Services to support cocoa sector competitiveness and sustainability: a case study from Indonesia

A challenge facing initiatives to promote more sustainable, competitive, and resilient agricultural systems is to identify solutions that are not only effective, but which can (a) be feasibly adopted by smallholder farmers and market actors, and (b) remain available when development assistance comes to an end.

This case study examines the experience of the Sustainable Cocoa Production Program (SCPP), which worked through a public-private development partnership (PPDP) to improve production and build sustainable supply chains in Indonesia’s cocoa industry as it faced global and domestic challenges. Seven development organisations and eleven private cocoa buyers contributed approximately
USD 55m to the PPDP. SECO and Swisscontact were, respectively, the ‘lynchpin’ funder and implementing organisation throughout.

SCPP focused on establishing, strengthening, and sustaining four key market functions: farmer training, traceability, planting material, and finance. It trained 160,000 farmers, enabled the integration of 79,000 cocoa farmers into sustainable, certified supply chains, generating USD 927,000 of certification premiums, and increased smallholder yields by 52% and raised their incomes by 75%. These tangible results demonstrated that the model of training plus certification plus traceability promoted could upgrade conventional cocoa supply chains to traceable, certified supply chains. In turn, this triggered sector-wide changes that indicate growing sector maturity:

  • Investment in farmer training as a core business function, not a Corporate Social Responsibility (CSR). Cocoa firms have integrated farmer support into the core commercial functions of their procurement or sourcing departments, as opposed to running them separately under sustainability or CSR departments.
  • Cocoa sector stakeholders are developing their own training programmes based on the content developed by SCPP, including cocoa firms and the Ministry of Agriculture.
  • Traceability services developed are being offered commercially to various clients the in cocoa, palm oil, coffee, coconut, and rubber sectors in more than 15 countries. Other firms have developed their own, in-house traceability platform and established or expanded their field teams.
  • A commercial supply of high-quality planting materials is available, and top and side grafting are a new norm in good cocoa farming practices in Indonesia.

SCPP’s experience in establishing and strengthening market functions to make Indonesia’s cocoa sector more sustainable, competitive, and resilient has highlighted several lessons that might be more widely applicable agricultural development initiatives. These lessons relate to the role of development organisations, the importance of doing the right type of analysis, and focusing on function before form.

Role of development organisations: provide or facilitate?

  • Direct delivery can be a valid tactic, but it must be guided by a vision for sustainability
  • Ensure feasibility for commercial delivery within prevailing capacity and affordability
  • Build on what’s already there

Do the right kind of analyses:

  • Start with a feasibility analysis and revisit it regularly
  • Perform cost-benefit analyses for the adoption of recommended practices

Form follows function:

  • Organised collective actions are not a panacea for farmer problems
  • Focus on market actors with the strongest incentive and capacity to perform the function
  • Size does matter for resilience against market shocks
  • Be mindful of the differences between programme MRM (monitoring and results measurement) and MIS (management information system) needed by market actors

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