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Sustainable Coffee Production of Indonesia: Farmer Cooperatives, Organic Farming, and Fair Trade

Introduction

There are millions of coffee farmers worldwide who depend on the profits of their hard work to provide for their families. The vast majority of coffee farming is in tropical and developing countries on relatively small farms. Cooperatives can serve to improve livelihoods of farmers as well as promote sustainable agricultural practices. Like labor unions, they can strengthen farmers through unity. NGOs and fair trade organizations can also help to replace exploitative global market relationships between producers and consumers by more ethical practices that provide greater economic benefits to coffee producers. Fair Trade, and eco friendly contracts ensure certain standards are met in the production of coffee beans. Standards are regulated by certification from organizations and companies like UTZ, Rain Forest Alliance, or Max Havelaar. These economic connections are promoting environmentally sustainable practices that do not violate human rights and empower farmers to generate income.


Context Within NORA

Relationships to Needs

Sustainable agriculture seeks to improve livelihoods of small scale agriculturalists while promoting environmentally friendly practices of agriculture. Unique forms of agriculture using coffee like inter-cropping or agro-forestry can generate income while also creating food security. It is necessary to reconnect small scale agriculturalists with their land, their environment can be utilized to improve their livelihoods. This article addresses the needs of small scale agriculturalists and also the need for creative alternatives in the global market and agricultural production. 

Relationships to Organizational Forms

The goal in sustainable coffee production is essentially based on creating vital non-exploitive links between producers and consumers. Cooperatives unite and empower small scale agricultural communities, they allow farmers to work with one another and gain power through unity. Fair Trade organizations are also enabling social mobility in a global market which has historically been exploitive. These organizational forms are creating new connections between consumers and producers while empowering small scale farmers. 

Relationships to Resources

Free Trade standards and Cooperatives are organizations that can promote sustainable agriculture that does not harm the environment with unsustainable extraction of natural resources. Sustainable coffee production provides an alternative to extractive regimes which have degraded the environment. Organic and sustainable forms of coffee production such as agro-forestry can help to preserve the environment and biodiversity of natural ecosystems. Cooperatives also enable agriculturalists to utilize their land to generate income while not harming the land. 


Information on Coffee

Coffee is widely consumed and is in fact the second largest traded commodity after petroleum. Consumption of the beverage (World Mapper, "Coffee Consumption") is highest in the United States and Europe. Coffee is cultivated in high altitude tropical places. Rubiaceae is the scientific name for the coffee family which has 500 genera and 6000 species, but 99% of the coffee produced in the world comes from two different species: Arabica and Robusta. Coffea arabica​ is the higher quality bean of the two species. It originates from the Ethiopian Highlands and is grown best between the elevations 1,500-2,000 meters. Coffea canephora, better known as robusta coffee is usually used for cheaper blends of coffee and instant coffee. 

Several steps are included in the creation of coffee; first the beans are cultivated, harvested, and then processed. Beans are also roasted to distinct flavor and transported all across the world. Coffee is made from berries which are picked when they are ripe, these are referred to as cherries because they resemble cherries. The picked berries are then processed and dried to get to the bean. When Imported, the coffee beans are then roasted according to the desired roast before being grounded and brewed to make coffee the drink. Green (un-roasted) coffee beans are one of the most traded agricultural commodities in the world.[1]

Coffee cultivation started in Ethiopia and Yemen. Arab traders started producing and trading coffee in the 14th century. Then at the turn of the 16th century in 1595, the Dutch arrived in Indonesia. Soon after their arrival the Dutch East India Company was established in 1602, and they then started the production of coffee as a commercial crop in Indonesia. The term "Java" refers to the Indonesian island where a large portion of coffee was cultivated. Java is the most populated of the Indonesian islands yet it still plays an important part in food production. Plantation systems were a component of the economic system created by the Dutch. Today production can vary between large company plantations and small scale cultivators under fair trade contracts. Much of the sustainably grown coffee and fair trade certified coffee is shipped to Europe, especially Germany. There is also an increasing market in the United States and Canada for fair trade and organic coffee. 

Along with rising concerns over coffee cultivation and its impacts on the environment, organically grown coffee is on the rise and is being demanded in the global market.  Mass produced coffee can have negative impacts on the environment through residues which are toxic. There are two important certifications that are used for coffee, Fair trade and Organic coffee. Fair Trade is a term claiming that a coffee product was produced and marketed on an ethically set standard that does not violate human welfare. Organic coffee is a term used to describe coffee that was produced without pesticides and herbicides. Furthermore there are additional certifications that claim that a coffee product was produced without harming the environment, e.g. Rain Forest Alliance. It is important to note that both of these terms can vary in their exact definitions, for each certification may require different standards to be met. Small cooperatives can serve as environmentally friendly alternatives to mass produced coffee processing. Fair Trade organizations can also be useful for ensuring that small scale cultivators of coffee are being paid and treated ethically. 

 


[1] Mussatto, Solange I.; Machado, Ercília M. S.; Martins, Silvia; Teixeira, José A. (2011). "Production, Composition, and Application of Coffee & Its Industrial Residues". Food and Bioprocess Technology 4 (5): 661–72. 

 

 

Background of Indonesia

Indonesia is a large and diverse nation made up of approximately 17,508 islands inhabited by 253.609,643 in 2014 according to the CIA World Factbook .[1] There are five main islands that are home to most of the total Indonesian population Sumatra, Kalimantan, Sulawesi, Irian Jaya and Java. With its lush tropical climate, Indonesia has diverse forms of agriculture such as rice, banana, rubber, coffee, and many other forms of cultivation. The most popular form of agriculture in Indonesia is Sawah​, which is wet rice farming, rice is the staple food for Indonesians. The landscape varies greatly from marshes, to high elevation rainforests, it is in areas of high elevation where the best quality of coffee can be grown. About half of the country is covered by rain forests, although that number is dropping as a result of rapid deforestation. The rapid deforestation is a result of unsustainable agriculture, logging, and mining (Mongabay.com – Indonesia). Deforestation has not only degraded the environment, but has endangered the rich bio-diversity of animals like the Sumatran tiger, Javan rhinoceros, orangutan, and Sumatran elephant (RAN.org).

Indonesia has undergone much political change over its history: Dutch colonization, Japanese colonialism, the first independent government under Sukarno, who was topple by Suharto with the backing of the CIA. Suharto introduced neo-liberal policies (until he resigned in 1998 during the Asian economic crisis), which opened the door for large corporations to extract natural resources unsustainably at the cost of human welfare and environment. With its massive population of over a quarter billion people, it is said that the Indonesian economy is growing; in 2010 it was reported to be the 27th biggest exporting country in the world (though one might expect a higher ranking from the fourth most populous contry in the world).[2] At the same time, there is growing poverty in Indonesia. According to a report in 2016, 39 million (18% of the total 220 million in Indonesia) are classified as poor by the Indonesian government’s statistics bureau. 75% of those classified as poor earn their living from agriculture.  This draws attention to the need to empower farmers in Indonesia to generate income and improve livelihoods, while practicing agriculture sustainably without damaging the environment. 


[1] Information on Indonesia. ASEM Development conference II: Towards an Asia-Europe partnership for sustainable development. 26–27 May 2010, Yogyakarta, Indonesia. ec.europa.eu

 

 

 


Government Policies of Land Use

Suharto, the New Deal, & the Extractive Regime

Politics are intertwined not only with human welfare, but ecological factors as well. The New Order was the term attached to Indonesian President Suharto’s economic policy. Following the coup against leftist Indonesian leader Sukarno, Suharto established an extractive regime based on large-scale, unsustainable exploitation of resources such as timber, petroleum, oil palm, and rubber, that brought Indonesian products into the global market. The Indonesian government has encouraged large foreign corporations to invest in Indonesia, leading to much intensification of extraction of natural resources. The intensified extraction of natural resources not only harms the environment but also human welfare by seizing indigenous lands, violating human rights, and creating large discrepancies of wealth in society. Because Suharto's legacy continues today, it is necessary to advocate for policies that empower disenfranchised people while preserving the environment. The goal is to achieve harmony between ecology and culture. 

Alternatives to the Extractive Regime

Extractive regimes in Indonesia have yielded environmental degradation, exploitation of labor, and mass dislocation of peoples from their native lands; alternatives must be found and practiced. There is a great need to sustainably manage the extraction of natural resources in order to preserve the environment while empowering the livelihoods of local peoples. Agricultural coffee co-operatives could be a way to provide marginalized rural people with the ability to generate income and utilize natural resources to meet their needs. Coffee is the 2nd most traded commodity in the world, behind oil, and a large portion of the world’s coffee comes from Indonesia. According to US Department of Agriculture date from 2010-11, Indonesia was the fourth largest producer of coffee in the world, producing 9.3 million bags, each bag weighing 60 kilograms. The World Mapper also reports Indonesia as the world's fourth largest producer, producing an annual average of 7.4 million 60 kg bags of coffee beans during the early 2000's. However many of these beans are the lesser quality Robusta beans which are cultivated for instant coffee. While vastly outproduced by the world's largest producer, Brazil, that produced 54.5 million bags in 2010-11, Indonesia still produces a significant share of the world total. 

Fair trade movements and co-operatives are re-linking coffee producers and consumers, which benefits cultivators financially while promoting sustainability. Contemporary consumers are starting to make two demands for ethically produced coffee. Firstly for environmentally friendly practices such as modest use of fertilizers, pesticides, water and energy. Secondly for human rights such as education for children of coffee farmers instead of being put to work, decent labor rights, housing, healthcare, and empowerment for farm workers. A substantial portion of the world's consumers are demanding that specialty coffee beans be grown ethically and not mass produced. This analysis shows how methods of coffee co-operatives and production can create greater abundance and create social mobility for rural and lower classes of society.​ 


Coffee Cooperatives in Indonesia

Cooperatives

Sustainable practices are an answer to both environmental degradation and violations of human rights, but these practices must be properly and strategically executed. Cooperatives enable farmers to collaborate with one another, pooling their resources and strengthening themselves as a collective to produce abundance of cultivated crops. They not only help producers control the land, but also help farmers to get better prices for their produce. Uniting farmers gives them greater collective bargaining powers. Furthermore large buyers prefer to buy in large lots that save them time and money. Cultivate.coop is a wiki which provides information on how to start an agricultural cooperative. Peer learning between farmers groups can share awareness, knowledge, technique, and spread ecological literacy.

Land is the key for subsistence, cooperatives enable farmers to control their local resources. Adat is an Indonesian term that refers to indigenous customary law regarding how to cooperatively deal with resources, its main goal is harmony between peoples and place. Original accumulation (also known as primitive accumulation, refers to the origins of capital and how classes are created between those who possess and don't possess) separates farmers from their land and subsistence, in part by undermining traditional norms such as the Indonesian adat. Farmers would often lose their land to large encroaching corporations, for example an oil palm plantation may intimidate farmers into selling their land for a far less than fair price, or not even recognize that they have rights to the land. Often an extractive regime government overlooks violations of civil rights by corporations with the idea that corporations that intensify production will be better for the economy. Empowering farmers to control their land and resources serves as a way to avert original accumulation, and to ensure that economic activity actually serves the needs of the people rather than enriching distant shareholders.

Sustainable Practices

Sustainable agriculture seeks to make the best use out of nature's goods and services, of knowledge and skills of farmers, of people's collective capacity to work together to solve problems (Jules Pretty, Agri-Culture). It is the goal for coffee cultivators to implement agricultural techniques that do not harm the environment, while ensuring that farmers are generating income in ways that are sustainable, which in turn empowers and creates social mobility for farmers. 

Two useful techniques that can be used in sustainable agriculture are agro-forestry and intercropping. Agro-forestry refers to combining tree crops with another crop; this can easily be applied to coffee which naturally grows best under the shade of the rainforest canopy. Intercropping is the practice of growing two or more crops in proximity. The most common goal of intercropping is to produce a greater yield on a given piece of land by making use of resources that would otherwise not be utilized by a single crop (Ouma, George, "Sustainable horticultural crop production through intercropping: The case of fruits and vegetable crops: A review“). Shade grown coffee refers to Arabica coffee that is grown in the shade; it is a viable alternative to deforestation. Robusta coffee beans don't require to be grown in the shade and can grow in tropical lowlands. Instead of deforestation, forests can be preserved as sources of shade under which coffee can be grown. Organic shade grown coffee doesn't degrade the land, it allows coffee to grow in it's natural environment and reduce soil erosion. Leaf litter from the canopy and coffee plants is good for soil nutrition, while coffee bushes and tree roots help to hold soil in place. This form of coffee production doesn't destroy the rainforest, though it does substantially alter its species composition. 

Human Welfare & Contracts

Fair trade certification is used to ensure that farmers are being treated fairly, this includes working conditions, education, and that farmers are being paid a fair amount. Fair trade contracts provide small farming families with enough money to improve their livelihoods by paying a price that is guaranteed to be above a given floor price when market prices are low, and above market prices otherwise. The global market of the coffee bean fluctuates wildly in prices, when the price of beans drop, farmers stop producing coffee, which then leads to an increase in price because of a shortage in coffee production. Contracts guarantee prices that support a stable livelihood, and work outside of the fluctuating market. Contracts under fair trade certification also ensure that products are produced under good working conditions with respect for the environment. 

Global Market

Rural people are often marginalized and exploited in the globalized market. A key aspect of coffee cooperatives is making vital connections across the globe by re-linking producers with consumers. Environmental and labor movements find common ground in the fair trade and sustainable coffee movements because these methods both preserve the environment and ensure social justice.The global market can actually be used as a vehicle for empowerment by connecting consumers who want ethically produced coffee with producers. Cooperatives and NGOs serve as the links between producer and consumer, using these links will benefit both environment and human welfare. Fair Trade USA's mission statement is to "…empowering farmers and workers around the world with the business training and capital investment necessary to grow high-quality products that can compete in global markets." Furthermore, Fair Trade USA seeks to  link organizations from all areas of the supply chain to maximize impact for producers​. Fairtrade standards for coffee act a safety net against the unpredictable world market. They provide securty to coffee producers so that they will get a price that covers their average costs of sustainable production (Fairtrade.net). The standards that Fairtrade International follows for certification are:

  • Producer organizations are paid a floor price (Fairtrade Minimum Price) of US 1.40 per pound for Fairtrade certified washed Arabica and US 1.35 for unwashed Arabica, or the market price, if higher.
  • For Fairtrade certified organic coffee an extra minimum differential of US 30 cents per pound is being applied.
  • A Fairtrade Premium of US 20 cents (with USD 5 cents earmarked for productivity and quality improvements) per pound is added to the purchase price and is used by producer organizations for social and economic investments at the community and organizational level.
  • Fairtrade coffee certification is currently only open to small farmer organizations. Small farmers must be organized in organizations which they own and govern.
  • Democratic decision making is required. Everybody has equal right to vote.
  • Environmental standards restrict the use of agrochemicals and encourage sustainability.
  • Pre-export lines of credit are given to the producer organizations. If requested, up to 60 % of the purchase price should be pre-financed to the producer organizations.
  • Trade standards aim to encourage fairer negotiations, clarify the role of price fixing, and reduce speculation

The Fair Trade Organization Max Havelaar, seeks to establish long term contractual relationships between producers and exporters. Exporters pay a guaranteed price under contract, pay a development premium and an advance payment. Max Havelaar monitors working conditions (no forced labor, no child labor, freedom of association and collective negotiation, etc.). Finally, it ensures observance of ecological criteria, including a ban on GMOs (Genetically Modified Organisms). With 23 other national fair trade labeling organizations, Max Havelaar Belgium is a member of FLO International (Fairtrade Labelling Organisations). Fair Trade USA and Max Havelaar are just a couple of examples of fair trade organizations. 

Predicaments & Obstacles

Food security exists if people are secure that they will consistently have neough food. Since coffee beans are not a source of food and their harvest may fail, inter-cropping and agro-forestry can increase farmers' food security by providing food even if they cannot sell their coffee. These two techniques are also good for soil nutrition and preventing erosion. 

A major obstacle to overcome is creating effective cooperatives and linking these cooperatives with consumers to buy their products. Products also need to be certified that they are ethically made, there are many organizations that provide certification for products. Another obstacle is ensuring that consumers keep buying from the producer and that the production of the product does not harm the environment or violate human rights. Effective agricultural extension of products, technology, and information is important to help keep cooperatives running effectively. 

Tad Mutersbaugh found in his research ("The Number is the Beast," 2001) that fair trade and organic certifications need to be rethought together with efforts to assist producer certification. This should be a priority for supporters of sustainable agriculture. Certification can complicate production and labor union organization because it is difficult to balance standards of production and producers interests. Furthermore another challenge Mutersbaugh addressed ("Fighting Standards with Standards," 2005) "The shift to globalized standards has transformed rent relations in ways that benefit certain actors (that is, retailers) and imperil the earnings of others. In brief, globalized standards increase the costs of standards compliance, the full burden of which falls upon immiserated producers, to the point at which farmers see little economic advantage to certified-organic and fair-trade production." A solution to the issue Mutersbaugh, taken from his title, is to fight standards with standards, he proposes that social-accountability standards can be used to certify strong labor and environmental protection standards under a single label. Simply stated, a single-standard system can make to complexity of standard certification easier on small scale producers, cooperatives, and unions. 

There is some question whether certification standard can help small scale farmers; a study by the The International Institute for Environment and Development investigates whether this system benefits poor and marginalized farmers. These standards do help farmers to reach new markets and learn new skills. However, these practices cost more than what some farmers can afford, this study (Blackmore, et al, 2012) concluded that "These farmers need carefully targeted support from external agencies such as governments, NGOs, the private sector or the certification bodies themselves in order to attain benefits of certification." Strong and ethically managed entities must work hand in hand with small scale farmers with the goal of improving their livelihood, preserving the environment, and creating abundance through this collaboration. 

The growing fair trade coffee market has re-linked producers and consumers with a viable alternative to an often exploitative world trade market. Cooperatives have addressed the needs of small scale agriculturalists in Indonesia, it has enabled them to use their land to generate income and improve their livelihoods while preserving the environment. However sometimes the standards of certification create a barrier that some farmers fear they cannot cross. Cooperatives and collaboration are one solution that help to ease the pressures of fair trade standards. Cooperatives help to effectively share knowledge and labor to meet standards and generate income. Cooperatives are transforming communities and protecting the environment; promoting agricultural techniques that are sustainable and do not harm the environment. 

 


Links

Center for Fair and Alternative Trade

Coffeeresearch.org

Cooperative Coffees – PPKGO Sumatra

Cultivate.coop

ECOM

Equal Exchange

Fair Trade

Fair Trade USA – Coffee

Fairtradeproof.org

The Guardian: Global Development Blogosphere

International Institute for Environment and Development

Max Havelaar: FLO-CERT database of worldwide fair trade organizations- Indonesia

National Sustainable Agriculture Coalition (USA)

Saffron Coffee (Luang Prabang, Laos)

Specialty Coffee Association of Indonesia

UTZ Certification

Watala

World Agroforestry Centre

World Coffee Research

World Mapper

4C Coffee Association


Literature 

Blackmore, Emma, et al, "Pro-poor certification: Assessing the benefits of sustainability certification for small-scale farmers in Asia," March 2012 IIED. 

Boserup Ester. The Conditions of Agricultural Growth: The Economics of Agrarian Change under Population Pressure, New York: Aldine Publishing Company, 1966.

Desai, Uday. 1998. Ecological Policy and Politics in Developing Countries: Economic Growth, Democracy, And Environment, Albany, NY: State University Press.

Dove, Michael R. and Carol Carpenter. Environmental Anthropology: A Historical Reader, Malden, MA: Blackwell Publishing, 2008.

            Geertz, Clifford. Agricultural Involution: The Process of Ecological Change in IndonesiaBerkeley, CA: University               of California Press, 1963.

Gellert, Paul K. 2010. “Extractive Regimes: Toward a Better Understanding of Indonesian Development,” Rural Sociology 75(1), pp. 28-57.

Mutersbaugh, Tad. 2005, "Fighting Standards with Standards: Harmonization, Rents, and Social Accountability in Certified Agrofood Networks," Environment and Planning A 37: p. 2033-2051. 

Mutersbaugh, Tad.  2002, "The Number is the Beast: A Political Economy of Organic-Coffee Certification and Producer Unionism" Environment and Planning A 34 (7) p. 1165 – 1184. 

Peluso, Nancy Lee. Rich Forests, Poor People: Resource Control and Resistance in Java, Berkeley, CA: University of California Press, 1994.Wilson, K. Coffee, Cocoa and Tea, New York: CABI Publishing, 1999. 

Potter, Leslie. 2001. "Agricultural Intensification in Indonesia: Outside Pressures and Indigenous Strategies," Asia Pacific Viewpoint 42 (2/3), pp. 305-24. 

Pretty, Jules. Agri-Culture: Reconnecting People, Land, and Nature, London: Earthscan Publications Limited, 2002.

Raynolds, Laura T. 2002. “Consumer/Producer Links in Fair Trade Coffee Networks,” Sociologia Ruralis 42 (4), October, pp. 404-424.  

Rigg, Jonathan. Southeast Asia: The Human Landscape of Modernization and Development, London: Routledge, 1997. 

Sauer, Jonathan D., Historical Geography of Crop Plants: A Select Roster, London: CRC Press, 1993.

Schmitz, Rob. "Growing Coffee in China's Tea Country," Marketplace, January 10, 2011, web accessed: 3/22/14: http://www.marketplace.org/topics/business/growing-coffee-chinas-tea-country

Smith, Stacey Vanek. "Coffee's Cheap Right Now, and You Should be Worried," Marketplace, January 27, 2014, web accessed 3/22/14: http://www.marketplace.org/topics/economy/coffees-cheap-right-now-and-you-should-be-worried.

Wilson, K. Coffee, Cocoa, and Tea, New York: CABI Publishing, 1999. 

 

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