Forgot your password?
Sumatra: untangling the mysterious world of coffee
Earlier this month, Coop Coffees' Bill Harris and Florent Gout flew across the globe to meet with several coffee cooperatives located in the Aceh province of the island of Sumatra. Despite the high international demand for Sumatran coffee and the high volumes of it that get exported, it is one of the most mysterious countries of origin for coffee importers. Likewise, many of the small, isolated coops in Aceh have little access to information about the international and Fair Trade, organic markets. There is still much to learn on both sides of this partnership but this trip sparked a valuable and much-needed exchange of information that will continue as our relationship with these coops grows!
by Florent Gout, Green Desk of Coop Sol
November 2009
Just
two weeks back from our travel to Indonesia, a part of our mind still
wanders through the wonderful Aceh province. Geographically, this
region is far from anything we consider familiar...but it is also
culturally “distant” from anything we had experienced in our
coffee travels to Central and South America. Located in the mountains
of the northern part of Sumatra island, the Gayo People have suffered
through a recent period of fighting between government troops and the
separatists. Paradoxically, the Tsunami which hit the coastal area of
the province in December 2004, came as a odd blessing for the Gayo people
in that it was strong enough to convince both parties to leave the
battlefields and work together in the area’s reconstruction.
After
more than 30 hours of flights across the Pacific Ocean – which
included a long night’s sleep on the floor of Singapore’s airport
– we finally reached Medan, in the early morning of Friday, October
30th.
Medan is the capital of Sumatra Island and is located about 20 miles
from the port of Belawan where containers of highly sought-after Gayo
coffee are shipped all around the world. Most of the coffee exporters
are located in Medan, so we spent two full days in this very populated
city to meet four of them who are associated with cooperatives from
the Aceh province. At this point I should mention that in Sumatra it
is extremely difficult for the coops in the remote Aceh province to secure an export license and preparation facility. Consequently, most of these coops team up with
an exporter and work essentially as a parallel organisation. This
model of partnership is also due to the lack of financing in the
coops and the lack of market access as well. The exporters also take
care of the dry processing once they receive the Asalan
(local word for green beans which have been hulled 
and partially
dried) from Aceh area. The local exporters are typically very young in business
(5-6 years) and were founded after the end of the war in the Gayo
Mountains. They have a good understanding of Fair Trade and are
working on improving their money flow transparency to match FLO’s
expectations. These cooperative/exporter partnerships are just beginning to fall into place since 5 new cooperatives have qualified for the fair trade registry during the last year greatly expanding the fair trade organic coffee supply chain from Sumatra.
After having met with the exporters, we made the long and tiring 12-hour drive from Medan to Takengon in the heart of Aceh province. Our driver’s determination to make record timing – despite the heavy rains – got us to our destination (in one piece!) by the late evening on Sunday. Takengon is a peaceful middle-sized city located on Lake Towar in the middle of Gayo Mountains. It provided an ideal “base camp” for visiting coops, which were located in a 1-hour drive radius around the city. Though the political situation is now safe in the Aceh area, this province remains very conservative and daily life looked very different from what we saw in Medan. The locals explained to us that Aceh has made many economic and social improvements since the end of the war in 2004. Even so, the region lacks infrastructure and people live in very basic conditions.
Despite
the difficult living conditions in Aceh, the Gayo farmers work in one
of the country’s richest natural environments. The fertile soil
combined with the long sunny days and year-round short heavy
rainfalls allow farmers to harvest their coffee plants 2-3 times in
one year. Good pruning and compost fertilization techniques keep the trees productive for 10 months of the year and for up to
45 years - unheard of elsewhere in the coffee universe! Because of all this, the “regencies” (districts) of
Aceh Tenang and Benr Meriah in Aceh province boast many coffee
farmers coops in a relatively small territory.
Currently, there are seven coops who produce Fair Trade and Organic coffee, 6 of whom we met with during our stay. Among these coops is KBQB, the “big” project of the area, having received solid financial and technical support from USAID and Washington-based NCBA. KBQB is the only coop in Takengon with its own drying process plant and the capacity to prepare the coffee to be ready for export from Takengon. KBQB has an export license, but CBI, an Ohio based marketing company that owns a regional office in Indonesia, handles the commercialization (they find the markets to which the coffee will be sold).
The
other coops we met - APKO, ASKOGO, HPKOGM, Arinagata and Permata Gayo -
are managed quite differently. In general they are groups with
between 800 to 1,200 members, and have the capacity for “semi-wet”
processing – pulping the cherries, hulling the gabah (wet
parchment), partially drying the beans, and shipping them to Medan to
be dry processed and prepared for export. These coops are new to the
exporting business and isolated from any international market
information. But they certainly don’t lack the motivation to learn
more about the complexities of the coffee trade! Despite their
ability to export an impressive amount of 50 to 80 containers per
year, they’re dealing with the constraints of a clear lack of
market information. And the pricing situation doesn’t help: the local
price for conventional coffee stays high due to strong international
demand for Sumatran coffee and multinational traders on the ground
often attempt to set their contracts for Fair Trade, organic prices to barely “make
the cut” under FLO regulations. They buy high volumes of the lowest
possibly priced Fair Trade, organic coffee and then resell it to
importers who, due to the lack of access to information in Sumatra,
opt for buying FT organic coffee from a trader as opposed to working
directly with a farmer coop.
Further complicating the situation, the recent addition
of
several
newly
certified coops has
created a
competitive dynamic in the area. When FLO and organic certification
was first introduced to the region and only two or three coops got on
the FLO registry, quite a bit of time passed before smaller groups
entered the scene. Because of the lack of information about the
international market (if
they only knew how high the demand was for Fair Trade organic
Sumatran coffee was!), many groups view neighboring coops as
competitors instead of potential partners. And unfortunately, this
kind of competitive spirit often gives buyers an advantage in
negotiating lower prices for Fair Trade and Organic coffee.
For
example a coop we visited is considering contracting several lots around 1.55 $US per pound in the last few
months...but our meetings consistently confirmed that they need to receive at least $1.70 per pound in order to cover their costs of production.
Despite unsettled nature of the current situation, many coops’ leaders of these smaller coops are very interested in learning more about the global coffee trade. There is huge potential for these cooperatives which have the capacity to produce legendary Gayo coffee. By supporting these coops and helping them to better understand the international market and how Fair Trade can be a tool to strengthen the coop, we have the opportunity to contribute to the empowerment of these coffee farmers and help them earn better prices for their unique fair trade organic coffee.
