain in the very best position to champion fair-trade. Nevertheless the bulk of the coffee mixes sold by local producers are Robusta rich, mirroring the taste requirements of the local customer base (generally based upon the carefully ground Robusta kopi tobruk discovered in many Indonesian cooking areas!). Robusta is still the main coffee type produced in Indonesia, and it certainly is a location where fair-trade struggles to make any effect. The traditionally flat rates for Robusta, integrated with the lack of interest in the coffee from the more political active specialty coffee sector, indicates that Robusta stays a low cost product, instead of a product that has value added by roasters skill. The capture on pricing for the regional café chains, as well as Robusta's role in the equation, suggests that any idea of fair-trade would have a hard time in the regional sector of the café market in Indonesia.