VECO’s experience working in Sulawesi in partnership with the global cocoa trader Armajaro illustrates how partnering with the private sector can optimize our impact, improve smallholder farmers' livelihoods, and increase the likely sustainability of farmers' gains. A case study of NGO-private sector cooperation on Sulawesi island, Indonesia.
Despite the importance of cocoa cultivation in Indonesia’s economy, productivity, bean quality and farm profitability have declined in recent decades due to aging tree stocks and unsustainable farming practices. Efforts to reverse these trends through on-farm investments in tree rejuvenation, replanting and sustainable practices have lagged due to farmers' limited knowledge and access to capital, and poor transmission of quality price signals.
NGO-private sector cooperation to improve the Polman, West Sulawesi cocoa chain
Armajaro offered incentives to AMANAH – the only organised smallholder cocoa farmer group in Sulawesi – to encourage collective sales to Armajaro, give the cooperative some capital, and enable it to reach out to more farmers. Meanwhile, VECO Indonesia provided technical and capacity-building assistance to the local NGO Wasiat – which in turn supported AMANAH – and developed strategies to facilitate farmer linkages with companies like Armajaro and Mars.
Results to date
Armajaro's cooperation and increased proximity to cocoa farmers in Polman has generated better prices, terms, and flows of market and quality information for the farmers. With VECO's support, AMANAH leaders have gained marketing skills and established sales partnerships not only with Armajaro but with several other traders too. They are also skilled technical trainers, teaching what they know to a growing number of farmer groups in other districts.
Future prospects and challenges
World cocoa prices rose to a 32-year high in early 2011 and prices are expected to remain high in years to come since demand outstrips supply: the confectionery industry needs all the cocoa produced, including the produce of Sulawesi's smallholder farmers.
To date, AMANAH is the only strong farmer organisation working on cocoa in Sulawesi, and there is no strong national cocoa farmer federation. Therefore, farmer organisations need to get stronger and better organised, locally and nationally, to improve their bargaining position within the industry.