COFFEE IN INDONESIA

 COFFEE IN INDONESIA 

National production, export and consumption of Indonesian coffee 

 

Indonesia is one of the largest coffee producing and exporting countries in the world. Most of their production is of the low quality Robusta variety. Indonesia is also famous for having many specialty coffees such as "luwak coffee" (known as the most expensive coffee in the world) and "Mandailing coffee" (see below). In terms of agricultural resources, coffee is the fourth largest source of foreign exchange for Indonesia after palm oil, rubber and cocoa. The Dutch introduced coffee to the islands who first planted coffee trees around their territory in Batavia, but quickly expanded coffee production in the Bogor and Sukabumi regions of West Java in the 17th century and the 18th century. Indonesia eventually had a good climate for coffee production so soon plantations were established in other parts of Java, Sumatra and Sulawesi. Currently, Indonesia's coffee plantations cover a total of 1.24 million hectares, 933 hectares of robusta plantations and 307 hectares of arabica plantations. More than 90% of the total crops are owned by small farmers who have small crops of about 1 to 2 hectares, respectively. Unlike competitors such as Vietnam, Indonesia does not have a large coffee plantation and therefore it is difficult to maintain high production and quality, which reduces the competitiveness of Indonesian coffee in the international market.

 

As mentioned above and like the great Vietnamese coffee region, most of the coffee production in Indonesia is of low quality robusta variety. Low quality Arabica is produced in South American countries such as Brazil, Colombia, El Salvador and Costa Rica. Therefore, most of Indonesia's coffee exports (about 80%) contain robusta beans. Organized coffee exports represent only a small portion of Indonesia's total coffee exports.

From the 1960s, Indonesia experienced a slight but steady increase in world coffee production. However, according to data from the Central Bureau of Statistics (BPS), the acreage of coffee in Indonesia is decreasing as farmers have shifted their production to palm oil (such as crude palm oil and coconut oil palm kernel) , rubber and cocoa, all of which provide significant income in the international market. Therefore, coffee crops - or parts of them - have been converted into crops of other primary products. In 2012, about 70% of Indonesia's annual coffee production was exported, mainly to customers in Japan, South Africa, Western Europe and the United States. However, as domestic consumption of Indonesian coffee has increased, exports have declined. Coffee consumption in Indonesia increased by a compound annual growth rate (CAGR) of 7.7% in 2011-2014. However, at 1.0 kilograms (2014 data), per capita coffee consumption is still low in Indonesia.