May 2012 C&CI • Indonesia • 23
3.3 million bags by 2009. With average annu- al growth of 5-7 per cent in the last 10 years AEKI estimates that consumption is approaching 3.6 -3.8 million bags by 2011. "In the coming years Indonesia will need to
As domestic consumption increases, so farmers will need to grow more and more coffee
Asian country back to third place among the world’s largest producers. Initially, the 2011-2012 crop was pegged
at 8.7 million bags by the ICO; the US Department of Agriculture had revised down the number to 7.885 million bags, citing growing evidence that bad weather last year severely affected output. Local exporters agree that last year was the smallest crop in five years, and AEKI’s Chairman, Suyanto Husein, recently said that, while final produc- tion figures in the last year may not reach more than 5.83 million bags, he hopes that in the 2012-2013 harvest output will rise to at least 6.67 million bags. AEKI’s official num- bers have, however, traditionally been lower than those released by the ICO, USDA and private exporters. "We believe the harvest last year reached
400,000 tonnes (6.667 million bags) and the new harvest, which is starting in April, is a lit- tle better, so we should see production go up about 5 per cent to 420,000 tonnes (7.0 million bags)," said Irfan Anwar, President Director of the Medan-based PT Coffindo coffee exporters. The company, which first opened for business in 1999, and which handles some 120,000 bags a year, was named "Indonesia Best Exporter" in 2010.
Global warming
"The effect of global warming is really being felt here in Indonesia. The changes in the weather from one season to the next is something we have never seen before," Mr Anwar told C&CI in a telephone interview from Medan, the coffee trading centre in northern Sumatra on the border with Aceh province. He said a lot of local and foreign compa-
nies are getting involved in Indonesia and try- ing to work with the country’s 3.6 million smallholder farmers in order to increase pro- duction through increased yields. "We want to improve productivity and try to
address some of the challenges from climate change at the same time. We are seeing a lot of foreign interest. There are a lot of pro- grammes being started now by companies such as Louis Dreyfus and Neumann as well as the Rainforest Alliance and other certifica- tion programmes," said Mr Anwar. In Indonesia’s most efficient coffee-grow-
ing regions such as northern Sumatra, which is also home to Mandheling Arabica, average yields reach about 14-15 bags, but in most of the country the yields are still only reaching 5 bags per hectare, he said. Part of the reason for the low yields is the
use by Indonesian farmers of intercropping, mixing vegetables and subsistence crops such as corn and rice with coffee trees. But the main reason, industry officials said, is that most producers only have about 1,000-1,200 trees per hectare, and most of the current tree population was planted over 30 years ago, and has never been pruned or rehabili- tated. "We have a budget to help some of the
farmers we buy from increase productivity, and the target is to see the average yield double to at least 1,500kg per hectare. It will be quite a slow process but it should be real- istic in the next 5-10 years," said Mr Anwar, echoing sentiments expressed by many industry stakeholders.
Increasing volume of Arabica
About 15 per cent of current production in Indonesia is Arabica, in line with AEKI’s offi- cial target established in the late 1990s to gradually raise Indonesia’s production of Arabica to 20 per cent from the 10 per cent it represented in 1995. Many of these development plans are
aimed at supporting rising local consump- tion, which has gone from just 1.2 million bags in 1990 to 2 million bags in 2004 and
produce a minimum average of 10.5 million bags a year in order to meet the local demand of at least 3.5 million bags and maintain the 7 million bags needed to supply its export markets we have in Europe, the US and southeast Asia," said the AEKI official. Indonesia has imported a growing amount of coffee in the last five years in order to satisfy local consumption requirements, which increasingly is met by coffee from Vietnam. Based on the current growth rates and the large part of the population which is young and more attuned to coffee drinking, the number is expected to grow to between 4.2 and 5.0 million bags by 2016.
Growing middle class
According to the USDA’s Foreign Agriculture Service (FAS) it is the growing middle class in Indonesia and "a new generation of people that demand socialising after hours, western food products and brand names" which are the key reason behind the rapid growth in the number of food service outlets, which have exploded across the country’s urban and tourist centres since 2008. "Indonesia’s 62 million children and
teenagers are being targeted as consumers for snack manufacturers," the FAS said, refer- ring to the key consumer group that local coffee roasters and retailers in Indonesia believe will grow up and drink at least one cup of coffee a day during the next 10 years. At 7.0g per day per person, that would trans- late into additional consumption from this consumer group alone of 2.64 million bags. "The rapid growth of Western-style, spe-
cialized coffee shops, cafes, bars and wine lounges as well as bakeries have also result- ed in an increase of imported specialty and gourmet food and beverage products," said the FAS, adding that the number of coffee shops alone has grown at 11 per cent a year in 2008 and 2009, and average growth is projected at 5.9 per cent through 2014. As the Indonesian coffee boom continues,
in all segments of the industry, companies like PT Coffindo are putting an increasing focus on the local market and how to devel- op new products. "Just as in China and other markets here in southeast Asia, the younger generation here is starting to drink more and more coffee, and that is what has boosted the local consumption," Mr Anwar concluded. C&CI
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