Insights from living income benchmarking in Indonesia’s coffee and cocoa sector

Cocoa and coffee both play a key role in Indonesia’s agricultural sector. The country is the third-largest coffee producer and the seventh-largest cocoa producer, according to data from the United States Department of Agriculture (USDA) and the International Cocoa Organization (ICCO) respectively. More than 90% of cocoa and coffee farms are managed by smallholder farmers, many of whom struggle to make ends meet.

Rikolto works with farmer organisations and cooperatives in four provinces -Jambi, South Sulawesi, West Sulawesi, and East Nusa Tenggara- to help coffee and cocoa smallholders earn a decent living from their work. We support them to grow their cocoa and coffee in a more sustainable way, facilitate inclusive trading relationships, and contribute to building an enabling environment to reach lasting policy change.

To assess the effectiveness of our strategies, we use a living income benchmarking approach, comparing actual household incomes with a calculated benchmark for what constitutes a decent standard of living. Living income is defined as the minimum income required by a household to achieve a decent standard of living—one that includes nutritious food in line with WHO and FAO standards, decent housing, healthcare, 12 years of education, and other essential needs.

Measuring living income and actual farmer incomes: key findings

Do smallholder cocoa and coffee farmers in Indonesia earn enough to achieve a decent standard of living? Between July and November 2024, Rikolto conducted a study to estimate the living income benchmark for cocoa and coffee farmers in Indonesia who are members of Rikolto’s partner cooperatives across nine regencies: Ende, Enrekang, Kerinci, East Luwu, North Luwu, Manggarai, Ngada, Polewali Mandar, and North Toraja. The study compared the benchmark in each regency with the actual total household income of local farmers. It involved 869 farming households (512 men and 357 women), with 394 farmers participating in focus group discussions and in-depth interviews.

The results reveal a significant income gap: on average, farmers earned Rp13,231,040 (EUR 702) less than the established living income benchmark. Only two regencies (North Luwu and Polewali Mandar) showed a surplus in actual income compared to the benchmark.

The success in North Luwu and Polewali Mandar can be attributed to larger land sizes per household and higher cocoa prices, even though their land productivity and non-cocoa incomes were similar to those in other surveyed regencies.

Conversely, Ende, Manggarai, and Ngada, all located in East Nusa Tenggara (NTT), recorded the lowest combined actual incomes, despite relatively high non-commodity income streams in some households.

Across all study locations, the productivity of coffee and cocoa farms remains low -less than 25% of their optimal potential, resulting in underperformance in income generation from these commodities.

Improving farm productivity is therefore a critical strategy for increasing farmer incomes. There is significant room for improvement, of up to four or five times the current yields. Productivity gains can be made by encouraging farmers to rejuvenate ageing plantations, adopt certified high-quality seeds, increase fertiliser use, and apply eco-friendly pesticides appropriately. Equally important is the continued support for farmers in adopting Good Agricultural Practices (GAP), alongside routine monitoring to track GAP improvements across all crops.