Boosting sustainable cocoa production on the Indonesian island of Sulawesi together with Mars

Boosting sustainable cocoa production on the Indonesian island of Sulawesi together with Mars

07/11/2017
Peni Agustijanto
Peni Agustijanto
Cacao sector manager in Indonesia

We need to begin with the individual farmers who make up the industry. To increase their yields and incomes, we need to help provide better access to improved planting materials, fertilisers and best-practices training. Our work in Indonesia and West Africa is a good start.”

So begins the Mars webpage on cocoa, explaining the company’s sustainability approach. In 2013 VECO (now Rikolto) started partnering with Mars on the island of Sulawesi. Together we invested substantially in training farmers to increase their yields and introduce new post-harvest techniques. But more specifically, Rikolto’s role is to increase the business capacities of the farmers’ groups. We aim for solid, trustworthy organisations of cocoa farmers that are capable of organising collective marketing and negotiating in a professional way on behalf of their members.

As cacao manager, I guide Rikolto's work in four different areas: Polman district, Masamba district, East Luwu district and Parigi district. All four have specific characteristics: the environment is different, the way the farmers are organised is different, but also the presence of Mars is not the same in every district. Generally speaking, Mars has two teams “in the field”: a commercial team and a sustainability team. In districts that have received a lot of support in previous years, there’s only a commercial team. The sustainability team operates where more support is needed. Accordingly, in each area we’ve worked with Mars to develop a different business model.

Case study: business relations in the Polman district

Two researchers from the University of Wageningen visited the cocoa-growing area and studied business relations in one of the districts: Polman. Over the past few years I have provided support to the farmers’ organisation, which is called Amanah, in this area. I’ve witnessed how they’ve developed more and more services for their members, how the farmers’ yields have increased, and how most farmers have been producing according to international quality standards (such as Rainforest Alliance) since last year. In my opinion, Mars is one of the companies that has a clear vision, a “farmers first” vision. We see that they also pay better prices, compared with other companies/traders.

In the case study below, you can read about the cocoa programme in Polman district. The role of each stakeholder in the programme is explained, as well as the strategies we’ve developed together in the past few years. Business relations between the farmers’ cooperative and Mars are also highlighted.

Besides the cooperative model described in the case study, there are other types of business models in the other regions, which I briefly explain below.

Unlike the situation in Polman district described in the case study, Mars has a much bigger presence in Masamba district (South Sulawesi). Here, there’s not only a commercial team in place, but also a sustainability team, which has a more active role in organising training for the farmers, e.g. on good agricultural practices and the best way to treat the cocoa after harvesting. Rikolto’s role is to assist the outsourcing organisation (Marewa), a business unit under the farmers’ organisation (Masagena Coop), in managing the internal control systems to comply with the Rainforest Alliance standard, as requested by Mars. We also assist their collective marketing and any negotiations to complete a business deal with the commercial team from Mars. We call this business model the outsourcing model.

In East Luwu district the approach is different again. Here we combine the idea of developing cocoa villages, as in Mars’ vision (briefly explained in the case study), and the cooperative model.

And then there is Parigi district in Central Sulawesi. This is a very remote area in the mountains, and consequently a harsh region where there is hardly any infrastructure (no electricity, poor roads). Farmers are quite scattered and generally they are less educated. There are no cooperatives and no farmers’ organisations, but the farmers do produce cocoa. In this area we use the existing socio-cultural structures to organise collective marketing. Linking unorganised farmers to companies like Mars requires this unique approach.

So all four models are of a different character, depending on the natural and cultural environment and the history and experience of the farmers’ organisations. Each type of business model has its strengths and weaknesses. In a second article to be published early next year, I will go into this in more in detail.

In the past couple of years, I’ve seen more and more cocoa traders and companies coming to the island of Sulawesi, each with their own vision. The biggest challenge for the years ahead is to see how we can set up a platform in each district to manage relations between the farmers’ organisations, the private companies and the supporting NGOs or training teams from the companies.