CONSERVATION COFFEE. Opportunities in Mandailing Natal and The Gayo Highland of Northern Sumatera

Transcription

1 CONSERVATION COFFEE Opportunities in Mandailing Natal and The Gayo Highland of Northern Sumatera

2 Conservation Coffee: An Assesment of Opportunities for Intervention in Mandailing Natal & The Gayo Highland of Northern Sumatera C 2006 Conservation International Indonesia Author : Lydia Napitupulu. Published by Conservation Support Division (CSD), Conservation International Indonesia Jl. Pejaten Barat 16 A, Kemang Jakarta Telp : (62 21) , , Fax : (62 21) Website : ci-indonesia@conservation.org ISBN : Any opinions expressed in this publication are those of the author and do not necessarily reflect those of CI. Design cover and Lay out: Ahad Point. Cover photograph: Arabica coffe of Mandailing Natal, by Diah R.S.

3 ACRONYMS Ateng CI CII Bappeda BGNP CBS FLO FTI GAM GLNP GRDP Ha ICCRI IPM KEL Kg m Madina MKP NASAA NSC Pers. comm. PPKGO Rp Skal UPH UPP VOC Abbreviation of Aceh Tengah; a popular variety of Arabica Conservation International Conservation International Indonesia Local planning agency Batang Gadis National Park Central Body for Statistics Fair Trade Labeling Organization Forest Trade Indonesia Aceh independence movement Gunung Leuser National Park Gross Regional Domestic Product Hectare Indonesia Coffee and Cocoa Research Institute Integrated pest management Leuser Ecosystem Kilogram Meter Mandailing Natal PT Mandailing Kopi Prima, a private grower in Ulu Pungkut (Madina) National Australian Sustainable Agriculture Association Northern Sumatra Biodiversity Corridor Personal communication Gayo organic farmers association Rupiah A Dutch organic certification agency coffee processing unit Central (coffee) processing unit Dutch trading arm during the colonial period All dollar ($) values in US dollars. Exchange rate used in this report is Rp9,300 per $1 (March 2005) 1 km 2 = 100 ha ACRONYMCS iii

4 EXECUTIVE SUMMARY An assessment of two regions, the Gayo Highland of Aceh and Mandailing Natal (Madina) of North Sumatra was conducted to evaluate the social and ecological aspects of the local coffee industry. Both regions comprise part of the Northern Sumatra Biodiversity Corridor (NSC), and therefore a target for biodiversity conservation planning programs of Conservation International. The NSC is part of a global hotspot areas of high biodiversity, yet also highly at risk and vulnerable to conversion and unsustainable resource uses. CI is working with stakeholders across the region in advocating, planning and implementing sustainable land use and economic activities to ensure the integrity of the whole Corridor. A thriving and healthy ecosystem in the region will benefit the millions of people living in its confines. The creation of the Batang Gadis National Park in Madina last year was an enormously positive step in this direction. CII supported stakeholders local and central government agencies, NGOs, the private sector and communities in the formal process of obtaining Park status, and now will continue to support the planning and management of the Park to ensure its protection is not only a status. Involving communities is one step, and this is particularly important in Madina since it is economically still under-developed, even compared to its surrounding regions. In 2003, the per capita Gross Regional Domestic Product of Madina was only little more than half of provincial and national levels. The education level of its population is relatively low, and health services lacking. Infrastructure and other services are basic, although it reaches relatively large part of the population. An overwhelming part of the population relies on agriculture as the main source of livelihood, but its development is lacking strategic direction, financial and technical support. Coffee cultivation was once an important part of the local agriculture. Madina is also amongst the first coffee growing areas in Indonesia outside of Java. The local population first started growing coffee in the mid 1800s almost 150 years ago. Since then coffee cultivation has had its ups and down, and recently it s mostly a down coffee prices are low, especially so at the farmer level. Increasingly coffee trees are abandoned as farmers switch to other crops such as paddy rice, cocoa, and high-value-fruit trees. EXECUTIVE SUMMARY The various evidence seems to conclude that the coffee cherries produced in Madina are being grown in an organic way (i.e. without chemical pesticides, herbicides or fertilizers). However, yields are low, and processed coffee is of low quality, sufficient only to fulfill the local or regional market demand. Low yields are mostly attributed to the fact that coffee trees are not maintained: trees are old, and pruning and cleaning of the grounds are not regularly undertaken. Farmers do not undertake maintenance because it is too costly at current selling prices: coffee plants are located in the mountains far from residential areas, the roads are bad, and transportation too costly. In addition, processing of coffee cherries is undertaken with scant or negligible attention to quality. Rather than use the processing stage to enhance the quality of coffee cherries, farmers spend a small amount of time and attention in generating coffee that potentially can earn added value. Similarly, iv

5 processing is basic since farmers feel coffee prices does not warrant the time and effort spent on ensuring good quality beans. The lack of effort in producing coffee that is of the highest quality on the part of farmers is unfortunate since the region then can not take advantage of the good international image already in place for coffees originating from Mandailing. Instead, other regions in North Sumatra, and even outside of Sumatra, uses the brand to sell their coffees. Meanwhile, the Mandailing or Mandheling name has gained wide international recognition, including in the up-and-coming specialty coffee market. It seems that the most prominent weakness of the Mandailing coffee sector is the fact that it is unorganized. Farmers are not organized in a sustained and systematic fashion; technical and financial assistance are given in a piecemeal manner which does not leverage existing or potential other sources of support. With facilitation and coordination, a coffee expert at the ICCRI is confident that the local coffee sector can turn out acceptable, export-quality beans. Poor cultivation and processing methods can also be attributed to the low level of farmers education in Madina. In general, farmers in Mandailing have only elementary-level schooling. Additionally, farmers lack sustained technical and financial support, both badly needed if coffee production is to succeed supplying the more lucrative demand of international consumers, and especially that of the specialty coffee market. The Gayo Highland is also located in the region designated as the Northern Sumatra Biodiversity Corridor by CI. In administrative terms the Gayo Highland covers two Districts: Bener Meriah and Central Aceh, located adjacent to each other in the vicinity of the Leuser Ecosystem. The Leuser Ecosystem, and the Leuser National Park within it, is an area of high biodiversity and landscape, covering both coastal, lowland and montane ecosystems. In contrast to elsewhere in Sumatra, the Sumatran large mammals such as the Sumatran tiger, elephant and rhino and many different species of wild cats, as well as many other species of fauna and flora, all live in the Ecosystem, some of which are unique only to the area. The Leuser Ecosystem, however, face enormous pressures from human activity, including conversion into agricultural and residential space, illegal logging and hunting of wild animals, pollution, and other threats. These threats are also seen in the Gayo part of the area. The Gayo people were originally from the Karo Highlands of present-day North Sumatra Province. The people retain a distinct cultural and social identity distinguished from its neighbors the Acehnese, the majority of the Aceh population. The Gayos have retained hospitable attitudes and relationships with in-migrants, and they resist movement toward independence that has been the cause of major armed and political conflicts in Aceh for many years. The economic performance of the Gayo people is relatively good compared to provincial indicators, although still very much below national levels. The level of education is still relatively low, and health services scarce, but the area is experiencing strong positive growth during the last few years. The EXECUTIVE SUMMARY v

6 EXECUTIVE SUMMARY coffee sector is the engine for this growth, and in both Bener Meriah and Central Aceh together, more than 90% of all households (more than 57thousand households) are involved in the coffee sector. In contrast to Madina, the coffee sector in the Bener Meriah and Central Aceh Districts in the Gayo Highlands is much more advanced. The Gayo people have been largely successful in taking advantage of local comparative and competitive advantages in coffee cultivation and processing. The Gayo name is now widely recognized internationally, after about two decades of intensive agricultural and marketing efforts. The coffee sector in the Gayo Highlands initially received particular attention from the provincial government agencies (Estate Services and Provincial Planning Agency) and an international donor (the Dutch Government). Promotion of the Gayo coffee brand and the organization of farmers with the aim of creating international demand for local coffees is reaping its benefits now. Today, farmers in the Gayo Highlands have a full option of choices in terms of cultivation and processing methods. Conservation coffee best practices (i.e. organic, fair trade, shade-grown coffee) are being implemented by several groups of farmers. Technical assistance and other support are available to other farmers who desire to also implement conservation practices. There are still minor drawbacks, however, which if not managed in the short term, may undermine the gains and progress already achieved today by the Gayo coffee sector. These drawbacks are 1) deteriorating government-sponsored technical and financial assistance to coffee farmers, notably the previously good research and product development facilities, and 2) the length of time taken by international certification agencies to process new applicants. Additionally, external factors such as the political situation in Aceh are still posing higher risks and costs to coffee farmers. Price premiums are already being enjoyed by those farmers willing to expend the extra effort to practice conservation coffee methods. Still others, however, do not consider the price premium to be high enough to be worth their while. In fact, the generally good prices obtained from coffee have caused casual or part-time farmers to be growing coffee with a view of obtaining profit with minimal effort. Some of these part-time farmers or landlords have other fulltime jobs (e.g. in the civil service) and are piggybacking in the coffee boom, generally without the interest of time to implement conservation coffee best practices. EXECUTIVE SUMMARY In view of the two sites, and considering especially the opportunities for developing and/or strengthening conservation coffee activities, the following recommendations are made. In Madina, work in direct partnership with existing group(s) in producing good quality coffee; provice small-scale marketing assistance to local processors; undertake organic agriculture trainings and the local as well as provincial levels. In the Gayo Highland, the priority activity should be mainstreaming of conservation coffee best practices, working with local stakeholders; alternatives include providing support to local farmer groups already implementing conservation coffee practices, supporting locally appropriate research and development activities. vi

7 RINGKASAN EKSEKUTIF Laporan ini merupakan tinjauan tentang aspek sosial-ekonomi dan aspek ekologis dari industri kopi lokal di dua wilayah di Indonesia, yaitu di Dataran Tinggi Gayo di Provinsi Nanggroe Aceh Darussalam, dan di Mandailing Natal (Madina) di Provinsi Sumatra Utara. Kedua wilayah ini merupakan bagian dari Northern Sumatra Biodiversity Corridor (NSC), yang merupakan target bagi program konservasi keanekaragaman hayati dari Conservation International (CI). NSC sendiri merupakan satu dari sekian banyak hotspot yang telah diidentifikasi oleh CI: wilayah yang memiliki tingkat keanekaragaman hayati yang sangat tinggi, namun pada saat yang bersamaan sangat rawan terhadap kegiatan konversi lahan dan kegiatan pemanfaatan sumberdaya alam secara tidak berkelanjutan. Bersama dengan para mitra, CI bekerja di bidang advokasi, perencanaan dan implementasi pemanfaatan lahan dan kegiatan ekonomi yang berkelanjutan yang bertujuan agar integritas NSC tetap terjaga secara ekologis, karena ekosistem yang sehat dan produktif di wilayah tersebut akan membawa manfaat bagi jutaan orang yang tinggal di sekitarnya. Penetapan Taman Nasional Batang Gadis (TNBG) tahun 2004 merupakan langkah besar ke arah pemeliharaan integritas ekologis di NSC. CI telah menjadi bagian dari kelompok yang terdiri dari pemerintah daerah, provinsi dan pusat, organisasi non-pemerintah, sektor swasta dan masyarakat lokal yang bermitra dalam proses formal pengajuan usul penetapan status taman nasional, dan selanjutnya CI akan mendukung proses perencanaan dan implementasi kebijakan pengelolaan TNBG untuk memastikan bahwa proteksi tidak semata-mata berupa status tanpa didukung kondisi riil di lapangan. Salah satunya adalah dengan cara melibatkan masyarakat lokal; hal ini sangat penting di Madina mengingat bahwa kondisi kesejahteraan masyarakat setempat masih rendah, bahkan bila dibandingkan dengan daerah di sekitarnya. Pada tahun 2003, Produk Domestik Regional Bruto (PDRB) Madina hanya sekitar setengah daripada PDRB provinsi dan PDB nasional. Tingkat pendidikan masyarakat masih relatif rendah, dan pelayanan kesehatan sangat kurang. Walaupun menjangkau sebagian besar dari penduduknya, kondisi infrastruktur dan pelayanan publik di Madina masih seadanya. Jumlah penduduk yang bergantung pada sektor pertanian sangat besar, namung demikian pembangunan pertanian berlangsung tanpa arah strategis dan tanpa dukungan keuangan dan tanpa pendampingan teknis yang memadai. Budidaya tanaman kopi pernah menjadi bagian penting dari sektor pertanian di Madina. Madina merupakan salah satu dari daerah pengembangan kopi pertama di Indonesia di luar luar Jawa. Masyarakat Madina pertama menanam kopi pada pertengahan tahun 1800-an sekitar 150 tahun yang lalu. Sejak itu, budidaya kopi di sana mengalami pasang surut, bahkan dalam beberapa tahun balakangan ini keadaan terutama surut harga kopi sangat rendah, terutama di tingkat petani. Perlahan tanaman kopi ditinggalkan oleh petani yang beralih ke tanaman lain seperti coklat, buah-buahan bernilai tinggi dan menanam padi di sawah-sawah, Beberapa petunjuk mengindikasikan bahwa biji kopi yang dihasilkan di Madina ditanam secara organic, i.e. tanpa pestisida, herbisida atau pupuk dari bahan kimia. Namun demikian hasil panen RINGKASAN EKSEKUTIF vii

8 cukup rendah, dan pemrosesan dilakukan dengan seadanya, sehingga kualitasnya rendah, hanya cukup untuk memenuhi permintaan lokal atau regional. Hasil panen yang rendah disebabkan oleh kondisi tanaman yang tidak terpelihara: tanaman sudah tua dan pemangkasan dan pembersihan lahan tidak dilakukan secara teratur. Petani tidak melakukan pemeliharaan rutin karena hal ini memakan biaya yang cukup tinggi, karena kebun kopi jauh letaknya dari tempat pemukiman (di bukit-bukit), kalaupun ada, jalan sangat buruk kondisinya dan biaya transportasi mahal. Di lain pihak harga jual biji kopi rendah Bersamaan dengan panen yang minim, pemrosesan biji kopi dilaksanakan dengan perhatian yang minim, kalaupun ada, terhadap kualitas. Petani berusaha menggunakan waktu dan upaya sesedikit mungkin dalam menangani biji kopi, sehingga tidak mungkin bagi mereka untuk menghasilkan biji kopi dengan kualitas baik yang dapat menghasilkan harga yang lebih tinggi. Sekali lagi, hal ini dilakukan petani karena mereka tidak optimis dapat memperoleh harga yang sebanding dengan waktu yang upaya yang telah dikeluarkan. Minimnya upaya petani untuk menghasilkan biji kopi bermutu tinggi patut disayangkan, karena dengan demikian petani tidak bisa memetik keuntungan dari image internasional yang sudah terbentuk mengenai kualitas kopi dari Mandailing. Malah daerah lain di Sumatra Utara (dan bahkan di luar Sumatra) yang mengambil keuntungan dari merk Mandailing untuk menjual kopi mereka. Bahkan berbareng dengan meningkatnya permintaan terhadap specialty coffee (kopi dengan kualitas khusus untuk para pehobi minum kopi), nama Mandailing atau Mandheling semakin dikenal luas. Sepertinya kelemahan utama dari kegiatan budidaya kopi di Mandailing adalah tidak adanya pengorganisasian. Petani tidak terorganisasi secara sistematik dan berkelanjutan; dukungan teknis dan keuangan diberikan dalam bentuk sepotong-sepotong, dan dukungan satu dan lainnya tidak saling bersinergi. Seorang peneliti senior di Badan Penelitian Kopi dan Coklat Indonesia bahkan berkeyakinan bahwa kopi rakyat di Madina dapat menghasilkan biji kopi berkualitas ekspor apabila petani memperoleh pendampingan dan koordinasi. Metode budidaya dan pemrosesan yang buruk juga mungkin bisa disebabkan oleh rendahnya tingkat pendidikan petani di Madina. Umumnya petani hanya mengecap pendidikan tingkat SD, bahkan tidak bersekolah. Petani juga tidak memiliki akses terhadap dukungan teknis dan keuangan, dan kedua hal ini sangat penting bila ingin menghasilkan kopi bagi pasar internasional, apalagi bila berambisi mengisi pasar specialty coffee. RINGKASAN EKSEKUTIF Dataran Tinggi Gayo juga terletak di wilayah yang termasuk dalam Northern Sumatra Biodiversity Corridor yang ditetapkan oleh CI. Dalam konteks administratif, Dataran Tinggi Gayo mencakup dua kabupaten: Kabupaten Bener Meriah dan Aceh Tengah, dekat dengan Ekosistem Leuser. Ekosistem Leuser, dan Taman Nasional Gunung Leuser (TNGL) di dalamnya, merupakan suatu wilayah yang memiliki keanekaragaman bentang alam yang tinggi, mencakup ekosistem pesisir, dataran rendah, dan dataran tinggi (montane). Ekosistem Leuser dihuni oleh mamalia besar seperti harimau Sumatra, gajah, badak dan macam-macam species kucing liar, dan juga spesies fauna dan flora lainnya, beberapa di antaranya unik dan hanya terdapat di ekosistem ini. Hal ini berbeda dengan daerah lain viii

9 RINGKASAN EKSEKUTIF di Sumatera di mana sudah terjadi penyempitan areal gerak sehingga mamalia besar tidak lagi dapat ditemukan dalam satu lokasi. Namun demikian Ekosistem Leuser menghadapi tekanan yang cukup tinggi dari kegiatan manusia seperti konversi lahan menjadi tanah pertanian dan pemukiman, pembalakan liar, pemburuan satwa liar, polusi dll. Tekanan-tekanan ini juga terjadi di wilayah Gayo yang berdampingan dengan Ekosistem Leuser. Orang Gayo awalnya berasal dari Dataran Tinggi Karo di Sumatera Utara, dan hingga saat ini mereka memiliki identitas budaya dan sosial yang dapat dibedakan dari tetangganya dari etnis Aceh yang merupakan penduduk mayoritas di Provinsi Aceh. Orang Gayo bersikap terbuka dan menerima orang luar, termasuk immigran dari Jawa, dan mereka bukan bagian dari gerakan kemerdekaan Aceh yang telah mengakibatkan kontak senjata dan komflik politik di Aceh dalam waktu yang cukup lama. Indikator performa ekonomi di Gayo relatif lebih baik daripada rata-rata indikator tingkat provinsi, walaupun masih jauh di bawah rata-rata nasional. Tingkat pendidikan masih relatif rendah, dan layanan kesehatan sangat jarang, namun demikian pertumbuhan ekonomi daerah ini mengalami kenaikan yang positif dalam beberapa tahun terakhir. Sektor kopi diperkirakan merupakan lokomotif bagi pertumbuhan ekonomi, karena baik di Bener Meriah maupun di Aceh Tengah lebih dari 90% dari seluruh rumah tangga (yang berjumlah sekitar 57,000 rumah tangga) terlibat dalam kegiatan penanaman kopi. Berbeda dengan di Madina, sektor kopi di Bener Meriah dan Aceh Tengah, di Dataran Tinggi Gayo, sudah jauh lebih maju. Mereka dapat memanfaatkan dengan baik keunggulan komparatif dan kompetitif yang mereka miliki berkaitan dengan budidaya kopi dan penanganan pasca panennya. Nama Gayo saat ini sudah dikenal secara luas di skala internasional setelah lebih dari 2 dekade upaya penanaman dan pemasaran yang intensif. Awal dari pengembangan sektor kopi secara modern dimotori oleh badan pemerintahan setingkat provinsi (Dinas Perkebunan dan Badan Perencanaan Daerah) dan oleh donor dari negara Belanda. Pembinaan di tingkat budidaya dibarengi dengan promosi merk Gayo dan pengorganisasian petani, dengan tujuan membangun permintaan internasional. Saat ini sektor kopi di Gayo sudah menikmati manfaat dari upaya intensif selama bertahun-tahun tersebut. Seorang petani di Dataran Tinggi Gayo sekarang dapat memilih di antara berbagai alternatif teknik penanaman dan penangangan pasca panen. Bahkan teknik penanaman yang sejalan dengan kegiatan konservasi sumberdaya alam seperti misalnya penanaman bersertifikasi secara organik, di bawah naungan (shade-grown) dan perdagangan secara adil (fair trade) sudah dijalankan di Gayo. Bimbingan teknis dan dukungan lainnya tersedia bagi petani, juga bagi petani yang ingin ikut dalam program conservation coffee (i.e. budidaya kopi yang ramah lingkungan). Namun demikian masih ada beberapa hal yang kurang optimal dilakukan, dan apabila tidak diatasi segera, dapat menggerogoti keuntungan dan progres yang sudah dicapai oleh sektor kopi di Gayo. Hal RINGKASAN EKSEKUTIF ix

10 RINGKASAN EKSEKUTIF tersebut antara lain 1) berkurangnya dukungan teknis dan keuangan yang dilakukan oleh pemerintah, terutama berkurangnya kegiatan riset dan pengembangan produk yang sebelumnya sangat intensif dilakuka; 2) jangka waktu panjang yang diperlukan oleh badan internasional untuk memproses aplikasi baru program sertifikasi. Selain itu, faktor external seperti kondisi politik ikut membebani sektor kopi dengan tingginya risiko dan biaya yang dihadapi petani. Harga jual yang lebih tinggi sudah dinikmati oleh sebagian petani yang bersedia mengeluarkan daya upaya lebih untuk bertanam kopi dengan metode yang ramah lingkungan (i.e. metode terbaik dari program conservation coffee) di Gayo. Namun demikian, masih banyak petani lain yang beranggapan bahwa daya upaya ekstra ini tidak sebanding dengan perbedaan/margin harga yang dapat diperoleh. Harga untuk kualitas yang biasa-biasa saja sudah cukup bagi sebagian petani, terutama bagi mereka yang pekerjaan utamanya bukan bertani dan hanya ikut menanam kopi untuk memperoleh pendapatan tambahan. Yang masuk kategori ini antara lain tuan tanah setempat dan pegawai negeri yang juga ingin memperoleh keuntungan dari boom kopi, tapi tidak memiliki ketertarikan dan/atau waktu untuk menerapkan teknik tanam ramah lingkungan. Dari sisi ekonomis, hal ini dapat diinterpretasikan bahwa margin keuntungan dari keikutsertaan dalam program sertifikasi belum cukup tinggi bagi para petani berdasi ini. Berkaitan dengan profil kedua wilayah yang menjadi fokus dari tinjauan ini, dan dengan mempertimbangkan peluang yang ada untuk mengembangkan dan/atau memperkuat kegiatan conservation coffee, ada beberapa rekomendasi yang dapat diberikan. Di Madina, kegiatan dapat difokuskan pada memberi dukungan pada kelompok petani kopi yang ada sehingga mereka dapat meningkatkan kualitas kopi yang dihasilkan; menyediakan bantuan pemasaran skala kecil bagi usaha pemrosesan kopi; dan mengadakan pelatihan budidaya organik pada tingkat lokal dan provinsi terutama untuk tanaman keras. Di Dataran Tinggi Gayo, prioritas sebaiknya ditujukan pada pengarus utamaan (mainstreaming) teknik-teknik terbaik dari program conservation coffee dengan bekerja bersama mitra lokal. Alternatif kegiatan antara lain terus mendukung kelompok petani lokal yang sudah menerapkan teknik budidaya kopi ramah lingkungan, dan mendukung kegiatan riset dan pengembangan yang sesuai dengan kebutuhan lokal (locally appropriate). RINGKASAN EKSEKUTIF x

11 TABLE OF CONTENTS ACRONYMS EXECUTIVE SUMMARY RINGKASAN EKSEKUTIF INTRODUCTION iii iv vii xiii PART A Mandailing NataI 1 SECTION I Natural resources, opportunities and conservation strategy I-1 SECTION II Cultural, political and socio-economic conditions II-5 1. Demographic conditions II-5 2. Economic conditions II-6 3. Social conditions II-8 4. Attitudes toward conservation II Local and community level political structure II-12 SECTION III Farm-level production system and support services III Factor inputs, resources and production patterns III Prevalent farming and biodiversity conservation practices III Extension services III-23 SECTION IV Local value chain and marketing strategy IV Processing, commercialization and other services IV Financial services IV Marketing and industry strategy IV-30 PART B The Gayo Highland 33 SECTION I Natural resources, opportunities and conservation strategy I-33 SECTION II Cultural, political and socio-economic conditions II Demographic conditions II Economic conditions II Social conditions II Attitudes toward conservation II-41 SECTION III Farm-level production system and support services III Factor inputs, resources and production patterns III Prevalent farming and biodiversity conservation practices III Extension services III-54 SECTION IV Local value chain and marketing strategy IV Processing, commercialization and other services IV Marketing and industry strategy IV-62 PART C Summary and Recommendations 64 REFERENCES 71 ANNEX Site selection diagram 75 TABLE OF CONTENTS xi

12 TABLE OF CONTENTS LIST OF TABLES, FIGURES, MAPS AND BOX Table 1: Basic geographic profile of Madina Table 2: Major rivers in Madina Table 3: Population growth , households, and number of villages in Madina Table 4: GRDP by industrial origin, Madina Table 5: Population by ethnic group, Madina 2003 Table 6: Incidence of sickness in Madina, 2003 Table 7: Coffee area and production in North Sumatra, 2002 Table 8: Arabica coffee area and production by sub-district in Madina, 2004 Table 9: Robusta coffee area and production by sub-district in Madina, 2004 Table 10:Area and production of smallholder estates in Madina by crop type Table 11:Cooperatives in madina, 1998] and 2003 Table 12:Loans taken out at a state-owned pawn shop by Madina residents, Table 13:Area and production of smallholder coffee in Madina, Table 14:Population, area and population density in Central Aceh and Bener Meriah, Table 15:GRDP by sector n Central Aceh (nominal terms), 1993 and 2003 Table 16:GRDP by sector in Central Aceh (constant 1993 prices), 1993; Table 17:Area and production of smallholder estates by crop type, Gayo Region Table 18:Incidence of sickness in Central Aceh, 2003 Table 19:Coffee area and production by sub-district in Central Aceh, 2003 Table 20:Coffee area and production by sub-district in Bener Meriah, 2003 Table 21:Head of households involved in coffee planting and average holdings, Central Aceh Table 22:Head of households involved in coffee planting and average holdings, Bener Meriah Table 23:Coffee processing facilities in Central Aceh, 2003 Table 24:Farmer organizations in the Gayo Region, 2003 Table 25:Government-sponsored groups in Central Aceh, 2002 Table 26:Coffee production in Central Aceh, select years TABLE OF CONTENTS Figure 1: Madina population Figure 2: Madina population pyramid, 2003 Figure 3: Haj participants in 2003 and their level of education Figure 4: The Mandailings concept of village-level spatial arrangement Figure 5: General coffee cherry processing flow, Madina Figure 6: General coffee marketing flow, Madina Figure 7: Coffee cherry processing flow at PPKGO Figure 8: Distribution channel for PPKGO coffee Map 1: Map 2: Box 1: North Sumatera Central Aceh Pak Mai, a small local processor xii

13 INTRODUCTION 1. Background As with most commercially important cash crops presently grown in Indonesia, coffee is not originally from the country. It was brought in by the Dutch through their trading arm, the Vereiniging Oost-Indische Companie or VOC. The first record of successful planting of Arabica coffee (Coffea Arabica) in Indonesia was more than three centuries ago, in 1699 in Batavia (present-day Jakarta). This was much earlier than other introduced crops such as cocoa (1780), tea (1826), oil palm (1848), rubber (1876) and Robusta coffee (Coffea canephora, 1900). From Batavia Arabica coffee spread throughout Indonesia. In Sumatra, coffee were first cultivated in the west coast of the Island across the Bukit Barisan mountain range, first in Bengkulu (1833), and later in Mandailing and Angkola (1841) and Takengon of the Gayo Highland (1908) [Yahmadi, 2000]. The first export of Arabica from Indonesia was in 1711, and production reached its peak between 1880 to 1884 when almost 95,000 tons were produced annually. Thereafter, however, producer decreased steadily to the leaf rust disease (caused by the mold Hemileia vastatrix). Most of the Arabica coffee trees in Indonesia were wiped out except those which were planted at altitudes of 1,000 m or more, which include those in the Gayo Highland of Aceh and in the highlands of Panyabungan (present-day Mandailing Natal) [Yahmadi, 2000]. Indonesia now mainly exports Robusta beans (more than 90% of coffee export), whereas world demand is mostly for Arabica coffee [Susila and Herman, 2004]. However, the few Arabica that is being exported is in general of good quality 71% of the highest grade, and about 95% at least Grade III. This is in contrast with the Robusta export where 74% is Grade IV and lower. Northern Sumatra is one of the main producers of Arabica coffee. Two regions have been identified by Conservation International Indonesia (CII) as having potential to be targeted for a conservation coffee project. The two areas are Mandailing Natal in North Sumatra, and the Gayo Highland in Nanggroe Aceh Darussalam. To assess the suitability of these two regions for a conservation coffee project, an assessment was conducted. This document synthesizes some of the main findings of the assessment, highlighting the differing paths that the coffee-producing industries in the two regions haveundertaken. A complete report is available from Conservation International Indonesia, An Assessment of Opportunities for Conservation Coffee Intervention in Mandailing Natal and the Gayo Highland of Northern Sumatra [Napitupulu, 2005]. Given the limited availability of literature about the coffee sector in Northern Sumatra, and especially in Mandailing Natal, the assessment relied on key informant interviews as much as literature and secondary statistics. The site visits were undertaken between 17 January 8 February 2005 and covered both the Gayo Highland and Mandailing Natal. Key informants were determined based on previous visits of CII personnel, as well as through the further recommendations of the informants themselves. Due to the security situation at the time, it was not possible (nor advisable) to be moving about independently while in Aceh, even though the major cities of the Gayo Highland were relatively safe. In this respect, this report has heavily focused on the activities of the Gayo Organic Farmers Organization (PPKGO) to illustrate the coffee sector of the Gayo Highland. In Madina no security-related problem was encountered. 2. Organization of the report This report follows the guidelines set out for a conservation coffee assessment provided by CII as outlined in Annex A. The main report is comprised of three main sections: Part A describes Madina, Part B the Gayo Highland, and Part C summarizes the previous two sections as well as provides recommendations for conservation coffee projects/programs. The main report is accompanied by a list of references and three annex (Annex A Context assessment guidelines, Annex B Site selection diagram, and Annex C Select maps ). 3. Acknowledgments The Assessment was possible through the willingness of many people to share their time and information. Bapak Zulkarnaen (Dinas Kehutanan Kab. Mandailing) and Bapak Iswandy Idris (PPKGO in Aceh) went out of their way in assisting with information, travel, facilitation, and even coffee samples. Iwan Wijayanto of CII provided needed support and absolute patience. Diah Sulistyowati of CI Medan was a great companion during the travel to the Gayo Highland. Goetz Schroth and Grace Wong of CI DC posed insightful questions and comments. To all: many, many thanks! INTRODUCTION xiii

14 PART A SECTION I PART A: MANDAILING NATAL NATURAL NATURAL RESOURCES CES, INTERRELATION TION WITH COFFEE OPPORTUNITIES, AND FIT WITH CONSERVATION STRATEGY TEGY 1 The Mandailing-Natal District is geographically located between 99 12' 45" to 99 47' 10" East and 0 27' 15" to 1 01' 57" North. It is made up of 17 Sub-districts, ranging from the lowland and coastal areas of Batahan, Muara Batang Gadis and Natal, to the mountains of Muara Sipongi (Table 1). The highest point is the summit of Sorik Merapi volcano at an elevation of 2,145 m. Photo: Fachruddin Mangunjaya Rice field bordered by mixed garden. In 2003 there were 366 villages making up about 662 thousand ha. Most of this area is comprised of forests (56%), with the rest being agricultural land (11%) and fallows (9%), with a very small percentage of built-up area (about 2%). The Madina regions has an interesting geographic feature in that about 75 thousand years ago, a volcanic eruption created the Batang Gadis River Valley (or also called Siondop Valley), which runs in the middle of two mountain ranges. The Valley is a graben, formed the meeting of two geological vaults. Furthermore, this high valley has features of a lacustrine a river valley enclosed by lowland forests. During the SECTION I 1 This section is partly based on Perbatakusuma et al, 2004 NATURAL RECOURCES AND CONSERVATION STRATEGY I-1

15 Table 1. Basic geographic profile of Madina No. Sub-district Topography Elevation (m above sea level) Rainfall (mm/year)* Distance from sub-district capital to district capital (km) Area (Ha) Area % of total Madina 1 Batahan Flat to undulating , , Batang Natal Undulating to hilly , , Bukit Malintang Flat to hilly , Kotanopan Hilly to mountainous , , Lembah Sorik Merapi Hilly to mountainous , Lingga Bayu Undulating to hilly , Muara Batang Gadis Flat to undulating , Muara Sipongi Hilly to mountainous 800-1,000 3, , Natal Flat to undulating , , Panyabungan Flat to hilly , , Panyabungan Barat Flat to hilly , Panyabungan Selatan Hilly to mountainous , Panyabungan Timur Hilly to mountainous , Panyabungan Utara Flat to hilly , Siabu Undulating to hilly , , Tambangan Hilly to mountainous , Ulu Pungkut Hilly to mountainous , Source: CBS Madina 2004 * Measured based on administrative boundaries prior to 2002 split Total 662, rainy season the area is flooded, and it is wet and productive throughout the year, providing sustenance to the wildlife living in its vicinity. Another feature of the region is that it is highly volcanic and somewhat disaster-prone. It is part of the Great Sumatran Vault Zone: the Batang Gadis Batang Angkola Batang Toru Sub-vault. The Vault is in a permanent state of motion, causing frequent earthquakes, the last major one of which occurred in In addition, there is the Sorik Merapi volcano, which erupted last in the 1980 s but did not cause major casualties. There are demonstrated advantages of being located in a volcanic area: Madina has an exceptionally fertile soil, and gold is present in the ground. In fact, gold has been extracted by local communities for many hundreds of years. In recent years a major mining company has undertaken exploration activities in the area. The unique and varied landscape making up Madina is part of the Angkola Lowland Wilderness, an area of 400,000 ha which CI has identified as an important feature towards the development of a Northern Sumatra Biodiversity Corridor 2 (the NSC). In addition, it was from the Angkola region that in 1641 the orangutan (Pongo abelii) was first described to modern science. The formation of the Batang Gadis National Park (BGNP) in 2004 is an important step to realizing the NSC. The BGNP is comprised of two forest types: the Air Bangis-Singkil formation (at medium elevation 300 to 1000 m), and the Bukit Barisan montane forest (at elevations of 1,000 to 1,800 SECTION I 2 The Northern Sumatra biodiversity corridor itself is estimated to be about 4.6 million ha that connects four major protected areas: the Angkola Lowland Wilderness, the Western Toba Watershed, the Leuser Ecosystem, and the Seulawah Heritage Forest. Whereas the corridor approach to biodiversity management focuses on increasing the likelihood of key species to survive by allowing it the necessary range. Conservation is then achieved not only at the species level but also at the landscape (habitat) and genetic levels. I-2 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

16 PART A: MANDAILING NATAL m). Many rare and endangered mammals can be found in the region, including the Sumatran tiger (Panthera tigris sumatrae), wild goat (Naemorhedus sumatrensis), tapir (Tapirus indicus), honey bear (Helarctos malayanus). The tapir and wild goat, furthermore, have been identified as key terrestrial herbivores that can be used as indicators to designing the protected area (i.e. umbrella species ). Compared to other conservation areas of comparable size in Sumatra, BGNP has a high level of bird diversity. There are at least 247 species of birds, 47 of which are placed in protected status by the Indonesian government, and 7 are globally endangered. Furthermore, the presence of 14 raptor species (the top of the food chain) indicate that the food web there is still in good condition. In terms of flora, surveys indicate a diversity that is richer than other lowland forests in North Sumatra, but less than in Borneo and the Malay Peninsula. Several endangered plants include the Rafflesia sp, Nepenthes sp. and Amorphaphalus sp as well as other plants listed in the IUCN Red List. In 2004, CII and partners conducted a rapid biodiversity assessment inside BGNP. The assessment added information to the database on the flora and fauna of the region, but the area Map of North Sumatra SECTION I NATURAL RECOURCES AND CONSERVATION STRATEGY 1-3

17 will need more surveys before a comprehensive information about habitat, life cycles and distribution of more species can be developed. This and other assessments showed, however, that the landscape of the BGNP is relatively non-fragmented, as residential areas and economic activities have been kept at the periphery of the Park, except for one village (an enclave in side the Park). In fact, farms are increasingly grouped together away from inside the Park as former roads become inaccessible and transportation costs increases. This includes coffee plantations those located in mountains and far from residential areas are increasingly abandoned. According to farmers these are increasingly abandoned since coffee prices have not kept up with the cost of it cultivation [A. Nasution and D. Nasution, 2005: pers. comm.]. Mixed garden. A setttlement of coffee growers. Photo: Fachruddin Mangunjaya Photo: Diah R.S. Table 2 Major rivers in Madina No. Name of river District Length (km) Width (m) Normal flow (m 3 /second) 1 Batang Gadis Panyabungan ,974 2 Batahan Batahan ,582 3 Kunkun Natal ,452 4 Parlampungan Muara Batang Gadis ,712 5 Sulang-suling Muara Batang Gadis ,530 Source: CBS Madina, 2003 SECTION I The BGNP is part of four watersheds, with the Batang Gadis watershed being the largest at about 384,455 ha (about 58% of the District), comprising about 943 river and streams. There are several major rivers in the region (Table 2), including the Batang Gadis River, for which the Park is named. In total, the BGNP is the source of water for about 1,175 rivers and streams. The quality of these rivers are presently relatively good and not impacted adversely by economic activities. Rivers are particularly important for the agriculture of the region, and this was one of the main reason strengthened protection status as national park for parts of the area. It is expected that there will be many opportunities for linking environmental services with a coffee intervention. A precursor for such link is already in place, i.e. the lubuk larangan no-take zone (refer to Section II). While the level of threat to the BGNP and the larger Angkola Lowland Forest is still not yet as high as elsewhere in Northern Sumatra, it is particularly important to strengthen local conservation institutions and incentives. Protection of intact habitats owned by farmers, especially with an added value of enhancing their livelihood, will contribute greatly to achieving conservation in Madina. I-4 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

18 PART A SECTION II CULTURAL, POLITICAL AND SOCIO-ECONOMIC CONDITIONS 2.1. Demographic condition PART A: MANDAILING NATAL Prior to 1998 Madina was part of the South Tapanuli District. In 1998 it was declared a District itself, with 8 sub-districts comprising 273 villages. Madina has since evolved into 17 sub-districts which together comprise 328 villages by February About 68 of these villages border the BGNP [Perbatakusuma et al, 2004]. During the past 6 years, the population has more or less been increasing in the region, from thousand people in 1998 to about thousand in 2003 (Figure 1), or growing at an annual average of 1.64%, higher than the national average of about 1.5%. Age group Population 65-upw ards 350, , , Figure 1 Madina population , , , , , , , , , , , Source: CBS Madina, various years Year Figure 2 Madina population pyramid, Population Source: CBS Madina 2004 Male Female Panyabungan District, where the district capital is located, has the highest percentage of the population (17.9%) and number of households (almost 14 thousand households). In terms of density, however, the Lembah Sorik Merapi Sub-district (the valley of the Sorik Merapi volcano) is highest with about 459 people/km 2. The average household size in Madina is between 4-5 people per household (Table 3). The make up of the population is relatively balanced between females and males, with the highest proportion being those under 14 years old (Figure 2). There are two possible explanation on the relatively large size of the youth population (given that the birth rate is not particularly high). First, there is a high level of out-migration amongst the young people completing basic education, both to obtain education as well as jobs. For example, one farmer mentioned that out of 6 children, only one child remains in Madina. Second, there is a sizeable number of Islamic boarding schools in Madina is frequented by a large number of students from outside the region. SECTION II CULTURAL, POLITICAL, AND SOCIO-ECONOMIC CONDITION OF THE SITE II-5

19 The relatively larger size of the 65 and above population, on the other hand, is thought to be caused by returning former residents, desiring to spend their retirement back in the village where they came from. Table 3 Population growth , households and number of villages in Madina No Sub-district* Population Population % of total Population density (Person/Km2) 1 Batahan 29, , Batang Natal 20, , Bukit Malintang 15, , East Panyabungan 12, , Kotanopan 26, , Lembah Sorik Merapi 15, , Lingga Bayu 28, , Muara Batang Gadis 13, , Muara Sipongi 12, , Natal 23, , North Panyabungan 21, , Panyabungan 67, , Siabu 47, , South Panyabungan 9, , Tambangan 21, , Ulu Pungkut 5, , West Panyabungan 8, , Total 377, , Number of households Average household size (Person) Number of villages Source: CBS Madina, various years 2.2. Economic condition The Gross Regional Domestic Product (GRDP) per capita of Madina in 2003 was Rp4,417,385 (about $475 million at exchange rate of Rp9,300/$1). It is more than half of the provincial GRDP per capita (Rp7,957,800) and national GDP per capita (Rp8,304,300). In constant 1993 prices, however, income is only about Rp1,836,913. As with the rest of Indonesia, between 1998 and 1999 there was a significant contraction of the Madina economy. However, we see that the local economy has been expanding in the last few years. In 2001, as regional autonomy began to be fully implemented in Madina, the economy grew by almost a third from it s size in 2000 (in constant 1993 terms). Most of this growth is attributed to the expansion of the trade, restaurant and hotel services sub-sector (Table 4). SECTION II The economy of Madina is dominated by the agriculture sector, comprising almost half (48.47%) of the GRDP in About 83% of the working population is employed by the agricultural sub-sectors (i.e. food and non-food crops, husbandry and fishery) [CBS Madina, 2004]. It is expected that in the future agriculture will continue to be an important source of income and consumption goods for the region. II-6 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

20 PART A: MANDAILING NATAL Table 4 Gross Regional Domestic Product (GRDP) by industrial origin in Madina District (at 1993 constant prices) , in million Rp No Sector * 2003 % of total 1 Agriculture 295, , , , , , Mining and quarrying 1, , , , , , Manufacturing industries 20, , , , , , Electricity and water supply 1, , , , , , Construction 23, , , , , , Trade, restaurant, and hotel 88, , , , , , Transportation and communication 29, , , , , , Finance, leasing, and company services 41, , , , , , Services 25, , , , , , Total GRDP 526, , , , , , GRDP growth Source: CBS Madina, various years *Preliminary data Within agriculture, the most extensive use of land is for growing cash (non-food) crops. In 2004, about 93.5 thousand ha (or about 14% of total the total area of Madina) was dedicated to cash crop cultivation. Almost all cash crops are grown by smallholders, and rubber plantations make up the largest plantation area in SECTION II Photo: F. Mangunjaya Women getting ready to plant rice. CULTURAL, POLITICAL, AND SOCIO-ECONOMIC CONDITION OF THE SITE II-7

21 The most prevalent food crop is paddy rice; the extent of land used for paddy rice agriculture (both wet- and dry-land paddy) was 38,892 ha in 1999, increasing to 44,828 ha in It has been somewhat reduced to 41,722 ha in This slight decrease is attributed to the low prices obtained for rice grains compared to the cost of growing and harvesting. Recently, farmers who grew rice considered themselves lucky if they can recoup costs. Many plant rice paddy at a loss to prevent land being abandoned and losing its productivity. Farmers in Madina rely on a combination of crops for their income. In general, a farmer will grow several types of cash crops in addition to some food crops. In the highlands, the combination can be coffee, fruits, cassiavera and rice paddy. In the lowlands, it is increasingly rubber and oil palm trees, paddy rice and some fruits and vegetables. Farmers are quick to change their planting habits according to price incentives. Coffee were produced fairly actively in 1998, during and right after the economic crisis. The prices offered to farmers were fairly favorable at the time, most likely since the Rupiah weakened. Since 1999, farmers have not continued maintaining their coffee plants due to low prices. Lately, mangosteens (Garnicia mangostana) have been an important source of income in some areas of Madina. It is being exported to meet international demands, including to China. The second most important sector in Madina is the trade, restaurant and hotel services sector, comprising almost one fifth (19.35%) of GRDP in This sector contracted in 1999 after the financial crisis, but since then has expanded significantly. One explanation for this is the changed status of Madina into a District, which brought with it expanded administration and budgetary autonomy. The public sector, consequently, has grown bigger and in turn, the local economy has been boosted, including the services sector catering to both the public sector and the general public. Outside these two main sectors, there is a gamut of economic activities in Madina, albeit mostly small in terms of scale, from trading to small industries such as gold-panning, smoked and dried fish processing, and brown sugar processing Social conditions The main indigenous group is the Batak Mandailing people, comprising more than 80% of the population (Table 5). According to historical records, civilization in the region is thought to have existed since at least the fifth century 3. The first signs of civilization were in the form of structural remains in the Simangambat area (Siabu Sub-district), dated from the 8 th century in. Early kingdoms in Madina are believed to have prospered through the discovery of gold. Gold facilitated the development of what is thought to be a highly advanced civilization at the time, with a written language of its own. This written language later spread elsewhere in North Sumatra. SECTION II Islam is estimated to have first been introduced in Mandailing in the 17 th century, when its practice were mixed with animist beliefs. In the early 19 th century, Moslem settlers (the Paderis) from the area now called West Sumatra caused a large-scale exodus of the Mandailing people to the Malay Peninsula 3 This sub-section on Mandailing history, current social and cultural system, and the lubuk larangan system relies heavily on Perbatakusuma, et al (2004) II-8 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

22 PART A: MANDAILING NATAL Table 5 Population by ethnic group in Madina, 2003 Ethnic group Population Number % of total Mandailing 288, Malay 24, Javanese 22, Tapanuli/Toba 10, Minang 4, Nias Aceh Karo Simalungun Pakpak Others 7, Total 359, Source: CBS Madina, 2004 (present Malaysia) due to religious and other conflicts. Later influences in Madina includes the Dutch zending (Protestant missionaries) and colonial administration. Prior to the settling of the Dutch, the Mandailing people were a thoroughly democratic group. The society was managed by an institution called the na mora na toras dohot raja made up of local leaders at the village level and headed by a chief. All decision-making were conducted in a village meeting house ( sopo godang ) built without walls to enable residents to witness the deliberation process. Upon their arrival, the Dutch tried to instill a feudal structure to wield authority over the Mandailings. Locals revolted against the system being pressed on them, taking up arms and, pioneering revolt against Dutch rule in North Sumatra. In modern times, the Mandailing people group themselves according to the clan system (marga). There are 13 main family groups in this modern time, that dominate the Mandailing society. Three main language groups are spoken: the coastal dialect, the Mandailing Muara and the Siponghi languages. Malay and Javanese immigrants make up more than 13% of the population. Otherwise, interviews reveal that in-migration is rarely encountered; farmers think this is due to the lack of economic opportunities in Madina. Photos: F. Mangunjaya Students of Islamic boarding schools (top) and children sitting in front of their wooden house (bottom). SECTION II CULTURAL, POLITICAL, AND SOCIO-ECONOMIC CONDITION OF THE SITE II-9

23 No official data is available about in- and out-migration, but most in-migrants are believed to have come from the neighboring West Sumatra Province and settle in urban areas. The town of Panyabungan, the district capital and the seat of the Madina Local Government, is thought to host many of these immigrants. SECTION II There is no trend of seasonal migration detected; the need for labor in the agricultural, industrial and services sectors is fulfilled locally. Data is also unavailable regarding overseas workers, but it s estimated that there s a number of people working overseas (mostly in Malaysia). Open conflicts are a rarity in Madina compared to other places in North Sumatra. Most conflicts are attributed to land issues amongst or within (extended) families. Farmer associations. Farmers in Madina are less organized than in Java, and farmer organizations are based fairly strictly on business interests, and in very much a local scope, most often for the objective of receiving support (technical, material or financial) from the government. Local and national government programs often require farmers to be organized into groups when receiving assistance. In many instances, these groups dissolve once the money has been completely disbursed or the program completed. Groups with longer lifespan were most likely formed as cooperatives. Rarely do the farmer organizations serve social mandates in Sumatra this is the general case for Madina as well. The ethnic social structure is stronger and permeates every aspect of life, from birth to death. In fact, several people mentioned that farmer organization may not be as successful in Madina as in, for example, Java, since it is often undermined by familial ties. The role of women. Women in the Mandailing society is very much involved in household decision-making, both in the urban and rural settings. In farming households, women work the land, feed and maintain livestock, process crops, and have a say in the allocation of household income. In households that grow coffee, women will be involved in maintaining coffee plants, harvesting and processing cherries, even up to roasting the beans and packaging them for selling. There are even women coffee collectors/traders by profession As an illustration, while interviewing two different heads of household, the role of the wife is very prominent. One head of household interviewed was a farmer with sizeable land holdings, livestock, and a small coffee processing and retail selling business. In this household, the wife participates in maintaining crops, taking care of the livestock, and roasting and packaging coffee beans. The second head of household has a small-scale ground coffee production business. He travels and buys coffee beans, and is mainly responsible for roasting and grinding it to a final product. His wife manages the small shop in the house, and weighs and packages coffee for retail sale. Both were interviewed together, and often the wife will provide clarification freely. The two households is the norm of the role women play in the household. Education. The local statistics office do not collect data on the level of education of total population of Madina. But as an illustration, amongst the people embarking on the haj pilgrimage in 2003 generally the most better-off in the community since they can afford the costly trip the majority only has elementary (6 years or less) education (Figure 3). It can be surmised, therefore, that the education level of the general population is poorer than this. Health. The prevalence of various illnesses such as diarrhea, malaria, bronchitis, dysentery and TB is still quite high in Madina (Table 6). Infections are even more prevalent amongst children up II-10 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

24 PART A: MANDAILING NATAL Figure 3 Haj participants in 2003 and their level of education Technical college 5% Senior high school 32% Source: CBS Madina 2004 University level (bachelor and graduate levels) 6% Junior high school 17% Elementary school 40% to 14 years of age. One in 14 children in this age group have been inflicted with at least one of these illnesses. Madina is also lacking in medical practitioners and facilities. For example, only 25 general physicians were listed in 2003 for the whole district a ratio of one per more than 75 thousand people. There were also only 5 dentists and 5 specialist physicians in Madina [CBS, 2004]. Table 6 Incidence of sickness in Madina, 2003 Type of sickness Number of children Number of people Diarrhea and cholera 4,088 6,696 Influenza 3,204 6,408 Bronchitis 420 1,584 Malaria 2,460 5,952 Dysentri 1,296 2,724 Total incidents 11,468 23,364 Source: CBS Madina, Attitudes toward conservation The Batak Mandailing people have a concept of sustainable use of the environment based on the needs of a village (huta) or several villages (banua). Each village will need to have a source of water, a forest and grazing ground for livestock. Local myths are replete with stories about water and rivers. Even now, villages are formed near water bodies and are named after rivers (batang), tributaries (aek), streams and creeks (rura), or springs (mual). In utilizing its surrounding natural resources, the Mandailings have a concept of spatial arrangement consisting of five main areas: 1) the settlement area; 2) the fields, pond and rivers;3) the fields, pasture, and mixed garden, 4) the forest as a source of medicinal plants, building materials and as hunting ground, and 5) the forbidden forest which can not be entered by people and is believed to have magical properties (Figure 4). SECTION II CULTURAL, POLITICAL, AND SOCIO-ECONOMIC CONDITION OF THE SITE II-11

25 Figure 4 The Mandailing s concept of village-level spatial arrangement Pemukiman Settlement Paddy field Pond River Field, pasture and mixed crop garden Forest Forbidden forest Source: adapted from Perbatakusuma et al (2004) SECTION II Even though there has been changes in the social structure of the Mandailing people, one the resource management concept that is today still enforced is the lubuk larangan code, or the protected river area/no-take zone. This is a model of river management that was formally coded in the 1980 s out of concern about ensuring the viability of rivers and springs. Local communities determine a portion of river where fishing is not allowed, usually for between 6 to 12 months. Additionally, a fee is charged to residents and visitors to catch fish in the larangan portion, with proceeds going to the village fund to be used for development of village facilities such as a mosque, roads, educational scholarships, etc. The system is in effect an independent enforcement of communal property to what was an open access resource, in effect reducing pressure to the resource [Lubis, 2005]. Parallel to cultural norms, religion plays a major role in governing day-to-day activities in Madina. Madina and for that matter the south-eastern part of North Sumatra province is predominantly a Moslem society. The 2003 statistics lists 98.25% of residents as Moslem, with the rest mostly Protestants and Catholics. In addition, there is a large presence of numerous Islamic boarding schools and religious leaders in the region. In this environment, the role of the religious leaders ulama is paramount Local and community level political structure. Given that the Madina Regency was only recently formed, its public sector is still in its infancy. Many of the staff were brought in from the South Tapanuli Regency, under which Madina belonged prior to Others were transferred from other regencies in North Sumatra, and a few from outside North Sumatra. Still more were newly recruited. For obvious reasons, therefore, the public sector is only recently relatively prepared to fully administer its responsibilities. In terms of agriculture, the Local Government has mostly left land-use decisions to individuals and communities. It seems that the local agriculture service is currently more concerned with providing technical assistance, and there is no evidence of a strategic plan in agriculture. II-12 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

26 PART A: MANDAILING NATAL The Local Government particularly the local forestry service have shown that they are willing to expend the required effort and resource to strengthening conservation status of an existing protected area. The Batang Gadis National Park was formed through the initial proposal by the Local Government, based on the desire of local communities in Madina to maintain the forests and ecological services which they depend on for their livelihoods. In this respect, the process for establishing the Park has been hailed as a novel and model approach in the context of regional autonomy in Indonesia, where previously Parks were formed through a top-down manner by the central government. Photo:Diah R.S. A portion of a river that is a no-take zone. The road to acquiring national park status for the BGNP was not easy. Further, the Local Government has since been in dispute with a mining company with a license (issued by the Central Government) to operate inside the new national park. While the management structure of the new National Park is still in the preliminary stages of design, the Local Government has been proactive in socializing the new status for the park area, especially to communities living around and inside the park. TheLocal Government has repeatedly indicated that the management regime for the park will be participative in nature. Working with CII and other organizations, one of their first activities upon the formation of the Park was to approach community leaders and other stakeholders to engage them in the process of drawing up a management plan for the Park. SECTION II CULTURAL, POLITICAL, AND SOCIO-ECONOMIC CONDITION OF THE SITE II-13

27 PART A SECTION III FARM-LEVEL PRODUCTION SYSTEM STEM AND SUPPORT SERVICES 3.1. Factor inputs, resources and production patterns The original coffee planted in Madina was brought in from Java 4. Today, locals still refer to Arabica coffee as kopi jawa or java coffee; when locals refer to kopi Mandailing or Mandailing coffee, they are referring to the local Robusta coffee. While North Sumatra is an important coffee-growing center in Indonesia, the contribution of Madina in coffee production is very small (Table 7), only about 5% of the provincial total in the year In comparison, the coffee sector in other Districts are larger and involve more households. Table 7 Coffee area and production in North Sumatra, 2002 Province Total Area (Ha) Productive area (Ha) Production (Ton) Productivity (Ton/Ha) # of farmers (Household head) Dairi 18,449 15,242 10, ,362 North Tapanuli 10,651 9,387 8, ,939 South Tapanuli 11,462 8,006 5, ,471 Simalungun 4,828 4,033 4, ,261 Karo 4,192 3,695 3, ,697 Mandailing Natal 4,777 3,660 1, ,426 Toba Samosir 3,145 2,410 2, ,922 Nias 1,617 1, ,635 Langkat 1, ,348 Deli Serdang 1, ,079 Central Tapanuli Labuhan Ratu Asahan Total North Sumatera 62,040 49,337 38, ,276 Source: Ministry of Agriculture 2002 Official statistics show that Arabica coffee is grown in all of the sub-districts of Madina (Table 8) and Robusta in 14 out of 17 sub-districts (Table 9). Over the past years, however, it s estimated that much of the coffee farms have been abandoned or converted. 5 In 2004, there was only about 521 ha of Arabica estates. The Ulu Pungkut Sub-district has the largest expanse, totaling 74 ha. The largest expanse of productive estate, however, was in Muara Sipongi (Map 1). SECTION III 4 Some elder residents stated that coffee in Mandailing was originally introduced by Dutch Protestant missionaries who taught locals how to plant Arabica, rather than the Dutch trade mission VOC. 5 It s prudent, however, to be cautious of in using statistics in this way since it is based on estimates rather than on actual field survey. In terms of coffee, the estimate is obtained by observing the volume of beans being traded in the local market and the amount of seedlings distributed. III-14 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

28 PART A: MANDAILING NATAL No. Table 8 Arabica coffee area and production by sub-district in Madina, 2004 Sub-district Not yet productive (a) Productive (b) Area (Ha) Not productive ( c) Arabica Total (a+b+c) Production (Ton) Average productivity* (Kg/Ha/Year) Estimated average productivity** (Kg/Ha/Year) 1 Ulu Pungkut Tambangan Kotanopan Lingga Bayu Muara Sipongi East Panyabungan North Panyabungan South Panyabungan Lembah Sorik Merapi Batang Natal Batahan Siabu Panyabungan Natal Muara Batang Gadis West Panyabungan Bukit Malintang Total Source: modified and recalculated from Estate Services Madina, 2005 * Calculated by dividing production by productive area ** Reported based on estimates The expanse of Robusta in 2004 was much larger than Arabica, about 2,823 ha, almost a third of which is in Kotanopan (Table 9). Kotanopan also has the most productive Robusta estates, though average yield seems to be low. Table 9 Robusta coffee area and production by sub-district in Madina, 2004 No. Sub-district Not yet productive (d) Productive (e) Area (Ha) Not productive (f) Robusta Total (d+e+f) Production (Ton) (Kg/Ha/Year) 1 Kotanopan , Ulu Pungkut , Muara Sipongi Siabu East Panyabungan Tambangan , South Panyabungan Bukit Malintang Panyabungan , North Panyabungan Batang Natal West Panyabungan Lingga Bayu Lembah Sorik Merapi Batahan Natal Muara Batang Gadis Total 157 1, , Source: modified and recalculated from Luas Areal dan Produksi Tanaman Komoditi Perkebunan 2004 * Calculated by dividing production by productive area ** Reported based on estimates Average productivity* (Kg/Ha/Year) Estimated average productivity** SECTION III FARM-LEVEL PRODUCTION SYSTEM III-15

29 SECTION III III-16 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

30 PART A: MANDAILING NATAL More than 80% of the coffee produced in Indonesia is grown by smallholders. While data is not available to clarify the average size of the individual land holdings of coffee farmers in Madina, in general farmers in Indonesia have 1-2 ha of land on which coffee is grown [ICCRI, 2005]. The average number of coffee plants per hectare is also unknown, but in general farmers plant coffee interspersed with other crops in the same parcel. Given low prices in recent years (explained in more detail in Section IV), coffee is being replaced by other crops (cocoa and fruits such as durian, mangosteen). Planting mangosteen is becoming popular for growing in Pekantan (Muara Sipongi). In Madina, Arabica is thought to be grown at elevations of between 600 m from sea level up to 1600 m from sea level, depending on area. For example, in Pekantan, coffee is grown starting around 600 m from sea level. In Ulu Pungkut Sub-district, coffee is grown from about 1,000 m from sea level. The reason for the good quality of coffee from Madina is thought to be due to the fertile volcanic soil at altitudes of 1,000m upward [Wibawa, 2000]. The average yield per hectare for Arabica is estimated by the Local Estate Services office to be between kg of cherries per ha; for Robusta it is between kg cherries per ha. If we divide the estimated total production by the estimated productive coffee area, for Arabica coffee we have results similar to the estimated productivity level above, i.e. yield of between kg/ha, or an overall average of 655kg/ha. However, the same estimate for Robusta, we came up with widely varying yield levels, up to 7,000/ha! In this case, the explanation may be that coffee were grown in one sub-district but were brought to another sub-district for trade. When tended carefully, Arabica coffee can be quite productive in Madina. For example, the common varieties grown in the Ulu Pungkut area are Kartika 1 and Kartika 2. The cherries of the Kartika variety physically resemble Robusta, although a bit more longish. Harvests of Kartika and the local Robusta have in 2004 been brought to the ICCRI for testing and were pronounced to be of good quality [Matondang, 2005: pers. comm.]. As mentioned above, the environment in Madina seems to be particularly suited for coffee, and other varieties are being planned for planting in Ulu Pungkut, such as the S79 variety. There are critiques, however, that the new varieties are inferior in terms of quality (aroma and taste) compared to the local older varieties. Land in Madina is passed down amongst families. Land is generally family-owned. Certification level, however, is still low. Residents, and especially those in rural areas, are disinclined to certify their land to avoid paying taxes on the land. However, tenure is relatively secure although registration level is low, mostly since traditional community groups have their own land recognition system. In general land is abundant and farmers are willing to sell. Land is not at all costly in the rural areas, especially since productivity is relatively low compared to the urban areas. Occupation of public lands are quite common, however, especially since these public lands are originally communal lands. It is expected, for example, that communities will need to have access to their land located inside the BGNP. For example, there is an enclave of 5,000 ha in the park, as well as claims to communal lands. Another community in Ulu Pungkut, for example, claims that there is about 5 ha of land inside the BGNP which they would not like to relinquish. The land is especially suitable for growing coffee. This is adat land, used to be rice paddy fields but since distance too far not used anymore. In 1968 this land was accessible by road. SECTION III FARM-LEVEL PRODUCTION SYSTEM III-17

31 SECTION III Most coffee farmers still used the traditional way of farming, including cultivation techniques which they learned directly from their fathers through observation and directly being involved in the land. Since coffee has been cultivated in the area since the late 1800 s, most farmers planting coffee has inherited their crops and is familiar with the method for planting coffee since fairly early in their lives. The low level of productivity of coffee farms in Mandailing can perhaps be attributed mainly to the lack of stable prices and stable demand for coffee. This has caused farmers to lag behind in maintaining their coffee crops. In addition, farmers do not have the incentive to undertake better handling and processing which result in better quality coffee cherries. On the other hand, since the area s farmers produce only small volumes of coffee with a high degree of variability in quality buyers are reluctant to spend the time and resources to source from the area. The cost of sourcing from Mandailing can be quite high given the quality of the crop, since villages only produce coffee in small quantities while the transportation cost and the time required to reach these villages can be substantial. Processing of coffee cherries is so far conducted in very small scale in Madina, almost all at the household level. Processing is conducted in a very casual manner. For example, coffee is dried in any open areas, even along roadsides. It is not surprising, therefore, that debris can be detected in roasted beans bought from local household processors. In most cases, farm planning is limited to the diversification of crops to optimize income. No business planning is involved, and commodity quality concerns are very low. In addition, coffee farmers in Madina are less attuned to the commercial aspect of coffee farming and processing compared to the neighboring regions, for example farmers in South Tapanuli or in Rao, their West Sumatran neighbors. Ironically, coffee cherries are bought by neighboring Rao processors to process into ground coffee, which in turn is sold back to consumers in Madina. Most farmers sell coffee in the form of parchment (dried coffee but still with a high moisture level, ready to be hulled) directly to local buyers. Having the coffee dried also allows farmers to store the coffee and wait for better prices and/or collectors to come. This applies especially to farmers whose farms are located far away from local markets and/or village roads. There is no incentive for them to bring coffee directly to the local market since the transportation cost can be very high compared to the volume of coffee they have. Villages in Madina are fairly reached by electricity, although power outages are quite common. Roads are particularly a problem: there is a lack of maintenance of rural roads. In addition, the shortest road to Medan, the capital of North Sumatra, has for some years been in a very rough condition. People prefer to take a longer detour but traveling on better roads. This has raised the cost of transportation to and from Madina, and lowers the price premium that may accrue to farmers. Overall, farmers practice mixed crop system, both in one parcel as well as in separate parcels. For example, a farmer will have cassiavera, coffee, orange and other crops in one parcel, and paddy rice in another parcel. In fact, the traditional way of agriculture is mansela, which literally translates into mixing of crops This practice is still very much followed A recent survey by the local statistics office confirm the tendency for Madina farmers to spread their portfolio and by having many different crops on their land 6. Crops are grown both for household consumption and cash income. III-18 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

32 PART A: MANDAILING NATAL In addition to coffee, various other cash crops being grown in Madina (Table 10). It seems that the soil around Madina is particularly suited for rubber, and cassiavera. The best cassiavera in northern Sumatra is considered to be found in Madina [Y. Nasution, 2005; pers. comm.]. Fairly recently, rubber (crumb rubber) production is increasing. Madina currently produces about 15% of the total North Sumatra Province output of rubber (about 27 thousand tons). Rubber trees are relatively easy and cheap to maintain, and the price of wet rubber which farmers sell in the local markets is reasonable. Most of the productive rubber trees are old, however, and about 60% of all rubber grown was planted in Dutch times (before the 1940 s). About 60% of Madina farmers make a living from rubber 7. Cocoa is only recently introduced to local farmers in Madina, but it has good potential. It is being planted in small scale, especially in lower-lying regions, and it is being processed locally using traditional methods. It has even been tried at higher elevations with good results, for example at elevations of 800 m in Ulu Pungkut. The quality of cocoa harvested locally is not inferior compared to the more-established estates in the Asahan District, but the processing in Madina is of lower standard. The harvested cacao are brought to either Kisaran (South Tapanuli District where there is a cacao auction) or to West Sumatra (where the price is a little bit higher). Price for cacao at international level stable at about $1/kg, and farmers rarely get less than Rp9,000/kg. Still, the profit margin for cacao is relatively slim. Another relatively profitable crop currently is the mangosteen which is targeted for export. Other fruits are both consumed and being sold for income, such as the local variety of the passion fruit. There is no data regarding the particulars of a coffee farmer s age and level of education. In general, however, the level of education in Madina is still very low. A 2002, a survey of smallholder rubber producers in two sub-districts in Madina (Panyabungan and Kotanopan sub-districts) revealed that almost half of rubber farmers (49.6%) received only received elementary level (6 years or less) of education [BPS Madina, 2002]. 6 The Central Bureau for Statistics conducted a national agriculture census in In Madina, the census covered about 85 thousand head of households who were farmer, noting their planting habits as well as technological and other issues. The data has not been entered and tabulated since they local statistics office lacks the financial resources to do this. They are, however, willing to collaborate with external parties to tabulate part or all of the data when needed. 7 The profit margin made out of trading rubber mostly accrues to the middlemen since the marketing channel for rubber is long. The rubber quality or grade, and thus its price, is determined by wholesalers. One of the aims of the Madina Estate SECTION III FARM-LEVEL PRODUCTION SYSTEM III-19

33 III-20 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA SECTION III Table 10 Area and production of smallholder estates in Madina District by crop type No Crop Area Production Area Production Area Production Area Production Area Production Area Production (Ha) (Ton) (Ha) (Ton) (Ha) (Ton) (Ha) (Ton) (Ha) (Ton) (Ha) (Ton) 1 Areca nut/pinang Aromatic oil/nilam 3 Candlenut/kemiri , Cardamom/kapulaga 7 Cassiavera/kulit manis 1, , , , , ,685 1,999 8 Clove/cengkeh Cocoa/coklat 1,607 1,080 1, , , , , Coconut/kelapa 5,986 6,476 5,986 5,785 5,986 5,785 5,986 5,785 4,986 5,785 2,314 1, Coffee/kopi 4,777 2,384 4,797 1,936 4,833 1,945 4,853 1,945 4,887 1,945 2,802 1, Gambir Ginger/jahe 14 Nutmeg/pala 15 Oil palm/kelapa sawit ,784 14,171 20, , Pepper/lada Rubber/karet 42,842 49,431 42,892 26,994 43,025 26,994 43,025 26,994 43,129 26,994 68,914 28, Sugar palm/aren Total estate use 58,340 61,026 57,891 36,000 58,658 36,928 58,160 36,038 63,527 50, , ,953 Source: CBS Madina, various years; Estate Services Madina, various years Note: empty cells indicate no data available

34 PART A: MANDAILING NATAL Given the low level of education, it is not surprising that farmers are quickly drawn to farming schemes that at first seemed profitable but which actually is a scam to sell seeds and other products. For example, there was a case of a pulp and paper company which promised to buy the harvest of a blonde teak ( jati putih ) which was said to be the raw material for paper. Many farmers bought seedlings and planted the tree in their farms. After a few years the paper company was not heard of again and farmers were disappointed. Nowadays farmers are wary of profitable crops. They adopt the wait-and-see attitude before adopting new cultivation techniques or crops. Almost all of coffee farm labor demand is met by the household. During harvesting season, neighbors may help each other in harvesting, which is the traditional way, during seasons when work is abundant or needed to be done quickly. Some of the wealthier villagers or land-owners with other occupation may hire poorer relatives to work their land on a sharecropping basis. Seasonal migrants is not prevalent in Madina. Resident (local) laborers may be hired to tend paddy fields. The level of wages have apparently been kept up with inflation by tying it with the price of rice. Wages may also be payable in kind rather than in cash. Apparently, however, the selling price of rice in the market has not kept up with the costs of laborers, and it has become unprofitable to hire laborers to plant rice paddy. Farmers may have land close to their place of residence or far away, or both. If the farm is located close to the place of residence, a farmer can spend 12 or more hours daily tending their farm, depending on season. If the farms are located far away from their residence and transport is difficult, farmers tend to spend a few consecutive days at the farm rather than make the daily commute. For example, there are farmers in Pekantan area whose coffee farms are located in the mountains 3 km away from their place of residence. Still other farmers can only access their coffee plantations by walking one way for many hours. During coffee harvesting season, farmers may spend 2-3 days at time in their coffee garden Prevalent farming and biodiversity conservation practices in the site Ten districts and about 68 villages border or is located inside the TNBG. Many of them are coffee growing regions, including the five main Arabica producing areas. The are of Ulu Pungkut Sub-district the main producer of Robusta coffee and where it seems that remaining Arabica estates are located is mainly located inside the BGNP. A typical farmer in Madina is relatively busy throughout they year, since they grow many different types of crops. The harvesting of Arabica coffee, for example, vary between regions. In Pekantan Dolok (Muara Sipongi), for example, the peak harvesting season for Arabica will start around April, and may last until July. In Hutagodang (Ulu Pungkut) harvesting is around June to September. Farmers in Madina still uses many traditional ways of farming, including for growing coffee. Farmers rarely uses chemical agents. For example, to prevent pests and to strengthen the coffee tree s resistance to pests, farmers undertake periodic smoking of a garden. In addition, it was mentioned many times that fertilizers are generally not needed for coffee farms, especially forarabica coffee since they are grown high in the mountains where the soil is very fertile. Fertilizers mostly used in growing paddy rice, and the most widespread use is of urea and TSP. SECTION III FARM-LEVEL PRODUCTION SYSTEM III-21

35 In general farmers practice contour planting, establishing live barriers and terracing. Fairly recently, integrated pest management methods have been intensively promoted in Madina. Farmers groups are being trained on these methods, and according to the Madina Estate Services staff, the trainings have been well received by farmers, and that farmers adopt the new practice. Most Arabica treees and for that matter, Robusta in Madina are planted under a shade canopy. The use of shade for growing Arabica has been in effect for generations. Farmers give several reason for using shade, such as to guard against too much sunlight which will cause extensive branching off (meranggas), undergrowth, or having larger leaves and leaving less nutrition for the coffee cherries. In Pekantan area, the traditional shade is the dap-dap tree (elsewhere known as dadap, Erytrina lithosperma or E. subumbrans). In Ulu Pungkut, the traditional shade is the kayu embun (Dacrycarpus imbricatus). Nowadays they are reverting to using a pest-resistant of the lamtoro plant (Leucaena sp, especially the PG 79 variety). The relatively new coffee farm of PT Mandailing Kopi Prima in Simpang Banyak (Ulu Pungkut) uses the lamtoro plant 8. In general, farmers are open to the type of shade used, especially if additional income from the shade trees are possible. For example, the Ulu Pungkut farmers have heard that elsewhere the pepper tree is used as shade (in Bengkulu Province); a farmer is considering to implement this in his coffee garden. Quality issues are not the main concern for farmer in Madina, including in harvesting and processing of coffee. The main reason is the lack of incentive to improving quality. Farmers are not yet producing to fulfill standards international standards such as organic, fair trade, shade grown or ECO OK. Locally, the Indonesian national coffee grading system 9 is barely implemented. Local traders buy coffee according to weight. Expansion of coffee farms is not seen in recent times in Madina; on the contrary, coffee trees are increasingly converted to other crops or being abandoned, transforming itself into forests. Degraded lands are also not widely prevalent, and land clearance for cattle grazing is almost unheard of. Photo: Diah R.S Neglected coffee trees Simpang Banyak (Madina). SECTION III 8 While there are types of lamtoro that are resistant to pests, Najiyati and Danarti (2004) do not recommend the use of this type of tree since it is still very prone to attacks of the jumping flea, Heteropsylla sp. 9 The Indonesian national coffee grading system (Standard Nasional Indonesia or SNI) is based on the defect system and has been in place since 1983 [Yahmadi, 1999]. This standard has two components, a general requirements and a specific requirement. The general requirements consists of various points including the minimum size of beans, moisture content, and others. The specific requirements are based on the number of broken or defective beans per kilogram. It is used by the Indonesian Coffee Exporter Association (AEKI) and developed by the government export inspection agency. III-22 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

36 PART A: MANDAILING NATAL Farmers do practice burning to clear land for cultivation. However, the size and frequency of land clearing by burning is relatively low. Additionally, clearing is mostly practiced on abandoned land rather than forests. Therefore unlike elsewhere in Sumatra, forest fires do not occur in Madina, and therefore is not a threat. Farmers in general understand that many species in the region are endangered, although perhaps they do not know the formal legal status of these species. For example, farmers understand that tigers are an endangered and protected species. Villagers report that tigers are seen in villages in Ulu Pungkut, usually very early morning. Tigers seems to use the villages as acorridor for moving across forests, and do not bother people nor livestock. Farmers hunt wildlife as a side activity, mainly for consumption (e.g. deer), to a smaller extent for sale, and as a method for pest control (wild boar). Traps are set in strategic places which farmers will periodically check Extension services being provided and conditions of service delivery 10. The main provider of extension service in Madina is the Local Government through its respective services office. In coffee agriculture and processing, extension is mainly provided by the Estate Services office 11. Additional support is also given by the Industry, Trade and Investment office, mostly in the form of training and equipment/supplies for coffee processing. Most extension work however, is concerned with the planting aspects of coffee growing, or with the conversion of from Robusta to Arabica varieties, and less to the processing and marketing of beans. Through the local Estate Services office, Madina is part of a national program (along with Deli Serdang and Simalungun Districts) of Pengendalian Hama Terpadu (integrated pest management or IPM). Sixteen extension staff have been trained for IPM in Madina, and they have conducted and IPM training and fieldwork for coffee farmers (Sekolah Lapangan Pengendalian Hama Terpadu, SLPHT). The IPM fieldwork promotes better seed selection, fertilization and maintenance of cash crops, to only use pesticides if natural predators are not present, and to monitor crops effectively. Specific modules are available, e.g. for coffee and cocoa farming. Fifty coffee farmers have participated in 2004 from Hutanamora Village (Lembah Sorik Merapi Sub-district), and in 2003 about 25 people from Ulu Pungkut Sub-district. Training was conducted once a week for with up to 20 meetings, and the activity was financed by the local budget. Previously coffee farmers have used pesticides, although in very small scale 12 since they lack knowledge about pests and its natural predator and disease types. The usual diseases attack the roots and leaves 13. In general, farmers were very receptive to the IPM training. These days farmers do not use agrochemicals at all since it is costly compared to the selling price of coffee. 10 Extension services is used broadly to refer to both traditional agricultural assistance services as well as to any other technical service provider, educator, organizational representative or community member that focuses at the household level in the site. This may include development workers, health promoters, protected area guards and environmental education staff, other governmental agency field staff, etc. It should not be narrowly associated with just the ministry of agricultures technical staff. 11 The Agricultural Services office mainly targets the food crops sector. 12 For example, coffee farmers say that pest is uncommon in Ulu Pungut, perhaps since it is a cold place. 13 Unlike farmers in Gayo, farmers in Madina can not articulate (e.g. provide specific names) the disease types attacking coffee plants. SECTION III FARM-LEVEL PRODUCTION SYSTEM III-23

37 Photo: Diah R.S Coffee at Mandailing Kopi Prima s farm. Apart from assistance/extension to the coffee sector, the Estate Services office is also actively engaged in the promotion and expansion of the rubber sector since They have established seed bank which have actively propagates and distributes rubber seedlings to farmers at cost. A rubber auction market is planned for completion in Another plan in the offing is the development of a 500 ha Local Government-owned estate comprising rubber, cacao and coffee. Assistance by the local Industry, Trade and Investment Services office have come in the form of technical advise on processing and packaging, and in the form of equipment (e.g. plastic bags 14 with and without labels and basic equipment for vacuum sealing). Processors in the ( Dolok Village and some households roasters/grinders in downtown Panyabungan have received such assistance. Apart from working with coffee farmers, the Industry, Trade and Investment Services office have also worked with rubber farmers in creating a rubber cooperative in Kayu Laut Village (South Panyabungan Sub-district) 15. Additional support have also been given by the provincial-level services office. For example, a set of coffee processing machines (from pulping to packaging) was provided to a cooperative in the village Ulu Pungut using funds from the provincial budget. The machine comes with a set of technical assistance from the ICCRI (which constructed the machine) as well as technical training for some of the cooperative s personnel 16. Unfortunately, there is not yet collaboration with universities in the region, for example with the North Sumatra University. SECTION III 14 Both farmers and the Industry, Trade and Investment Series officer concede that paper or carton packaging is better for ground coffee; however it is much more expensive compared to plastic packaging. 15 The rubber sector is much more organized than the coffee sector. In fact, there is a local branch of the Asosiasi Petani Karet Indonesia (association of rubber farmers of Indonesia). 16 The machine, however, is not yet being used since the cooperative lacks operating funds. III-24 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

38 PART A: MANDAILING NATAL PART A SECTION IV LOCAL VAL ALUE CHAIN AND MARKETING STRATEGY TEGY 4.1. Processing, commercialization and other services Processing and commercialization The processing system in Mandailing is in general using a very basic wet method (also called the semi-washed method). The first stage of processing harvesting is done by hand. Since many coffee estates are located far from residential areas, whereas yields are small, many farmers do not only pick ripe cherries, but also unripe, green, ones. Processing of coffee cherries up to the parchment level is generally conducted at the farm level (Figure 6). After being harvested, coffee cherries are transported for further processing, usually at farmers home. Previously cherries are ground in stone grinders to separate the pulp. Nowadays many farmer boil coffee cherries; by boiling even green cherries can be pulped easily [D. Nasution, 2005: pers. comm.]. Figure 5 General coffee cherry processing flow, Madina On farm Harvest Transport to processing place Pulping (Crushing in stone grinder, boiling, or mechanical/hand operated pulper) Overnight (dry) fermentation Washing Storage Or Local collector Or Direct to local market Drying in the sun Off farm Hulling Drying Sorting Domestic or international buyers Hand sorting Drying Next coffee cherries are fermented overnight, in sacks, buckets or other storing apparatus. Cherries are then washed to remove the mucilage, followed by drying. Drying is done in an open, flat spaces such as the yard or roadsides. Raised platforms are rarely used for drying. After a few days of drying, dry cherries are then sold to collectors or are kept for a time until collectors arrive or the price is more favorable. If a farmer has sufficient quantity of beans, he may bring it directly to a local market to be sold. A peculiar aspect of the coffee market in Sumatra, which seems to also be the tendency in Madina, is that cherries are sold at relatively SECTION IV LOCAL VALUE CHAIN AND MARKETING STRATEGY IV-25

39 high moisture level, more than 30%, which makes it more susceptible to molding [Ismayadi and Zaenudin, 2003]. The amount of processing a farmer undertakes will depend on the current selling price and his evaluation whether the price differential is worth the time and effort of processing. Farmers can even sell cherries as they are harvested. Local farmers use the standard weight of a can (kaleng) of coffee to indicate the level of processing (i.e. drying) cherries have undergone. A can of dried beans which will obtain top prices will weigh about 3 kg. If less dry cherries will weigh significantly more, up to 4 kg. A buyer will adjust the price at which he will buy the cherries depending on the weight of the cherries. It is very rare that a farmer will process coffee exclusively from harvesting to roasting on his own. Growers with only a small amount of cherry harvest may sell their harvest to a village-level collector, who then may or may not process the cherries himself before selling it to another collector which buys from several villages (in the sub-district). Ultimately the parchment will end up in the hands of wholesalers in Medan (North Sumatra) and Padang (West Sumatra) For traders, the cost of collection becomes high since each place can only provide low volume of coffee. Roads to and from Madina from other cities in North Sumatra are also not in good condition, making it more costly to transport coffee, especially to Medan. The flow of coffee as it changes ownership is given below (Figure 7). Figure 6 General coffee marketing flow, Madina Farmers Processing units Village level local collector Local consumers (households, coffee shops etc) Regional collectors National buyers Sub-district collectors District collectors Provincial collectors and/or exporters (in Medan or Padang) International buyers SECTION IV In the Mandailing region, Kotanopan is the center for coffee trade, where local coffee collectors meet with buyers who have come from outside the region. Most of the coffee is brought outside the region; very little is being processed domestically, and usually by household or small-scale processors (Box 1). IV-26 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

40 PART A: MANDAILING NATAL Box 1 Pak Mai, a small local processor Pak Mai is a local processor working out of a small shop in the center of town of Panyabungan. He buys coffee directly from farmers in the surrounding areas, sometimes travelling 35 km to villages in Kotanopan. Most of the coffee he buys are Robusta; it is hard to find farmers who has Arabica beans. Whenever he can find some Arabica, he buys it to be mixed with the Robusta. The aroma of local Arabica is different and much better than the Robusta, so a mixture will result in more fragrant cup of coffee. Nowadays he buys dry Robusta parchment at about Rp5,500-Rp6,000/kg, and Arabica at about Rp7,000/kg. In general the quality of beans are about the same everywhere, but he observes that a lot of farmers are switching to cocoa. From about 100 kg of parchment Pak May is able to obtain 70 kg of pure ground coffee (without mixing in other ingredients); he sells these for Rp14,000/kg. He makes two other grades of ground coffee: one type coffee that is mixed with 20% corn powder is sold for Rp12,000, and another with 50% corn powder is Rp8,000/kg. The corn powder he buys in the market, and he was told it comes from Siantar. Pak May on average roasts twice a week. His customers are mostly local households and small coffee shops. His coffee compete with those that comes from Pasaman in West Sumatra Province, which are cheaper. Source: Pak Mai, pers. comm. Most of the coffee beans from Madina will ultimately end up either in Padang (West Sumatra) or Medan (North Sumatra) after passing hands through many middlemen 1. Through the creation of many more local processors (Unit Pengolah Hasil or UPH), farmers will be able to sell directly to processors and thus cut shorter the chain of middlemen. In Simalungun District, for example, the price for coffee at farmer s level (farmgate price) is a little higher than in Madina since the marketing chain is shorter and there are many UPH operating everyday. Sometimes these UPH come to Madina to buy coffee since their processing capacity is higher than local production. For this reason, a large volume of coffee from Madina are thought to originate from the Sidikalang area 2. The market relationship between farmers, cooperatives, intermediaries and buyers are relatively stable interacting in the market place (rather than one on one). There does not seem to be other type of support provided by coffee buyers to farmers. In general, the coffee sector in Madina only caters for the local and regional markets, which are not demanding in its quality requirements. There are indications, however, that the coffee cherries produced by local farmers are of relatively good quality. A recent taste and quality test conducted at the ICCRI on coffee from Ulu Pungkut pronounced that the quality of the coffee is good (Matondang, 2005: pers. comm.]. Another proof is that a local producer, PT Mandailing Kopi Prima, which caters to the export market has had to buy cherries from local neighboring farmers to top off its own production for export purposes [Rangkuti, 2005: pers. comm.]. It seems that with proper processing, the farmers coffee meet the required international (non-organic) standards. 17 This is unlike rubber which is oriented to the market in Medan, and cassiavera which is oriented to Padang. 18 It is almost certain that coffee originating from different places are being mixed in Sidikalang, especially since Mandailing coffees are generally believed to have a better aroma. SECTION Iv LOCAL VALUE CHAIN AND MARKETING STRATEGY IV-27

41 Producer organizations At one time or another farmers in Indonesia have belonged to, or at least requested to join, a farmer s group. Being a member of a group is often a prerequisite for obtaining support (financial, technical, or material) or for participating in a government-sponsored program. In this case, it can be said that most farmer s organization are government-sponsored. There are very few cooperatives in Madina, and in the years between 1998 and 2003, only two additional cooperatives were formed (Table 11). To the best knowledge of local Estate Service staff, there seems to be only two that specifically group coffee producers. The first is in Hutanamale (Kotanopan Sub-district), which was formed a few years back (in 2000 or thereabout). The second is in Huta Godang (Ulu Pungkut Sub-district), which has just been formed in Table 11 Cooperatives in Madina, 1998 and 2003 No Sub-district* Batahan Batang Natal Lingga Bayu Kotanopan Ulu Pungkut Tambangan Lembah Sorik Merapi Muara Sipongi Panyabungan Panyabungan Selatan Panyabungan Barat Panyabungan Utara Panyabungan Timur Natal Muara Batang Gadis Siabu Bukit Malintang 1 1 Total Source: CBS Madina, various years The cooperative in Huta Godang was expressly formed to receive a set of coffee processing machine provided by the North Sumatra Provincial Estate Services office. The set was constructed by the ICCRI is made up of many components to undertake pulping to roasting and grounding, to packaging coffee. The machine is not yet operational since the harvesting season has not yet arrived 19. By procuring the machinery, it is hoped that the local coffee-growing sector can be revitalized, since processing will be easier (and less costly), and quality can be improved. The cooperative is being modeled after a similar experience in Sidikalang (Dairi District, North Sumatra). The Chief (Camat) of the Ulu Pungkut Sub-district stated that several potential buyers 20 have expressed strong interest in making continuous purchase from local farmers, given that a steady volume of beans can be guaranteed. In addition, the group also has plans to apply for the copyright of the term Mandily for their coffee production. SECTION IV Business advisory services Several sources of business advisory services are theoretically available to farmers and farmer organizations: the government technical offices at the local, provincial or even national level (such as the Trade, Industry and Investments Services; Cooperative Office; and the Estate Services itself). Thus far, however, these agencies have not had sustained programs directed at coffee farmers. What have been available are fragmented and piecemeal assistance that were developed without consultation with other relevant agencies and/or the prospective clients themselves (i.e. the coffee farmers themselves). An example is the granting of a set of equipment to a village cooperative as mentioned above, without the long-term facilitation and assistance which may ensure the long term success of the operation. 19 There is also the opinion that the cooperative lacks the funds to finance the initial operation of the machinery. 20 From Jakarta and Pekanbaru (Riau Province). IV-28 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

42 PART A: MANDAILING NATAL Suffice it to say that there is a host of resources (financial and technical) that can be tapped into for assistance to coffee farmers. To access them effectively, however, a coordinating body working closely with farmers for the long term is perhaps what is needed and is currently lacking Financial services Commercial credit from formal financial institutions is not easily accessible to farmers in Madina, and for that matter to farmers in Indonesia in general. The reason is that farmers often can not fulfill the administrative requirements set by banks, and collateral is often not available in the format that banks require 21. Those in need of credit have resorted to borrowing from pawnshops and from unofficial sources, i.e. friends and family members or local creditors (tengkulak or tauke). The Padang Sidimpuan branch of the state-owned pawnshop (Perusahaan Jawatan Pegadaian) reported that the amount borrowed by Madina residents against pawned assets in 2003 totaled Rp13.46 billion (about $1.45 million), more than threefold the amount in 2001, with increasing value per unit of collateral. In the years between only less than 0.5% of collateral was not redeemed (Table 12). No doubt the penchant of Indonesians and, in particular, Sumatrans for investing in the form of gold jewelry facilitates borrowing from pawnshops. Table 12 Loans taken out at a state-owned pawn shop by Madina residents, Year Number of units placed as collateral Value of collateral auctioned off/not redeemed (as % of amount borrowed) ,729 4, , ,044 10, , ,905 13, , Source: CBS Madina, various years Amount Average value borrowed per unit (in million Rp) collateral (Rp) Compared to the interest charged by pawnshops (between 3 to 4% % per quarter), the interest rate charged by these sources vary and can be quite high. However, since collateral is rarely required such arrangements are still quite common. Since the establishment of Madina as an autonomous District, several of the major national banks have established a presence in Panyabungan. In addition, there are two privately-owned credit agencies in Madina (one each in Kotanopan and Panyabungan). There are other potential sources of financial support (both grant and credit) that is available at the national level for 21 Farmers may have fixed assets (land, house, etc) that can be used as collateral, however they rarely have the paperwork to prove ownership (e.g. proof of registration or deeds). The reason is that farmers are reluctant to pay taxes for these assets, or they do not see the benefit of registration. Even if they have the collateral, given the uncertainty of harvest, farmers are reluctant to put up assets a collateral. They would rather go to an informal source of credit (e.g. neighbors, family members, or local creditors/loan sharks) and put up future harvests as collateral. SECTION IV LOCAL VALUE CHAIN AND MARKETING STRATEGY IV-29

43 farmer groups 22. However, these sources are competitive in nature, and farmer groups will need facilitation in order to access them Marketing strategy and industry Mandailing or otherwise known as Mandheling or Mandily, has been known for many, years internationally, ever since the first harvests of the Dutch-sponsored coffee estates were exported to Europe. Presently, the term Mandheling is mostly used to describe coffees from Sumatra in general, rather than the origin or site where the coffee is grown. 23 It is ironic, therefore, that Mandheling coffee have gained ground in the international arena whereas coffee-growing in Mandailing itself is increasingly abandoned. Given the general profusion of descriptions, it s unclear whether the descriptions or terms that are generally used to describe Mandheling coffees are actually applicable to coffees grown in Mandailing. The confusion aside, the specialty market describe Mandheling Arabica as strong and full-bodied; have good (low) acidity, and earthy and warm aroma, and rich, smooth and full-flavored [Mawardi, 1999 and cross-referenced with various coffee internet sites]. While it may be confusing, the use of Mandheling or Mandailing as trade names seem to project the image of good quality coffee, and should be a positive advertising for coffee from Madina 24. Unfortunately, good international image is apparently having no impact on coffee growers in Madina it has not helped boost production and quality coffee that caters to the international market. In fact, the increased consumption of specialty coffees in the past few years, including in Indonesia, have not been sufficient to prevent the negative growth of the coffee sector of Madina. Based on statistics, production over the past few years 25 have been decreasing, slightly picking up in Local farmers indicate that the last immediate time coffee prices were favorable SECTION IV 22 In the aftermath of the financial crisis, it was observed that household, small-scale and medium enterprises were the most resilient in surviving the economic downturn as they were not ridden with foreign currency debt, and were more flexible in adapting their strategy to the new business environment compared to the large-scale enterprises and conglomerates. Since then, the government has budgeted more resources (credit, technical assistance, etc) for micro-, small- and medium-sized enterprises. In addition, policies were put in place requiring banks to allocate a larger portion of their credit to these institutions. 23 Internationally, however, many people apparently think that Mandheling coffee actually comes from Mandailing. For example, Mandheling is described as a one of.two major growing regions ( and that Mandheling coffee is grown in..districts around lake Toba in North Sumatra Province. Yet others indicate that Mandheling and An(g)kola coffees.are grown near the port of Padang in west-central Sumatra, ( The confusion reigns deeper when a coffee labeled Sumatra should consist entirely of beans from a sing crop in a single country, Sumatra. 24 An Australian man traveled to the Netherlands where he was told that the best coffee in the world comes from Mandailing. Back in Indonesia, he worked with his Indonesian father in-law to find land in Mandailing. Having found suitable land in Simpangbanyak Village in Ulu Pungkut, a small coffee estate was established: PT Mandailing Prima Kopi [Rangkuti, 2005: pers. comm.]. 25 Coffee production data for the past years may be available from the statistics office in Sidikalang, South Tapanuli District, where formerly Madina belonged; given limited time during the field visit a data collection trip to Sidikalang was not undertaken. IV-30 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

44 PART A: MANDAILING NATAL were in during the financial crisis, when price was about Rp17,000-18,000/kg of parchment. Given that at such a favorable time local farmers were only able to produce 2,384 tons of coffee, this is perhaps close to the current available production capacity. Table 13 Area and production of smallholder coffee in Madina, ,000 5,000 4,777 4,797 4,853 4,853 4,887 Area and Production 4,000 3,000 2,000 1,000 2,384 1,936 1,945 1,945 1,945 2,802 1,549 3,348 1, Year Area (Ha) Production (Ton) Source: CBS Madine, various years, Estate Services Madina, various years There is no data on the size of the demand for coffee, but from interviews it seems that local and regional demand are stable if not slightly growing. The growth may be due to the decrease in price which can t be met by supply, but since there are alternatives to local coffees, the gap in demand and supply has not induce a price increase. At farmer level in 2004, Arabica was selling for Rp5,500- Rp6,000/kg of parchment, Robusta at about Rp4,000/kg. Given these low prices, old coffee trees were not maintained since it was not economical, especially considering that before 1995 price reached Rp30,000/kg 28. This year processors say that there are buyers who will shell out Rp15,000-19,000/kg for good Arabica beans, yet there is no supply to be bought. To ensure a steady supply of beans, farmers need to receive at least Rp10,000/kg for Arabica [A. Nasution and D. Nasution, 2005; pers. comm.]. If coffee price can be stable, farmers would rather tend to coffee than grow rice. The trend in the past was that price would go up and then there would be an oversupply, which causes price to come down abruptly and significantly. Consequently farmers are wary of price increase for coffee. If price can be stable for at least 5 years, farmers will have the incentive to grow coffee and tend to production on their own. From a village with 150 heads of household in Pekantan Dolok Village, about 5 tons of Robusta can be produced by the village depending on the harvesting season; an exceptionally good season will see 10 tons produced. On the other hand, perhaps only around 200 kg of Arabica will surface in this Village. 26 The rise in area and production size in the statistics may be due to more to diligent data collection (for the purpose of publishing a dedicated yearly statistics on cash crops), rather than actual expansion of the sector. 27 Or as locals put it, while Habibie was president [Darwin, pers. comm.]. 28 Villagers were told that in that year the international supply had gone down due to harvesting failure in Brazil. Many buyers come to the villages to buy coffee from farmers. In the 1980 s buyers came actively to buy from the villages to bring to Medan. SECTION IV LOCAL VALUE CHAIN AND MARKETING STRATEGY IV-31

45 PART A: MANDAILING NATAL SECTION IV During Dutch rule, Robusta was not in demand, although the quality is also quite fine from the area. Presently, there is always a local buyer for Robusta even though the price can be very low. Some people bring the coffee to elsewhere in Sumatra (for example to Dumai in Riau Province) to be mixed with other coffees. The cost of tending to Robusta trees are not so high since farms are located closer to residential areas. The major coffee buyers in the region currently are regional in nature; about half of the regional buyers come from Medan with the other half from Padang (West Sumatra). A major regional buyer is from the neighboring Rao and Pasaman in West Sumatra Province. Processors buy dry coffee beans from Mandailing, produce ground coffee from it packaging it under a Pasaman brand and market it to major cities in Sumatra and Java, including back to Mandailing. A study on coffee quality in the Indonesia coffee triangle (South Sumatra, Lampung and Bengkulu) indicate that the presence of defects are high in coffees at the farmer and local/regional (small- and medium-scale) collectors levels, but significantly lower at the wholesale level. This indicates that significant re-processing are conducted by wholesalers to remove defective beans, and negligible processing if at all at the local collector levels [Yahmadi, 1999] Internationally, Sumatran coffees are generally sold as a varietal coffee, and is primarily used as a component of a blend [Fricke, pers. comm.]. However, local informants believe that no international buyers are buying directly from Madina. It may be that international buyers go through wholesalers or exporters in Medan or Padang. One local buyer emerged last year, PT Mandailing Kopi Prima, which bought about 3 tons of coffee from farmers near its estate to top off its own production which was targeted for export to Switzerland [Rangkuti, 2005; pers. comm.] 29. The Mandailing Arabica has good aroma, much sharper compared to the local Robusta. Locals, however, prefer Robusta. Sometimes when processing, the two are mixed. Additionally, by mixing in corn powder, it s possible for local ground coffee to be sold at lower prices than that paid for coffee parchment. The main local actors promoting the region s coffee seems to have been the Local Government, although it s efforts are small in scale and of very limited exposure (i.e. directed only at the local or regional audiences). For example, the local Madina Trade, Industry and Investment Services office have for several years provided local producers with generic coffee packaging bearing the Mandailing name. Fairly recently, the Local Government promoted a marketing tour to Penang, Malaysia. However, there seems to be no direct communication between clients to farmers, perhaps since there may be several layers of middlemen between farmers and consumers/ultimate buyers in Madina. Consequently, farmers are only vaguely aware of quality requirements. For example, farmers in Ulu Pungkut understand that they will need to improve post-harvesting treatment of their coffee if they want to sell to international buyers. Local government staff seem to be quite motivated in supporting the local coffee sector in recent years. They point out to the success of marketing efforts from Lintong in only a few years, the Lintong brand has achieved success internationally. 29 This information has not been confirmed with the management of PT Mandailing Kopi Prima itself. IV-32 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

46 PART B: THE GAYO HIGHLAND PART B SECTION I NATURAL RESOURCES CES, INTERRELATION TION WITH COFFEE OPPORTUNITIES TUNITIES, AND FIT WITH CONSERVATION STRATEGY TEGY The Gayo Highland is geographically located at 96 27' to 96 22' East and 4 10' to 4 58' North, with elevations ranging from 200-2,600 m above sea level. It is type B (wet) on the Schmidt- Ferguson classification, with average rainfall of mm/year in 162 days out of a year. Administratively it is comprised of two districts, Central Aceh and Bener Meriah Districts, each with 10 and 7 sub-districts respectively. In 2002 there were 324 villages in the region [CBS Central Aceh, 2003; Widyotomo et al 1999]. Several protected areas intersect in the Gayo Highland: the Leuser Ecosystem (which includes the Gunung Leuser National Park), the Lingga Isaq Game Park, and the Seulawah Heritage Forest Ecosystem (Map 2). Part of the Gayo Highland is located within the Leuser Ecosystem, a 2.6 million ha area with formal protected status given in Inside the Leuser Ecosystem is the 865 thousand ha Gunung Leuser National Park (GLNP) which was established earlier in 1980 as one of the first national parks in Indonesia 30. Together, the Leuser Ecosystem is 150 km long, over 100 km wide and is predominantly mountainous. It covers most of the West Barisan, West Alas and East Barisan ranges and is nearly divided by the Alas Valley graben. About 40% of the Ecosystem, mainly in the north, is Photo: Lydia Napitupulu PPKGO farmers coffee tree 30 Leuser Ecosystem (or locally known as KEL, the abbreviation of the Indonesian term of the area, i.e. Kawasan Ekosistem Leuser) as a protected area in 1992, more than 10 years after the Gunung Leuser National Park, with the intention of including areas of particularly high biological diversity and to provide the required range for the larger mammals [Wiratno, 2005; pers. comm.]. SECTION I NATURAL RESAURCES, INTERELATION WITH COFFEE, AND FIT WITHIN CONSERVATION STRATEGY I-33

47 SECTION I steep and over 1,500 meters in elevation. In the lower southern half or about 12% of the Ecosystem, it is below 600 meters and for 25km runs along the coast. Eleven peaks are over 2,700 m in elevation, and the highest point is 3,466m (Gunung Leuser). The Ecosystem has a 3,000 mm rainfall in the north, and up to 4,657mm in the lowland south. Temperatures average between 21 to 28 C and the humidity is always above 60%, especially over 1,700m. In total, the Ecosystem is spread over two provinces, North Sumatra and Aceh. The Ecosystem holds Sumatra s most threatened forest type, the Sumatra lowland forest, in addition to coastal and montane forests. Superlatives abound to describe the Ecosystem: it holds 45% of plant species recorder in the West Indo-Malayan region; at least 194 species of reptiles and amphibians; 387 species of bird; rare mammals such as the Critically Endangered orangutan (Pongo abelii), Sumatran elephant (Elephas maximus sumatranus), Sumatran rhino (Dicerorhinus sumatrensis), Sumatran tiger (Panthera tigris sumatrae), wild goat (Capricornis sumatraensis) dan at least seven of the nine Indonesian cat species. Moreover, the GLNP has been declared a UNESCO Biosphere Reserve. Apart from its highly diversified and unique landscape, flora and fauna, the Ecosystem also provides important ecological services to the millions people living in its vicinity, including the people of Gayo. These services include the flow of water for household, agriculture and industrial use (estimated to serve more than 6 million people); the management and prevention of erosion and flooding; a habitat for freshwater fishery resources; local climate control; carbon I-34 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

48 PART B: THE GAYO HIGHLAND sequestration; a source of genetic diversity; a beautiful landscape for tourists to visit; and many more other services. One source calculated that in monetary terms, the Leuser Ecosystem generates about Rp 1.9 trillion (about $204 million) of services annually [Beukering et al, 2003], and this is not even counting the benefits it generates for people not living in its immediate vicinity. In addition to the Leuser Ecosystem, the Lingga Isaaq Game Park and Forest Preserve and the Seulawah Heritage Forest Ecosystem are all located in parts of the Bener Meriah Sub-district. The mapping of the Game Park is only recently completed, and it covers an area of about 85,381 ha [CBS Central Aceh, 2003]. The Seulawah Heritage Forest covers an area of about 1.4 million ha that is yet without formal protection status, but which has been identified as a crucial area to be conserved in order to maintain the genetic exchange of large vertebrates such as tigers, rhinos and elephants. The area also harbors many endemic species, and acts as a watershed for major cities in the northwestern part of Aceh. Despite its protected status, the Leuser Ecosystem is facing increasing pressures from economic activities such as illegal logging, plantations and other agricultural activities, and development of human settlements. The National Park and its surrounding land classified as buffer zone or watershed protection forest cannot be used for logging, plantation or agricultural schemes but reports of these activities, even inside the Park itself, abound. Similar pressures are also impacting the Game Park and the Seulawah Forest. Given the strategic importance of the Gayo Highlands to the establishment of a viable biodiversity corridor in northern Sumatra, it s important that land use and economic development planning take into account conservation needs. An intervention directed influencing regional landuse strategy and the type of economic activities undertaken may be a particularly effective way of nsuring the achievement of conservation targets in the region. SECTION I NATURAL RESAURCES, INTERELATION WITH COFFEE, AND FIT WITHIN CONSERVATION STRATEGY I-35

49 PART B SECTION II CULTURAL, CONDITIONS POLITICAL AND SOCIO-ECONOMIC 2.1. Key demographic indicators Prior to 2003 the Central Aceh District comprised of more than 263 thousand people living in 322 villages. In 2003, Central Aceh District was split off into two districts, creating the new district Bener Meriah. Today, the two Districts comprise the main coffee-growing area of the Gayo region. During the 5 years between the region s population grew 15.3% or an average of 3.1% annually, much above than the national average of about 1.5% annually for the same period 31. In the last few years since 2002, however, the population seems to have grown at a very high rate. In 2002, a 9.6% jump in the population is seen for Bener Meriah, and 7.2% for Central Aceh. In 2003 the latest year demographic data is available the population of Central Aceh District grew by 4.6% (Table 14). One reason for the rapid increase in the population during these last few years is that the region is now relatively safe, and so people who previously left the region have returned. In addition, economic opportunities have led people from other areas, especially from North Sumatra, to seek jobs there, mostly in the trading sector. In terms of population density, the Bebesen Sub-district in Central Aceh is highest with about 448 people/km 2 ; the Kebayakan Sub-district in Central has the highest average household size (more than 8 people per household). Through the split, Bener Meriah has ended up with a lower proportion of the region s population and area, though not in similar proportions. Consequently population density is about twice of Central Aceh. Bener Meriah also has a somewhat higher average family size. The ratio of female to male population is not overly tipped to one gender for the region: for Central Aceh it is 1 male to 99.3 female, for Bener Meriah the opposite, 1 female to 99.3 male Key economic indicators In nominal terms, the total Central Aceh GRDP in 2003 was Rp8.3 million (about $89.37 million), or a GRDP/capita of Rp5.3 million (about $570). This is lower than the provincial SECTION II 31 Official statistics is not available for Bener Meriah population after Since the split, Bener Meriah District has yet to have a fully functioning local government including the local statistics office which is not yet staffed and operational. On the other hand, starting fiscal year 2004 the Central Aceh District has ceased to collect and report data that includes the Bener Meriah District. Consequently, statistics for the year 2003 and 2004 for Bener Meriah is rarely available. In some cases it s possible to separate data for each district by using statistics prior to the division; in other cases this is not possible since data is not broken down by sub-district. In this section, whenever a statistic is attributed to the region, this means both districts together. II-36 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

50 PART B: THE GAYO HIGHLAND Table 14 Population, area and population density in Central Aceh and Bener Meriah, Area (Km2) Population density (person/ km2) Househo lds Average number of people/ household No Sub-district* Central Aceh 123, , , , , , ,848 4, , Change (%) Linge 14,956 16,291 16,888 18,964 18,693 19,706 21,983 2, , Bintang 7,163 7,116 7,191 7,926 8,082 8,076 8, , Takengon 24,298 24,247 24,430 26,023 27,629 28, Pegasing 16,147 16,636 16,760 18,557 17,884 18,865 12, , Bebesen 23,456 23,509 23,653 26,560 26,611 30,746 21, , Silih Nara 37,887 38,009 38,257 39,769 28,098 30,621 27, , Ketol 12,926 13,112 6, , Kebayakan 24, , Kute Panang average with oil and gas, which was 9, , Celala about Rp9.4 million and the 7, , Lut Tawar 17, , Total Central Aceh national 123, ,808 GDP 127,179 which 137,799 was 139,923 about 149, ,848 4, , Bener Meriah Rp ,587 million 104, ,463 in ,850Without 103, ,464 n.a Change (%) n.a. oil and gas 32, however, the 1 Timang Gajah 39,960 40,059 39,997 39,772 39,520 41,229 n.a , Bukit provincial 31,662 31,756 GRDP/capita 31,934 29,290 for 27, ,710 n.a , Bandar 32,965 33,114 33,532 35,788 33,979 is Rp4.7 million, to which Central 34,302 n.a , Syiah Utama 2,068 3,223 n.a Total Bener Meriah Aceh 104,587 GRDP/capita 104, , ,850 compares 103, ,464 n.a. 1, , favorably (Tabel 15). Coffee farms near PPKGO Grand total Central Aceh processing facilities, Bener Meriah. and Bener Meriah 228, , , , , ,447 n.a. 5, , Source: Central Aceh in Figures, various years * Sub-district names were changed and added after the creation of Bener Meriah District 32 The oil and gas sector is only produced by 3 districts in Aceh: North Aceh, Aceh Tamiang and Lhokseumawe Photo: Lydia Napitupulu SECTION ii CULTURAL, POLITICAL AND SOCIO-ECONOMIC CONDITIONS II-37

51 No Sector * 2003* (% of total) 1 Agriculture 125, , Cash/estate crops 27, , Mining and quarrying 1, , Manufacturing industries 3, , Electricity and water supply , Construction 20, , Trade, restaurant, and hotel 9, , Transportation and communication 15, , Finance, leasing, and company services 5, , Services 27, , Total GRDP 209, , Central Aceh population ,848 Central Aceh GRDP/capita 2002* 4,990,136 Central Aceh GRDP/capita 2003* 5,299,246 Aceh Province GRDP/capita 2003 (without oil & gas)* 4,686,488 Aceh Province GRDP/capita 2003 (with oil & gas)* 8,514,354 Aceh Province GRDP/capita 2003 (with oil & gas)* 9,413,600 Indonesia GDP/capita 2003* 8,304,300 Source: CBS Central Aceh, 2004b *Preliminary data Table 15 GRDP by sector in Central Aceh District (in nominal terms), 1993 and 2003 In nominal terms, between , the economy of Central Aceh grew almost threefold, or an average of about 30% growth per year. This is misleading, since the inflation rate in Indonesia is quite high. In constant terms (i.e prices), Central Aceh GRDP in 2003 was only about Rp277 billion (about $29.85 million), only 1.3 times larger than its 1993 size. This represents an annual growth of only about 3.3% between (Table 16). Accordingly, in constant prices the GRDP/capita in 2003 was only about Rp 1.77 million (or about $190). In other words, the economic situation has not really improved as nominal data seem to suggest. Table 16 GRDP by sector in Central Aceh District (constant 1993 prices), 1993; SECTION II No Sector * 2003* (% of total) 1 Agriculture 125, , , , , Cash/estate crops 27, , , , , Mining and quarrying 1, , , , , Manufacturing industries 3, , , , , Electricity and water supply , , , , Construction 20, , , , , Trade, restaurant, and hotel 9, , , , , Transportation and communication 15, , , , , Finance, leasing, and company services 5, , , , , Services 27, , , , , Total GRDP 209, , , , , Population ,848 Per capita regional product ,768,904 Source: CBS Central Aceh, 2004b *Preliminary data II-38 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

52 PART B: THE GAYO HIGHLAND Within the economy of Central Aceh, the most important sub-sector is agriculture; in nominal terms it made up almost 70% of the economy in The cash/estate crops sub-sector is about 16% of the total economy. The second and third most important sectors in Central Aceh are the transportation and communication sector and the services sector (contributing 12% and 11% of the GRDP in 2003, respectively). Within agriculture, the most extensive use of land is for growing cash crops. The main cash crop in Gayo is coffee. Apart from coffee, sugarcane, tobacco plants, cassiavera and sugar palm make up the five main crops in terms of land use in 2003 (Table 17). Table 17 Area and production of smallholder estates by crop type in the Gayo Region, select years* No Crop Area Production Area Production Area Production Area Production (Ha) (Ton) (Ha) (Ton) (Ha) (Ton) (Ha) (Ton) 1 Aromatic oil/nilam Candlenut/kemiri Cassiavera/kulit manis Clove/cengkeh Cocoa/coklat Coconut/kelapa ,200 7 Coffee/kopi* 73,373 28,968 73,781 28,357 73,821 26,747 37,556 13,827 8 Ginger/jahe Kunyit Nutmeg/pala Oil palm/kelapa sawit Pepper/lada Sugar cane/tebu 2,963 7,938 5,932 44,958 2,932 2,437 2,723 8, Smallholder n.a. n.a. 2,971 15,392 n.a. n.a Estate n.a. n.a. 2,961 29,566 n.a. n.a. 2,321 8, Sugar palm/aren Tobacco/tembakau Quinine/kina Source: CBS Central Aceh, various years; Estate Services Central Aceh, various years *Data prior to 2003 includes Bener Meriah A lesser amount of land is used for growing food crops, and this appears to be only slightly increasing in recent years. The total area for planting food crop in 2003 was 20,858 ha, mostly made up of wetland paddy (14,804 ha) with the rest being tubers, vegetables and fruits [CBS Central Aceh, 2004a] Key social indicators Cultur ulture. e. The main indigenous group in the Gayo Highland is the Gayo people, originally from the Karo Highlands in neighboring North Sumatra Province. Ethnically and culturally, the Gayos have retained an identity that is distinct from their neighbors the Aceh and the Alas people. The most apparent difference is in the language; even now, very few Gayos speak Acehnese. A unique character of the Gayo people is their love for the arts. Not uncommonly heard is the chanting of fishermen by the Lut Tawar Lake, and an all-nighter involving the singing of a didong is not uncommon. It s said that the only cultural center in Aceh can be found in Takengon [Kompas, 30 September 2000]. SECTION II CULTURAL, POLITICAL AND SOCIO-ECONOMIC CONDITIONS II-39

53 SECTION II One curious feature of the Gayo is the high prevalence of suicide, so much so that it has been an object of research for the Indonesian Police Force. Suicide does not only occur among the old and destitute, but also the young and well-off. One psychologist s explanation of this phenomenon is that due to their gentle and submissive nature, the Gayos may find that ending their own life the quickest solution to their problems [Kompas, 30 September 2000]. In addition to the Gayos, another major ethnic group is the Javanese. In the late 19 th century, the Dutch brought in laborers from Java to work in the plantations. Later in the 1970s and 80 s the Indonesian government also sent in transmigrants to the area. Most of these immigrants have remained in Gayo, and they are accepted by the Gayos as part of the community. Contrary to the hostile attitude of Acehnese to immigrants from Java, the Javanese and other ethnic groups have had very few problems with the Gayos, and inter-marriages amongst the ethnic groups are quite common. Today most of the population in the Gayo Highland is made up by a majority of the Gayo people, and the rest a mixture of other ethnic groups including Javanese, Karo, the Batak, Chinese and other ethnic groups. Another feature that distinguishes the Gayo Highland from the rest of Aceh is the unpopularity of the independence movement (GAM). The GAM itself admitted to having difficulties establishing a local office, much less recruiting people from this area the central Aceh area [Kompas, 18 June 2003c]. On the contrary, there are political moves to set up a separate province in southern Aceh region, on the grounds that successive Aceh provincial governments (dominated by Acehnese) have done little to help the indigenous Gayo, Alas and Singkil people of South and Central Aceh. Before the colonial period, the area of central Aceh were ruled by the Gayos in a democratic system made up of four components (sarak opat); the ruler (reje or penghulu), elders (petue), religious leaders (imem), and the people (rakyat). Governance were conducted under the philosophy of sudere genap mufakat or consultation for decision making [CBS Central Aceh, 2004a]. Until recently, this traditional decision-making process is adhered to, although it has somewhat been eroded since the advent of the larger role of the government in local decision-making. In this relatively democratic environment, the women of Gayo hold important positions in the households and the community. In households, women have a say in the allocation of resources and in working the land. In the community, women are welcomed in formal economic institutions, including in commerce and production. For example, about 20% of the farmer-members of the PPKGO are women (and not necessarily widows) [Idris, 2005: pers. comm.]. Health. Illnesses such as diarrhea and cholera, malaria, bronchitis, dysentery and TB are still quite prevalent in Gayo. Data for Central Aceh, for example, are given in the Table below (Table 18). The region is also lacking in medical practitioners and facilities. Only 15 physicians (including dentists) were listed in 2003 for the whole Central Aceh district a ratio of more than 118 thousand people per doctor with no hospitals, only health centers (Puskesmas). II-40 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

54 PART B: THE GAYO HIGHLAND Table 18. Incidence of sickness in Central Aceh, 2003 Type of sickness Total number of people inflicted Diarrhea and cholera 4,973 Pneumonia 138 TB 518 Malaria 6,600 Dysentri 1,972 Total 14,201 Source: CBS Central Aceh, 2004a Religion. The majority (94% in 2003) of people in Central Aceh District is Moslem [CBS Central Aceh, 2004a] Attitudes toward conservation Being an agricultural people, the general population in the Gayo Region have a high appreciation for nature, and know that degradation of their environment will impact their agricultural livelihood. Such concerns are voiced for example, over the decreasing water table of the Lut Tawar Lake, a major source of water and freshwater fishery resource for many people living in its vicinity. Soil and land conservation aspect also feature in the Gayos agricultural practice. Resistance by some farmers to the use of agrochemicals is another indication for the high regard of farmers for their environment. In addition, the Gayos are quick to adopt conservation practices in agriculture such as organic cultivation. On the other hand, however, encroachment on the Leuser Ecosystem have also been reported, including for coffee agriculture. Economic incentives seem to play a large part in the expansion of agricultural lands into protected areas. As the population increases and greater revenues are obtained from farming (especially from coffee farming), incentives for expansion are also heightened. Weak management of protected areas and the lack of coordination in implementing a land-use plan have also not contributed to curbing expansion into protected areas. SECTION II Photo: Lydia Napitupulu Laut Tawar Lake Central Aceh. CULTURAL, POLITICAL AND SOCIO-ECONOMIC CONDITIONS II-41

55 PART B SECTION III FARM-LEVEL PRODUCTION AND SUPPORT SERVICES 3.1. Factor inputs, resources and production patterns Production patterns The origin of coffee plantations in Gayo began with the Dutch colonialists failed effort to establish tea plantations. These were later converted into coffee plantations in the early 1900s. Snouck Hurgronje, an early traveler to the region, noted that coffee were not grown purposefully by the Gayo people, but rather were sown by accident. Coffee trees were considered wild plants; seed were thrown in the year and were used as fencing. Coffee cherries were given to the poultry which further distribute the plant [Kompas, 5 December 2004]. In the 1940 s fighting with the Indonesian independence movement intensified, and, later the Dutch had to flee the area. After the declaration of independence, in the late 1940 s were reclaimed by locals [Nur and Melala, 2001]. Since the area is hilly in nature, it is more suitable for plantation agriculture rather than for paddy rice. These became the smallholders of today [Fricke, 2005; pers. comm.]. Today coffee is the main source of livelihood in the Gayo Highlands of Central Aceh and Bener Meriah. 33 In 2003, the area planted with coffee in the Gayo Highlands totaled 75,524 hectares, producing 23,825.8 tons of coffee cherries. This account for about 7.5% of the total area (1,001,603 ha) and 3.4% of total production (702,274 tons) of Indonesia in Since most of the coffee grown in Indonesia is Robusta, and only about 10% is Arabica the coffee agriculture of the Gayo Highlands may account for up to 75% of the Arabica planted in Indonesia, and about a third (34%) of the total production [BPEN, 2005]. Additionally, an overwhelming 95% of all households in the two Districts are involved in the coffee sector. With the split of the region into Central Aceh and Bener Meriah Districts, the plantation area and number of farmers have been split in almost equal parts between the two districts. The total size of coffee plantations in Central Aceh District in 2003 was 37,556 ha (about 9% of the District s total area), producing about 13,827 tons of coffee cherries at varying productivity levels. Officials estimate that productivity vary between the range of kg/ha, with an average of 680 kg/ha. Calculation of average production in terms of productive area, however, suggest that it might be higher, up to 884 kg/ha (Table 19). In Central Aceh, the largest coffee area can be found in the Silih Nara Sub-district (Map 3). But more than half of these estates are either not productive or neglected. Unproductive and neglected estates seem to be prevalent in Central Aceh, and at the extreme is Ketol, where about 83% of the coffee estates are estimated to be neglected. In total, about 52% of all coffee estates are either not productive or neglected in Central Aceh. SECTION III 33 Coffee not only play an important role as a source of income, but is also serving a social function. Coffee shops in Gayo (and in Aceh in general) have evolved into the main meeting place for local men (women generally do frequent coffee shops), where information is exchanged III-42 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

56 PART B: THE GAYO HIGHLAND The total coffee plantation area in Bener Meriah District (Map 4) at about 37,556 ha in 2003 (about a quarter of the total district area) was slightly vaster than Central Aceh District (Table 20). Production, however, was much lower at 9,999 tons in This is due to the fact that compared to Central Aceh, even smaller tracts of coffee plantations are productive in Bener Meriah. Officials estimate that the productivity of coffee plantations in Bener Meriah ranges from kg/ha, a slightly wider range than in Central Aceh District, although on average they are the same at 680 kg/ha. However, calculations of average productivity by dividing production with productive estates also suggest that productivity in Bener Meriah may also be higher than official estimates in Bener Meriah. About 68% of all coffee estates are either not productive or neglected. No. Sub-district Table 19. Coffee area and production by sub-district in Central Aceh, 2003 Not yet Area (Ha) Productive Not productive (b) productive (d) (a+b+c+d) (Kg/Ha/Year) productivity** 1 Silih Nara 297 5,361 5,229 1,257 12,144 5, Celala 143 2,024 1,140 1,099 4,406 1, Pegasing 398 1,349 1, , Bintang 359 1,383 1, , Linge 552 1, ,141 1, Kute Panang 356 1,350 1, , Ketol ,200 2, , Bebesen 94 1, , Kebayakan , Lut Tawar , Total 2,553 15,640 13,284 6,080 37,556 13, Source: Estate Services Central Aceh, 2004 * Calculated by dividing production by productive area ** Official's reported estimates Neglected Total Production (Ton) Average productivity* Estimated average No. Table 20 Coffee area and production by sub-district in Bener Meriah District, 2003 Sub-district Not yet productive Productive (b) (a) ( c) (Kg/Ha/Year) 1 Permata 143 2,348 3,521 2,533 8,545 2,657 1, Pintu Rime Gayo 371 1,217 2,969 3,974 8,530 1, Timang Gajah 138 3,742 2,969 1,297 8,146 2, Bandar 397 1,661 1,948 1,537 5,542 1,762 1, Bukit 98 1, ,431 2,925 1,207 1, Wih Pesam ,258 2, Syiah Utama ,705 1, Total 1,307 10,842 12,084 13,735 37,968 9, Source: Estate Services Central Aceh, 2004 * Calculated by dividing production by productive area ** Official's reported estimates Area (Ha) Not productive Neglected (d) Total (a+b+c+d) Production (Ton) Average productivity* (Kg/Ha/Year) Estimated average productivity** Current data on the average size of land holding of coffee producers is not available, but for Central Aceh, it s estimated that there were 28,024 heads households involved in coffee planting (about 76% of total households in the districts). This translates to an estimated average of 1.34 ha of land for coffee planting per household given information on the current total area of coffee plantations (Table 21). This seems to confirm a study in 1993 by the Gayo Coffee Research Center (cited in Erwidodo et al, 1994) which estimated that the average coffee farm is between 1 to 3 ha in size. SECTION III FARM-LEVEL PRODUCTION SYSTEM III-43

57 SECTION III III-44 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

58 PART B: THE GAYO HIGHLAND SECTION III FARM-LEVEL PRODUCTION SYSTEM III-45

59 SECTION III A larger number of households were involved in coffee planting in Bener Meriah in 2003: 29,050 households. This translates also translates to an estimated 1.3 ha of coffee plantations per household, similar to that in Central Aceh (Table 22) 34. Growing coffee under shade is the dominant strategy in the Gayo Highlands. For example, compared to coffee growing in Lintong (North Sumatra Province), Gayo farmers are using shade more extensively. While there is no official estimate of what percentage is being shade-grown, Thomas Fricke of Forestrade stated that shade-grown coffee is already very popular in the coffee growing regions of Aceh, and additional promotion is not particularly needed. All farmers under the PPKGO use shade in growing coffee [Fricke, 2005: pers. comm.]. In Central Aceh shade plants are slowly replaced by lamtoro since it is resistant to pest (tahan hama). The traditional shade plant is the gamal tree (kayu air or Glirisida maculata), however it is slowly being replaced by lamtoro which is more resistant to pest. Apart from providing shade, the lamtoro tree yield edible fruits and its wood can be used for fuel. In coffee plantations located close to towns, some farmers are switching to fruit trees as shade, for example to citrus trees (Citrus spp). If placed at least 8m from coffee, coffee can still tolerate such a shade, but any closer and farmer believe the fruit tree compete with coffee for nutrients from the soil. Table 21 Head of households involved in coffee planting and average holdings, Central Aceh, 2003 No. Sub-district Head of household Area of coffee plantation (Ha) 1 Kebayakan 1,245 1,742 2 Bebesen 1,446 2,026 3 Pegasing 2,669 3,737 4 Silih Nara 8,674 12,144 5 Bintang 2,488 3,484 6 Linge 2,242 3,141 7 Ketol 1,903 2,665 8 Kute Panang 3,175 3,046 9 Lut Tawar 1,036 1, Celala 3,146 4,406 Total 28,024 37,556 Source: Estate Services Central Aceh, 2004 Table 22 Head of households involved in coffee planting and average holdings, Bener Meriah 2003 No. Sub-district Head of household Area of coffee plantation (Ha) 1 Bandar 3,997 5,542 2 Permata 6,103 8,545 3 Syiah Utama 1,223 1,713 4 Bukit 2,088 2,925 5 Wih Pesam 1,834 2,568 6 Timang Gajah 7,805 8,146 7 Pintu Rime Gayo 6,000 8,530 Total 29,050 37,968 Source: Estate Services Central Aceh, 2004 Dry coffee cherries, Bener Meriah. Photo: Lydia Napitupulu 34 The average size of landholding for PPKGO farmers is 1 ha [Idris, pers. comm.]. III-46 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

60 PART B: THE GAYO HIGHLAND Photo: Lydia Napitupulu PPKGO farmers coffee farm, Bener Meriah. The variety of coffee grown in the Gayo Highlands are predominantly Arabica. Robusta are planted but in much lower proportion; the main reason is that the price is low for Robusta compared to Arabica. In fact, in recent years Robusta plantations were converted to Arabica. Amongst PPKGO farmers, for example, about 200 ha converted from Robusta to Arabica. There are conflicting accounts on which of the two distinct botanical varieties is the most dominant in the region. One source states that about three quarters of Arabica planted are of the Typica variety [Ismail, pers. comm.], while another source [Nur and Melala, 2001] points to the Catimor, which is a Bourbon Maragogipe [ It is possible that both varieties occur in similar abundance, as indicated by a survey in 1998 by Nur et al (1998) in parts of the Gayo Highland. The Typica variety of Arabica coffee can yield harvest after 3 years, but will last for decades, perhaps even to one hundred years. There are some coffee trees of the Typica variety in the Gayo Highlands that are already at least 58 years old, but still in a good productive condition. The Catimor variety is derived from the Red Caturra and Hibrido de Timor varieties. The Red Caturra variety is characterized by a shorter tree with exceptionally high yields, whereas the Hibrido de Timor variety is particularly resistant to the leaf rust disease. Outside of Gayo, this variety is known as the Ateng variety (both for its short stature and for the fact that it comes from Aceh Tengah or Central Aceh in Indonesian language). One variety of the Catimor, the Catimor Jaluk variety, is particularly popular in the region. It can be grown at a density of 10,000 trees per hectare for the first two or three harvests (after which 75% of them must be removed to allow for better growth [Nur and Melala, 2001]. A national coffee study in the early 1990s revealed that there are about 35 varieties of coffee being planted in the Gayo Highlands [Ismail, 2005: pers. comm.]. Coffee is grown at elevations between 800 to 1,600 m above sea level. Farmers believe that by growing coffee trees at higher elevations coffee trees will be more resistant to pests and diseases. In Gayo coffee it is possible to grow coffee at elevations below 800 m, but farmers believe that it will yield lower quality coffee and will be prone to pests and diseases. Further more, at elevations more than 1,000 m the soil is much more fertile since it is mixed with volcanic powder. SECTION III FARM-LEVEL PRODUCTION SYSTEM III-47

61 SECTION III At the most ideal condition (i.e. farmers growing under the close supervision and guidance of coffee researchers), farmers have been know to produce 2 tons of parchment (pergamino) per hectare. Currently the highest production is about 1,500-1,600 kg of parchment per hectare, with rare occurrences of up to 1,700 kg/ha. After processing, this result in about 800-1,000 kg of greens per hectare. Coffee experts on visits to the Gayo Highlands have found that the coffee cultivation and production system there is state of the art [Fricke, pers. comm.] 35. There are conflicting views, but some of the key informant interview mentioned that some transmigrants in the Gayo Highlands have been more successful at growing coffee (and some other agricultural commodities) than the indigenous Gayo people. Amongst the coffee growers, transmigrants have been more consistently successful than locals producing 800 kg parchment from a hectare of coffee estate. In general, however, those farmers with coffee plantations close to the road system are more able to intensively cultivate coffee, resulting in higher yields. Farmers living far from towns are face higher security risks so they are less able to intensively tend to their crops. When the Dutch started creating plantations in Aceh, it was using common property or community (adat) lands. When the Dutch left the Gayo Highlands, these lands were taken back by community groups, and on these lands coffee agriculture continued, in addition to on individual lands. Individual lands are passed down and divided amongst sons. In this case, land ownership is increasingly in small parcels. Consequently, agricultural expansion have increasingly been into forests and community lands further away from villages including in the buffer zone or the vicinity of the buffer zone of the Leuser National Park. Most of the coffee agriculture expansion, however, is still done by conversion from other commodities, cultivation on neglected agricultural lands or on from former logging concessions, rather than opening up of forests. Expansion seem to be directed to the area in Syiah Utama, Pegasing and Linge Sub-districts. In Linge coffee estates have expanded into the Leuser Ecosystem (Jagung and Bintang villages). Since generally the Gayo Highlands are at elevations of more than 900 m, many lands are particularly suited to coffee agriculture. Other commodities that are expanding include vegetables and horticulture. For transmigrants, land were bought by the government and given to them when the relocated to the Gayo Highlands. Land ownership/tenure is generally secure, with very rare cases of dispute or land grab even though many lands are abandoned due to security reasons. Land is still available widely for purchase or rent, from people who can not undertake agriculture on these lands themselves, or from people who are changing professions (e.g. from planting to trading/commerce). Farmers of the Gayo Highland have a reputation for being progressive professionals, a reputation that matches the reputation of the Karo farmers, their distant cousins in North Sumatra Province. The Karo farmers, however, do not face the security risks that a Gayo farmer must deal with on a daily basis, and which constrain their productivity and limit the efficient distribution of their harvest. The Gayo farmers knowledge of farming techniques, and in particular coffee cultivation, goes back to the early 1900 s when the Dutch started developing plantations in the Gayo Highlands. 35 As comparison, in Latin America yields are half of this. Reasons for the higher yield in Gayo include the longer coffeegrowing season, the ability to manage water from the rain, and the fertile quality of the soil [Fricke, 2005: pers. comm.]. III-48 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

62 PART B: THE GAYO HIGHLAND Local people were employed as laborers (koeli) on the plantations, and were taught various planting techniques, including how to plant coffee. Since then, the Gayo farmers have retained the ability to implement good coffee agriculture, even matching those farmers in Java where coffee agriculture started many years earlier (for example in Jember, Central Java). In addition to using local laborers, the Dutch also brought in transmigrants in the early 1900s, to work the tea plantations. Many of them never left the region, and continue to be farmers. They are, however, inclined to grow tubers (palawija) although some are very good coffee growers. Some of the cultivation practice in the region, therefore is already popular knowledge for many years, perhaps even more than a hundred years, including the need for shade. Not all coffee farmers, however, maintain good coffee-growing practice until now. The most pertinent constraint is the cost (both in terms of out of pocket cost and/or the time and energy required) associated with maintenance such us using compost, routine pruning, and using natural means of combating pest. Routine pruning is especially important, since coffee trees in Gayo are single stemmed. Pruning should be done after each harvest, and heavy pruning every few years. However, many farmers feel that some maintenance activities are not worth the effort (i.e. represent costs without significantly increasing revenues). For example, heavy pruning of a coffee tree will result in zero yield from that tree for at least one harvesting season, so farmers have increasingly disregard this practice. Coffee in the Gayo Highlands are grown interspersed with other crops, including vanilla, chili peppers, ginger, and fruit trees such as durian and citrus (jeruk keprok and jeruk siam, respectively Citrus reticulata and Citrus suhuensis). In a survey in 1998 which covered then sub-districts Bandar, Bebesen, Bukit and Takengon, Nur et al (1998) found that about 67% of farmers have undertaken diversification on their farm. The most diversified are farmers in the Bandar Sub-district. Most farmers still undertaking monoculture were found in Bebesen Sub-district. Some of the other trees planted are bananas, oranges, avocado and passion fruit. The most popular plant is orange which was found in all of the sampled location. The most common are the keprok and siam types. Nur et al (1998) were only able to quantify the monetary contribution of citrus to a farmer s income, since farmers were not able to quantify the monetary benefits for the other crops (bananas, avocado and passion fruit). Researchers found that citrus contribute between 19%-42% of a coffee farmer s income. Farmers also may be growing other corps in a separate parcels, for example vanilla and vegetables. A small portion is used by the household, but mostly harvests from crops are brought to the market, providing additional income. Photo: Lydia Napitupulu The affluent town of Takengon, Central Aceh. SECTION III FARM-LEVEL PRODUCTION SYSTEM III-49

63 Intensive coffee farming, however, is the priority for many farmers such as members of the PPKGO. While additional income from other crops are welcome, they recognize that there is a balance that must be met to prevent other crops competing with coffee trees for nutrients from the soil. Some high value crops such as citrus need to be carefully grown in the same parcel with coffee. The second most important cash crop in terms of the area used for planting in the Gayo Highlands is the sugarcane. Sugarcane plantations, are mostly grown in areas where the soil is sandy, and are mostly not located in the vicinity of coffee trees. Transmigrants from Java in particular like to grow tubers since they are relatively quick-yielding. Harvest are brought to Medan in North Sumatra Province. SECTION III Farming household profile There is no data on the particulars of coffee farmers, however the average education of PPKGO farmers is high school level (between years of schooling). Full-time coffee farmers are generally aided by their family in carrying out the various tasks associated with farm work. Given that farmers generally do not have extensive land holdings, almost all of the labor effort required in tending the farm is provided by household or extended family members. Farmers with large tracts of land, or land owners would rather rent out their farms to other rather than hire workers to help them cultivate the land. Hiring workers require some level of supervision, for which farmers have limited time. Should a farmer decide to hire laborers to help with their cultivation, it is usually done by contracting a set of tasks rather than by the level of effort. For example, maintenance work such as pruning and clearing of underbrush are usually contracted lump-sum based on the size of the area needing the work. Daily individual laborers are sometimes needed, e.g. during harvesting season, and they are paid either in kind or its equivalent in cash. The fee rate for female workers are in general lower than men. There are many scale of producers in the Gayo Highlands, but most farmers still rely on manual labor in cultivation. The processing of cherries, however, are increasingly mechanized. Many do not have their own processing equipment but rather rent or have part ownership in a processing facility. There are numerous facilities both in Bener Meriah and Central Aceh Districts. There are two main issues that loom large over the horizon of Gayo coffee farmers: the security situation in Aceh and potential decline in coffee prices. In general the security in the Gayo Highlands have been more stable than elsewhere in Aceh. The activity of the independence movement (GAM) is fairly limited since there is little support for independence in the area. Still, there are some GAM movements in the area, mostly in the form of extortions of locals, especially farmers living in outlying areas. Once in a while gunfight erupts 36. At the height of armed fighting in year 2000, it was estimated that 60% of coffee farms were neglected, and buyers and farmers alike were not able to travel to and from Gayo to Medan, the 36 Two weeks after the visit for this assessment in February, it was reported that the GAM gunned down a minibus traveling on a major road [Sulistyowati, 2005; pers. comm.]. III-50 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

64 PART B: THE GAYO HIGHLAND coffee trading center in North Sumatra Province. As recently as 2003, farmers have had to abandon their villages and farms. As one farmer stated, in 2003 a group of people came and burned her village of 80 houses. She lost her husband, a child and relatives. The bridge which connects them to their farms was also destroyed and has not been repaired, making it impossible for her to tend to her farm of coffee, durian and candlenut trees [Media Indonesia Online, 2004]. The second major risk is declining coffee prices, although for many years now prices have been favorable. A decline in price in addition to escalating security risk, however, can make coffee cultivation and processing too costly for farmers. In this respect, many farmers are investigating other higher value commodities into which they may diversify their agriculture to hedge against the risk of falling coffee prices Prevalent farming and biodiversity conservation practices in the site In the Gayo Highlands, coffee farming is still mostly conducted in the traditional way. Seeds are obtained by manually selecting from the best (disease-free) trees, grown for a few months in a nursery, and later the best seedlings are planted. The maintenance of plantations are mostly conducted by hand, mostly using non-mechanical tools although a few farmer groups are acquiring mechanical ones. Prior to the mid 1980s, no chemicals whatsoever were used to cultivate coffee in the Gayo Highlands. Later, however, a well-connected businessman influenced the government to promote the use of chemical herbicides to farmers throughout Aceh. Fortunately, it s estimated that only 10% of the total area of coffee plantations use agrochemicals [Nur and Melala, 2001]. Even if chemicals were used, it was in small quantities. Erwidodo et al (1994) reported that in 1994, coffee farmers in the Gayo Highland were using fertilizers way below the recommended levels. On average, only about 22.5 kg of Urea, 14 kg of TSP and 10 kg of KCI were used per hectare per year. 37 Presently, if chemicals are used, it is more likely in the form of a fungicide since the most common diseases for coffee trees are the leaf rust disease (karat daun due to the mold Hemileia vastatrix) and on the roots. On leaves, the fungus may cause them to fall out, resulting in coffee cherries that are too heavy and therefore yielding lower quality. To treat this disease without chemicals, all the coffee leaves must be cut off. Some farmers are reluctant to do this because throwing away leaves diminishes the coffee plant s ability to bear fruit. Similarly, to treat diseases attacking the root system, farmers sometime use chemical fungicides. Without fungicides, a temporary solution is to dig a trench around the diseased plant to isolate it from expanding to other plants the trench must be as deep as the root system of the coffee plant. The long term solution, which a farmer is loath to do, is to cut the plant and wait one year before planting. Either way, farmers need to eventually destroy the diseased plant if they are not to use agrochemicals. So those not on an organic program tend to use agrochemicals. If there are alternative organic means which does not require tree-cutting, farmers would most likely adopt it. But the problem is that 37 The recommended level was 400 kg of Urea, 160 kg of TSP and 320 kg of KCI per hectare per year, with the assumption of 2,000 productive coffee trees per hectare [Erwidodo et al, 1998]. 38 It should be noted that the ICCRI have developed methods of dealing with diseases and pests without the use of agrochemicals [Suara Pembaruan, 2003]. Apparently these methods have not been widely socialized, at least to the coffeegrowing center in Gayo. SECTION III FARM-LEVEL PRODUCTION SYSTEM III-51

65 buyers always insist on not using agrochemicals, but do not come up with organic means or alternatives to eradicate diseases or pests [Idris, 2005: pers. comm.] 38. Previously many years ago, a widespread case of the jumping fleas (kutu loncat, Heteropsylla sp.) affected the shade plant lamtoro which warranted the use of chemicals by farmers in the area. Widespread attack on the lamtoro tree has ceased, especially since many farmers now use a more pest-resistant variety of lamtoro. In terms of fertilizer, for example, organic matters are used. In places close to roads (i.e. transportation is convenient and not costly), waste from coffee processing are being used as organic fertilizer il conservation practices such as contour planting, live barriers, and terracing are widely adopted, these are some of the good agricultural practices that the Dutch had taught locals to do, and are sustained by various (governmental) extension services. There is, however, a small percentage of farmers not implementing coffee best practices. Since coffee is the major crop in the region, the farm management cycle is similar across households. The peak coffee harvesting season is usually February through April, with harvesting occurring later at higher elevations, so for the whole region harvesting season is relatively long. During the peak harvesting season, rainfall is scarce so it is ideal for drying coffee out in the sun. Arabica trees yield harvest once a year; for Robusta it is possible for harvesting to take place twice in a year. Coffee is harvested manually by hand. The most skillful pickers can pick up to 200 liters (100 cans) of cherries a day. Harvesting is usually conducted by farmers and family members, with occasional hiring of additional laborers. In general farmers do pay attention to making sure that they do not damage coffee cherries while picking or transporting them, as good quality beans can command top prices. Several producer groups in the region conduct coffee planting and processing based on international standards. Photo: Lydia Napitupulu SECTION III Waste from fermenting and washing process, Bener Meriah. III-52 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

66 PART B: THE GAYO HIGHLAND The Gayo Organic Farmers Association (PPKGO), for example, has shade grown, organic, fair trade and coffee kids programs 39. They are about to develop a bird-friendly program. PPKGO s organic coffee are certified fair trade by Fair Trade Labeling Organization (FLO), organic by Skal (a Dutch certification agency) and by the National Australian Sustainable Agriculture Association (NASAA). Another large farmer group is under the management of the Genap Mupakat coffee company, which is Skal-certified to producing organic coffee. Although there is no data on what percentage of coffee cultivation and production are under certification, certification is exception rather than the norm in Gayo. However, farmers are enthusiastic to be certified. On the other hand, producer groups have limited resources to help farmers undergo the certification process. Sometimes the certification agencies themselves can not keep up with certification demand, which is the case faced by PPKGO. Farmers application for certification can take a year or more to be processed by certification agency. Apart from international certification, there is a national and a local grading system (refer to Part A, Section 3.2.) In 1989 the total area of coffee plantation was estimated to be around 68,800 ha. Fourteen years later in 2003, according to official statistics this has increased to about 75,524 ha (an increase of about 10% over the 14 years or an average of 0.7% annually). 40 One source indicate that expansion during the decade are in order of 25,000 to 30,000 ha. Most of the expansion have into forests, including in transmigration areas. Notable expansion is in the direction of the Linge Subdistrict toward East Aceh, which is close to the buffer zone of the Leuser Ecosystem. 41 In Bener Meriah expansion is being planned in the direction of abandoned fields, which is currently under discussion to be allocated to returning refugees (mada or internally displaced persons or IDPs) from the tsunami-hit areas. In addition, there is about 10,000 hectares of degraded land in both Central Aceh and Bener Meriah Districts, and there are discussions of rehabilitating these lands by planting shade coffee. During the last year, an estimated 6,000 ha of agricultural lands in the Gayo Highlands were neglected due to the implementation of the martial law and it s accompanying military operation directed at the GAM. But this lower than previously in 2002, when about 60% of coffee farms were estimated to have been abandoned or not at maintained since security condition is not conducive. These farms are those located in the in the periphery/far from towns and villages. Rather than grow degraded, however, abandoned lands seem to be thriving and retuning into a forest-like state, including those previously residential areas. As mentioned in Section I, several protected areas overlap in the Gayo Highland. Farmers do live and work in protected areas. For example, amongst PPKGO farmers a few are located in 6 villages in 39 Contrary to its name, the coffee kids program do not encourage coffee consumption by kids, but rather provides support to coffee-growing families so their childern can have a better life. 40 Caution must be exercised when interpreting official statistics, which do not have a reputation of being very reliable in Indonesia. 41 Only a small number of PPKGO coffee growers have farms located in the buffer zone of the Leuser Ecosystem. In Kerinci farmers are already starting to protect NP since they realize its value for their farms. In Leuser this is not yet seen, as farmers are more passive to the issues of the protected area. SECTION IV FARM-LEVEL PRODUCTION SYSTEM IV-53

67 Linge. Two of these villages, Tanah Abu and Merah Pupuk villages, are located within the Leuser Ecosystem, accessible by small roads going to the farms that trucks can pass. Land conservation issues, also lies closer to town, where the water table of the Lut Tawar Lake is decreasing every year. This is attributed to the decreasing tree cover surrounding its hills [Kompas 18 June 2002c]. Trees are being cut down to be converted to agriculture as well as to be used as fuel and for local construction. The Lake is a source of drinking water for the Town of Takengon, as well as providing energy for a couple of local power-generation plants (PLTA Peusangan I and II) Extension services being provided and conditions of service delivery 42. In the 1980s to early 1990s, the provincial and central government agencies were the main proponents of coffee extension service in the Gayo region. An early major effort was the Central and North Aceh Development Program (CANARD), and a major component of this project was smallholder Arabica coffee development. 43 The implementation agency for the coffee project was the Provincial Planning Agency in collaboration with ICCRI. Major accomplishments of this project included the formation of a local coffee research agency, demonstration plots and extension service to local farmers, provision of seed, equipment and supplies, and the undertaking of a major marketing effort (including overseas). One of the early efforts of the provincial government was to develop a large and modern processing firm, PD Genap Mupakat, in the early 1980s, together with strengthening the local coffee research center. One of the accomplishments of the research center was the development of local Arabica varieties, including hybrid varieties which grow and yield harvest more quickly, and is now popular throughout the rest of Sumatra Another major effort is the successful development of an organic coffee farming system with local farmers. The first organically certified (by Skal) product was shipped for export by Genap Mupakat in 1992 under the brand Gayo Mountain Coffee Organic. 44 Another major funding was created in 1992 by the Organic Coffee Research Project, funded by the national government budget (APBN). Research was conducted by ICCRI, and results of the research was exposed in Central Aceh in a seminar in 1995 [Mawardi, 2002]. The Local Government has also provided support to the coffee sector, especially in recent years as they gain more autonomy. In fact, for the local Central Aceh Estate Services office SECTION IV 42 Extension services is used broadly to refer to both traditional agricultural assistance services as well as to any other technical service provider, educator, organizational representative or community member that focuses at the household level in the site. This may include development workers, health promoters, protected area guards and environmental education staff, other governmental agency field staff, etc. It should not be narrowly associated with just the ministry of agricultures technical staff. 43 Local civil servants and others still remember the large coffee project that was the LTA 77 Loan Technical Assistance No. 77/A for Central Aceh. Many coffee cultivation and processing research and projects were undertaken. The Central Aceh planning and estate services office, however, did not have any remaining document from the project. Unfortunately I did not have enough time to track down documents from the local coffee research center, where presumable some of these documents may be stored. 44 In 1997, after encountering mismanagement and financial problems, the Genap Mupakat company and its facilities were acquired by the Holland Coffee Group, an international coffee supplier. Amongst its objectives, Holland Coffee stated that it will be reviving the coffee research center. As the most advanced coffee processing center in the area, GM had provided technical and other assistance to farmers in coffee growing. For example, during the installation of a set of equipment at the Sumber Rejeki cooperative in 1999 (in Jagong Jeged Village, Linge) [Mulanto, 1999]. This partnership seems to have dissolved, however. IV-54 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

68 PART B: THE GAYO HIGHLAND Photos: Lydia Napitupulu Coffee cherries being dried on concrete platforms by PPKGO workers, Bener Meriah. Coffee drying in the streets of downtown Takengon, Central Aceh. programs and trainings for the coffee sector make up the bulk of their work. For example, training was given to provide know-how of eradicating diseases plaguing coffee trees, in controlling quality, and in introducing mechanical means of coffee processing. Additionally, in association with the provincial Estate Services office, a series of training for pest management and control is being conducted. The trainers usually come from the ICCRI the local coffee research center. Since the number of coffee farmers are large, training is not conducted one-on-one but rather in groups. Apart from the Estate Services office, other branches of the Local Government have regular programs targeted at coffee farmers and the coffee industry, such as the training on small-scale business management by the local Cooperative Services office and the training on the processing and marketing of coffee by the Trade and Industry Services office. In general, government support (notably local and provincial government) for the coffee industry is strong in the Gayo Highlands. Farmer groups themselves also arrange for training and demonstration for their members. For example, Forestrade have sent their farmers to attend training at the ICCRI in Jember, and to Padang for ISO SECTION II FARM-LEVEL PRODUCTION SYSTEM III-55

69 PART B SECTION IV LOCAL VAL ALUE CHAIN AND MARKETING STRATEGY TEGY 4.1. Processing, commercialization and other services Processing and commercialization The general processing of coffee in Gayo is the simple wet method similar to that described for Madina. However, in Central Aceh much more attention is paid to harvesting, including picking only ripe cherries. This is due to higher prices obtainable for better quality beans. Farmers then have the option of bringing their harvest to processing centers in the region for mechanical processing such us pulping and hulling. In 2003, for example, there were 42 pulping and hulling facilities in the Central Aceh District alone (Table 23). Table 23 Coffee processing facilities in Central Aceh District, 2003 Pulping and hulling facilities No Sub-district Capitalization Unit Employee (000Rp) 1 Linge ,010 2 Bintang ,500 3 Lut Tawar n.a. n.a. n.a. 4 Pegasing ,800 5 Bebesen ,394 6 Silih Nara ,820 7 Ketol ,750 8 Kebayakan ,200 9 Kute Panang n.a. n.a. n.a. 10 Celala ,600 Total ,377,074 Source: CBS, 2004a SECTION IV Larger processing plants of farmer groups implement a more complete wet processing method. For example, PPKGO farmers and their processing partner Trimaju implement both the dry processing and wet processing methods according to customer s request. Before becoming members of PPKGO, farmers were not acquainted with the wet processing method. This wet technique is similar to that done in Ethiopia, and is characterized by wet fermentation and by hulling in the wet parchment form (elsewhere in the world it is dry parchment method that is used). This processing method is said to be what gives it a distinct flavor profile. PPKGO has two different ways in which coffee harvesting and processing are conducted. The first process is where the cleaning, sorting, pulping, fermenting and drying are done at the local processing centers. Each of these centers serve about 25 coffee farmers. A collector 45 gathers the harvest of this assigned farmer group and brings it to the local processing center. Here cherries are processed to the parchment form, when then it is brought to the main processing center to be further sorted, weighed, dried, hulled, and dried further before it is ready to be sent to the Medan storage facilities. In 45 Collectors are chosen by farmers amongst their own. Each collector will need to have a means of transport for picking up and delivering harvest to the processing center. In return, collectors receive some fee and a portion of profits. IV-56 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

70 PART B: THE GAYO HIGHLAND Medan it is further weighed, dried and sorted according to customer specifications, before being bagged for export. A second way is where cherries are brought in by collectors directly to the main processing center to undergo the complete processing stages, either in the from of wet processing or dry processing. This main processing center has a pulping machine that has a processing capacity of 6,000 kg per hour, and is able to operate 24 hours a day, where about 30 peoples work fulltime, sometimes in shifts. Throughout the process, speed is of essence, as Arabica will ferment quickly. Robusta, which the PPKGO also produces, can keep for longer. The processing stages undergone by the PPKGO is illustrated below (Figure 7). Activity at the farm gate (on farm) ends with harvesting, weighing and getting cherries ready for transport to the main processing facility. Alternatively, processing can be done at the local processing facility up to the parchment form, where it then will be brought to the main facility for hulling and completing the rest of the process. The collector gathers beans from many farmers, which will then be brought to the main processing facility. The collector s task does not end here, as that person will also gather the rejected beans for sale to the local market. The rest of the process is undertaken at the main processing center, and in this case by the processing partner firm, Trimaju. Once ready from the huller, it is dried and prepared for transporting to Medan, where the final processes for export are implemented, including ensuring the moisture level of beans. The water used by the PPKGO and its partners for the processing of coffee cherries in the main processing center and some of the local processing centers are especially channeled from a source in the Burbur Mountain, about 5 km away. Water is also channeled separately to supply residential areas. This water source and its method of channeling are also included in the periodic inspection by certification agencies, so there is a lot of incentive for farmers to maintain the water source. Forestrade Indonesia (FTI) as the exporting partner of PPKGO and Trimaju, receives the processed dry cherries in Medan. FTI will undertake further processing, such as drying up to moisture level required by buyers (generally 18%). Sorting and bagging are further done to exact specifications. FTI usually do not buy coffee at beginning or end of the season since quality is less satisfactory. Lower quality beans are sold to be made usually into instant coffee. In the complex in Medan where FTI warehouse is located, there are other coffee warehouse-coffee processing centers. The local center for coffee trade for Central Aceh is in Takengon, and trading is dominated by migrants from West Sumatra (Padang) and people of Chinese descent. The role of most farmers are limited to growing coffee, and so much of the value added from trading is enjoyed by those controlling the coffee trade [Kompas 18 June 2002]. Most of the PPKGO farmers production are directed for export. But all along the processing path some beans get rejected and these are processed separately though this will end up at the hands of Medan coffee wholesalers as well (Figure 9). SECTION IV LOCAL VALUE CHAIN AND MARKETING STRATEGY IV-57

71 Figure 7 Coffee cherry processing flow at PPKGO Processing phase Actor Location Harvesting Farmer On farm Weighing Famer-collector Off farm Transport to processing facility Weighing at processing facility Group processing facilities Pupler Wet fermentation in water Washing Drying Weighing Huller Drying Bagging Weighing Labeling Document preparation Transporting to Medan Exporter Weighing in Medan storage Drying Sorting (mechanical and manual) SECTION IV Weighing Drying Bagging for export IV-58 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

72 PART B: THE GAYO HIGHLAND Figure 8 Distribution channel for PPKGO coffee Farmer Local processing center Rejects Local or regional buyers Main processing center Rejects Wholesalers in Medan Exporter in Medan Rejects International buyers Distance and transportation is an issue in the Gayo Highland. Travel to Medan, the final processing, trading, and processing center for Gayo coffee is not easy and takes many hours. From Takengon to Medan via the eastern coastal road, for example, can take more than 10 hours by passenger cars, although the roads are in relatively good condition; trucks will require longer traveling times. Shorter distance to Medan is from the inland road through Blangkejeren, but since roads are bad it can take up to 20 hours. Whichever route is taken, there are many checkpoints along the way which can mean travel delays. The tripartite collaboration between FTI (intermediary and exporter), PPKGO (farmers) and Trimaju (processor) seems to have been relatively stable since its creation in Buyers have also been particularly supportive of farmers from which they source their coffee. In fact, the PPKGO was formed with funding and support of a buyer (Green Mountain Coffee). Buyers have continued to provide support to farmers, for example through the provision of financial, equipment and technical assistance, training, and social development initiatives such as the Coffee Kids program. Buyers support continued beyond coffeerelated activities, as exemplified by the sizeable amount of donations coffee buyers and drinkers have channeled through Forestrade for tsunami victims in Aceh [Blanchett, 2005; pers. comm.]. Export of coffee production is conducted out of Medan, North Sumatra Province, so it is difficult to pinpoint the amount of coffee produced for international consumption and those for domestic use. Most of the coffee produced by the FTI partnership in Gayo, however, is directed for the export market. Beans that do not meet the quality standards of international buyers are set aside for domestic or local use. Given the increasing demand of international buyers for Gayo coffees, it is reasonable to conclude that cultivation and processing activities meet international clients requirements. SECTION IV LOCAL VALUE CHAIN AND MARKETING STRATEGY IV-59

73 SECTION IV While clients quality requirements are known by coffee farmers, they are in the dark about the prices at which their coffee is selling and the profit margin made on them. This has not been yet a problem in the partnership, although there are indications that PPKGO is less than satisfied with this situation. For other farmers and/or groups, the distribution chain may mean that a farmer sells to a village collector, which in turn sells to the sub-district and/or district level collectors, before finally reaching Medan. Some of these local coffee buyers provide cash advances to farmers. Some sources indicate that these local buyers agents of Medan-based traders do not buy coffee from farmers at a fair price [Media Indonesia Online, 4 February 2004]. It must be noted, however, that there is a certain amount of security risk involved in conducting buying trips to Gayo. Plus, transportation costs are high. Consequently, it should be expected that lower prices are offered compared to Medan. Farmgate prices for Arabica beans ready for export in Gayo is currently about Rp36,000-37,000/kg Producer organizations According to the Estate Services office, in 2003 there were 4004 farmer groups in Central Aceh and 360 in Bener Meriah (Table 24). However, no further data is available on the particulars of these farmer groups (i.e. size of membership, type of group, etc), nor on the portion of all farmers which are member of producer groups. Table 24 Farmer organizations in the Gayo Region, 2003 No Sub-district Number of groups Villages Central Aceh 1 Kebayakan Bebesen Pegasing Silih Nara Bintang Linge Ketol Kute Panang Lut Tawar Celala Total Central Aceh Bener Meriah 1Bandar Permata Syiah Utama Bukit Wih Pesam Timang Gajah Pintu Rime Gayo Total Bener Meriah Source: Estate Services Central Aceh, 2004 The relative abundance of farmer groups in Gayo is further confirmed by Mulato et al (1999) which indicated that in 1999 in the village of Jagong Jeged, a transmigration village and a relatively progressive coffee-growing area, there were at least 3 groups of coffee farmers: two groups were cooperatives and one group working under the auspices of the Genap Mupakat firm. Around this time, processing by farmers as a group was a relatively novel approach [Mulato et al, 1999]. As a cooperative, the PPKGO were formed in 1997 with 86 farmers in 2 villages. Every year the number of farmer joining the association has increased. Currently there are 1,375 active organic farmers organic farmers. Interestingly, apart from the active members, there are many other members which are in various states of suspension due to their violation of some code of the organic farming agreement. Amongst these are 95 farmers on probation (which means that if they do not violate any of the requirements again they can be reinstated as active members) and 262 farmers are already in the transition phase out of organic farming since they did not pass the probation stage (which lasts 3 IV-60 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

74 PART B: THE GAYO HIGHLAND years). Further, since the formation of PPKGO, 82 (former) members have been disqualified from organic farming altogether. Given that it is not easy to get certified in the first place, the number of farmers violating the organic code seems to be high. The process for joining a certified program can take a year or more, which starts with farmers banding together in a group of 30 (not necessarily from the same village) and submitting an application to the PPKGO. The PPKGO will then send out an internal inspection teams which will put together a baseline data and submit it to a certification agency. The certification agency will then send an inspector, and here there seems to be a bottleneck since it may take a year before an inspector/inspection team is sent. Farmers are not assessed fees for joining the program, just that they are required to adhere to the organic farming regulation. Funding for PPKGO s operational expenses comes from the split in profit from selling coffee beans which is split three ways between FTI, PPKGO and Trimaju. In addition, there are also some contribution from buyers provided directly to farmers for farm upkeep, and for training and other technical assistance. The largest farmer grouping in the area is under the Genap Mupakat operation, although it seems that for several years the operation has been floundering. It is not clear how many groups and members there are left in the Genap Mupakat operation. Several former members of the Genap Mupakat group have joined PPKGO. Farmers are also grouped around a central processing unit (Unit Pengolahan Kopi or UPP) a communally owned set of facilities. In 2002, there were 10 projects in the region, involving 2,219 farmers and 2,911 ha of land between them an average of 1.3 ha of land per participant (Table 25). This is only a very small fraction (about 4%) compared to the total number of farmers and land involved in coffee cultivation in the region. Table 25 Government-sponsored groups in Central Aceh District, Area of No Sub-district coffee farm Farmers Unit served involved (Ha) Central Aceh 1 Bintang Takengon Pegasing Bebesen Silih Nara Total Central Aceh 6 1,301 1,143 Bener Meriah 1 Timang Gajah Bukit Bandar Total Bener Meriah 4 1,610 1,076 Source: CBS Central Aceh, Business advisory services There seems to be no noteworthy and sustained business services provision available to farmers in general, much less to coffee farmers. Farmer groups such as PPKGO will provide basic training to farmers, and the Local Government services office (such as the Industry Services office or the local Village Cooperatives Center) may provide training once in a very long while, for example on bookkeeping and credit management, but a specialized agency or office to which farmers can consult on a continuous basis is nonexistent. In addition, services have been provided only to a limited number of farmers and does not reach all farmers. Any service provided by government offices, however, are generally free and funded by governmental budget (local or national). SECTION I LOCAL VALUE CHAIN AND MARKETING STRATEGY IV-61

75 4.2. Marketing strategy and industry Prior to the 1990s, the Gayo Region as a coffee-producing region was not as popular as today. One reason was that most of the coffee produced in the Gayo highlands were brought to Medan where it is further processed, packaged and exported. The Medan traders used other terms for Gayo coffee, for example calling it Sidikalang or Mandheling/Mandailing coffee. Nowadays, at the international commodities wholesale market the region s coffee is known as Mandailing. At the specialty and organic coffee market, the Gayo coffee is gaining recognition. While international buyers prefer Arabica coffee from the Gayo Region, local Gayo tastes are geared more to Robusta. Locally, coffee is ground without the addition of other ingredients such as corn powder as elsewhere in northern Sumatra or in Java. Additionally, contrary to popular belief, ground coffee from Gayo is not mixed with marijuana [Idris, 2005 pers. comm.] During the last few years, the trend in coffee production for the Gayo Region has been decreasing (Table 26). Since exporting is conducted out of Medan, North Sumatra, what percentage of this is exported is unknown. However, the Head (Bupati) of Central Aceh stated that about 75% of coffee produced are exported, contributing $10 million of foreign exchange per year 46. In addition to foreign exchange earnings, the local coffee industry contributes 60% to Local Government revenues [LIN, 2004]. Table 26 Coffee production in Central Aceh District, select years Year Area (Ha) Production (Ton) ,373 28, ,781 28, ,821 26, ,525 23,826 Source: CBS Central Aceh, various years; Estate Services Central Aceh, 2004 SECTION IV The supply of coffee from the Gayo region is affected more by the political and security situation rather than a lack of demand. For example, out of the estimated total coffee area, at any given year up to 60% may be unproductive and/or neglected. This is also the reason for the seemingly low productivity level of the coffee agriculture. Demand, on the other hand, have been increasing for many producers, which is somewhat reflected by price. This is also the reason that producers have not switched to other crops. On the contrary, coffee cultivation seems to be expanding and non-farmers are even conducting coffee agriculture. There is no data on the main international clients for coffee from the region, but PPKGO Manager Iswandy Idris mentioned that Robusta coffee produced by the group is mostly sent to Europe, whereas Arabica to the United States. Most international buyers have agents at the local level to do the buying for them. 46 This is likely a low estimate. Assuming that annual production is 23,000, and 75% of which is exported at a price of $1/ kg (or $1,000/ton), then the foreign exchange earned should be at least $17.25 million. IV-62 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

76 PART B: THE GAYO HIGHLAND Photo: Lydia Napitupulu Packaged ground coffee produced by Genap Mupakat, Central Aceh Domestic use (Indonesia-wide) of Gayo coffee is relatively small, and distribution is done out of Medan in North Sumatra Province. The domestic use in Aceh is even smaller, most coffee being consumed in Banda Aceh, the provincial capital. Internationally, coffee from the Gayo region is primarily used as a component of a blend, since it has a strong body and moderate acidity [Fricke, pers. comm.; Nur and Melala, 2001]. This is especially the case in the US, where blended coffee is particularly popular. Gayo coffees are often blended with coffees originating from South America. In the early 1980 s, the provincial government of Aceh (notably through the Genap Mupakat coffee company) were active promoters of the region s coffee, conducting regular marketing trips abroad. Presently, the most common promoter of the region s coffee are the certification bodies and vendors of specialty coffees. For PPKGO, the fair trade certifier organization (FLO) is an especially active promoter of its coffee. In the case of PPKGO farmers, buyers quality requirements are communicated to farmers through various ways, including perhaps the most effective by having buyers visit the sites where farmers work, as well as bringing key farmers and/or managers to major coffee markets and to meet key buyers. Several times the PPKGO managers exclaimed his amazement at how discerning and articulate international coffee experts are about coffee from the Gayo area. Additionally, these cross-visits instilled recognition that Gayo coffees are competing with coffees sourced from all over the world. SECTION IV LOCAL VALUE CHAIN AND MARKETING STRATEGY IV-63

77 PART C SUMMARY AND RECOMMENDATIONS The Mandailing Natal District is located in an area that CI has identified as part of a hotspot in the northern Sumatra region an area of high biodiversity, yet also highly at risk and vulnerable to conversion and unsustainable resource uses. The CI Indonesia program in the area is an important part of an overall Northern Sumatra Biodiversity Corridor program (NSC), which endeavors to work with stakeholders in planning for and implementing sustainable land use and human activity to ensure the integrity of the whole Corridor. A thriving and healthy ecosystem in the region will benefit the millions of people living in its confines. The creation of the Batang Gadis National Park in Madina was an enormously positive step in this direction. CII supported stakeholders local and central government agencies, NGOs, the private sector and communities in the formal process of obtaining Park status, and now will continue to support the planning and management of the Park to ensure its protection is not only a status. Involving communities is one step, and this is particularly important in Madina since it is economically still under-developed, even compared to its surrounding regions. In 2003, the per capita Gross Regional Domestic Product of Madina was only little more than half of provincial and national levels. The education level of its population is relatively low, and health services lacking. Infrastructure and other services are basic, although it reaches relatively large part of the population. An overwhelming part of the population relies on agriculture as the main source of livelihood, but its development is lacking strategic direction, financial and technical support. Coffee cultivation was once an important part of the local agriculture. Madina is also amongst the first coffee growing areas in Indonesia outside of Java. The local population first started growing coffee in the mid 1800s almost 150 years ago. Since then coffee cultivation has had its ups and down, and recently it s mostly a down coffee prices are low, especially so at the farmer level. Increasingly coffee trees are abandoned as farmers switch to other crops such as paddy rice, cocoa, and high-value-fruit trees. PART C The various evidence seems to conclude that the coffee cherries produced in Madina are being grown in an organic way (i.e. without chemical pesticides, herbicides or fertilizers). However, yields are low, and processed coffee is of low quality, sufficient only to fulfill the local or regional market demand. Low yields are mostly attributed to the fact that coffee trees are not maintained: trees are old, and pruning and cleaning of the grounds are not regularly undertaken. Farmers do not undertake maintenance because it is too costly at current selling prices: coffee plants are located in the mountains far from residential areas, the roads are bad, and transportation too costly. In addition, processing of coffee cherries is undertaken with scant or negligible attention to quality. Rather than use the processing stage to enhance the quality of coffee cherries, farmers spend a small amount of time and attention in generating coffee that potentially can earn added value. 64 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA

78 PART C: SUMMARY AND RECOMENDATIONS Similarly, processing is basic since farmers feel coffee prices does not warrant the time and effort spent on ensuring good quality beans. The lack of effort in producing coffee that is of the highest quality on the part of farmers is unfortunate since the region then can not take advantage of the good international image already in place for coffees originating from Mandailing. Instead, other regions in North Sumatra, and even outside of Sumatra, uses the brand to sell their coffees. Meanwhile, the Mandailing or Mandheling name has gained wide international recognition, including in the up-and-coming specialty coffee market. It seems that the most prominent weakness of the Mandailing coffee sector is the fact that it is unorganized. Farmers are not organized in a sustained and systematic fashion; technical and financial assistance are given in a piecemeal manner which does not leverage existing or potential other sources of support. With facilitation and coordination, a coffee expert at the ICCRI is confident that the local coffee sector can turn out acceptable, export-quality beans. Poor cultivation and processing methods can also be attributed to the low level of farmers education in Madina. In general, farmers in Mandailing have only elementary-level schooling. Additionally, farmers lack sustained technical and financial support, both badly needed if coffee production is to succeed supplying the more lucrative demand of international consumers, and especially that of the specialty coffee market. PART C Photo: Lydia Napitupulu Mixed garden. SUMMARY AND RECOMMENDATIONS 65

79 The Gayo Highland is also located in the region designated as the Northern Sumatra Biodiversity Corridor by CI. In administrative terms the Gayo Highland covers two Districts: Bener Meriah and Central Aceh, located adjacent to each other in the vicinity of the Leuser Ecosystem. The Leuser Ecosystem, and the Leuser National Park within it, is an area of high biodiversity and landscape, covering both coastal, lowland and montane ecosystems. In contrast to elsewhere in Sumatra, the Sumatran large mammals such as the Sumatran tiger, elephant and rhino and many different species of wild cats, as well as many other species of fauna and flora, all live in the Ecosystem, some of which are unique only to the area. The Leuser Ecosystem, however, face enormous pressures from human activity, including conversion into agricultural and residential space, illegal logging and hunting of wild animals, pollution, and other threats. These threats are also seen in the Gayo part of the area. The Gayo people were originally from the Karo Highlands of present-day North Sumatra Province. The people retain a distinct cultural and social identity distinguished from its neighbors the Acehnese, the majority of the Aceh population. The Gayos have retained hospitable attitudes and relationships with in-migrants, and they resist movement toward independence that has been the cause of major armed and political conflicts in Aceh for many years. Photo: Lydia Napitupulu PART C Coffee trees grown under shade, Bener Meriah. 66 CONSERVATION COFFEE OPPORTUNITIES IN NORTHERN SUMATRA