BAHAN PRESENTASI DEPUTI BIDANG KOORDIANSI PERTANIAN DAN KELAUTAN PADA ACARA EXPO SUMBAGSEL DI PANGKAL PINANG TANGGAL 7 FEBRUARI 2013

COORDINATING MINISTRY FOR ECONOMIC AFFAIRS

Public Private Partnership

Swiss, 1 0 March 2014

INDONESIAN COCOA

DEVELOPMENT PLAN

Musdhalifah Machmud

Assistant Deputy of Plantation and Horticulture

Map of Cocoa in Indonesia Data of Cocoa in Indonesia The Position of Indonesia Cocoa Downstream of Cocoa Processing Industry

ACCELERATION AND EXPANSION OF INDONESIA ECONOMIC DEVELOPMENT 2011- 2025 : MP3EI

Present Status and The Future Challenges Where are we Heading? Framework Design MP3EI COCOA as a Focus Economy Development in Corridor Economy of

Sulawesi

2

PUBLIC PRIVATE PARTNERSHIP IN COCOA

OUTLINE

Where We are Headed

~ 12 largest

~ 8 largest

8 9 % per annum

5 6 % per annum

Data of Indonesia Cocoa 2008-2013

No Information 2008 2009 2010 2011 2012 2013*

1 Areal (Ha) 1.425.216 1.587.136 1.650.621 1.732.641 1.774.464 1.852.947

2 Production (Ton) 803.594 809.583 837.918 712.231 740.513 777.537

3 Productivity (Kg) 889 822 804 821 850 880

4 Labours (Persons) 1.474.570 1.551.615 1.611.139 1.701.958 1.662.272 1.707.450

5 Price (Rp./Kg) 16.357 18.557 20.499 20.393 17.625 16.725 (#)

6 Trade Value (US$ Million)

1.155,5 1.294,2 1.479,1 996,4 877,0 391,7 (#)

7 Export (Cocoa Bean and Cocoa Processed)

- Volume (Ton) 515.539 535.191 552.843 410.210 387.777 375.855 (##)

- Value (000 US$) 1.268.947 1.413.441 1.643.649 1.345.278 1.053.447 1.037.431 (##)

8 Import (Cocoa Bean and Cocoa Processed)

- Volume (Ton) 53.331 46.866 47.415 43.663 48.191 59.564 (##)

- Value (000 US$) 118.741 121.306 164.552 175.507 176.894 191.772 (##)

Source : Ditjenbun Note: *) Tentative Note: (#) Quarterly average of two Note: (##) Jan Nov 2013

FORECAST OF INDONESIA COCOA INDUSTRYUNTIL 2015

Year 2011 2012 2013 2014 2015

Cocoa factory 16 16 18 19 20

Nbr of workers 4.300Persons

4.300Persons

5.300Persons

5.800Persons

6.000Persons

InstalledCapacity

580.000Ton

580.000Ton

700.000Ton

740.000Ton

800.000Ton

Production capacity

268.000Ton

310.000Ton

400.000Ton

500.000Ton

600.000Ton

INDONESIAN ARCHIPELAGO: Map Of Cocoa Production Center in Indonesia

SULAWESI:958.079 Ha468,942 Ton(850 Kg/Ha)

SUMATERA:427.619 Ha154.688 Ton(849 Kg/Ha) MALUKU &

PAPUA:118.449 Ha32.667 Ton(708 Kg/Ha)

JAWA:104.241 Ha32.285 Ton(754 Kg/Ha)

BALI:14.808 Ha3.668 Ton(474 Kg/Ha)

KALIMANTAN:44.951 Ha10.190 Ton(596 Kg/Ha)

NUSA TENGGARA:64.494 Ha9.790 Ton(450 Kg/Ha)

ACCELERATION AND EXPANSION OF INDONESIA ECONOMIC DEVELOPMENT 2011- 2025 : MP3EI

THE NEEDS TO DEVELOP

There are several factor that affect :

Regional Dynamicshigher economic competition in the future Indonesia lies in the heart the worlds economic growth. East Asias economic growth is higher than the averageof other regions in the world, Indonesia needs goodpreparation

Potential advantages and natural resources are not used optimally

The challenge of the some internal issues

Slide 8

6 Economic Corridors (EC)

ICT Shipping

Rubber

Palm Oil

DefenseEquipm.

Steel

FoodBeverage

TextilesTransportEquipm.

Nickel

Coal Oil & Gas

Timber

AnimalHusbandry

Cocoa

Fisheries

Tourism

Foodcrops

MetropJakarta

Area

SundaStrait Area

Bauxite

Copper

22Main Economic

Activities

Distribution of 22 Main Activity into 6 Economic Coridor

Sumatera

Java

Kalimantan

Sulawesi

Bali - NT

Papua Maluku Islands

RubberPalm Oil

Textiles

Coal Shipping Steel

FoodBeverage

TransportEquipm. ICT

DefenseEquipm. Shipping

MetropJakarta

Area

SundaStrait Area

Palm Oil Timber Oil & Gas Steel Bauxite Coal

Foodcrops Fisheries Nickel Oil & Gas

Tourism AnimalHusbandry Fisheries

Foodcrops Fisheries Copper Nickel Oil & Gas

Cocoa

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Development of the main economic activities will beto focus on improving yield of cocoa upstream valuechain, and downstream industry development.Increased production of the upstream industry isobtained through:

1. Increasing production, sustainable productivity, and improving quality of cocoa;

2. Improving the quality of cocoa bean through fermentation and certification (through Cocoa Bean Fermentation National Movement);

3. Accelerating the provision of infrastructure that supports the development of national cocoa industry.

4. Aplying Indonesian Sustanability Cocoa (ISCOCOA)

Added-value activities include:

1. Increasing utility capacity of existing cocoa processing industry;

2. Increasing downstream market share at home and abroad;

3. Applying international standards in order to improve the quality of cocoa products in the downstream industry

Present Status Future Target

Area (000 ha) 1700 1700

Location Sulawesi(70%)

Sulawesi, Sumatra, Java,

Papua

Production, (000 tonnes)

450-700 1700

Productivity, kg/ha

200-400 1000

Present Status and The Future Challenges

Present Status Future Target

Cultivation method

Manual Mechanization

Fine flavor 1% 10%

Fermentation Unfermented Fermented

Management Smallholder (>90%)

Partnership Nucleus (20%) &

Smallholder (80%)

Present Status and The Future Challenges

Present Status Future Target

Program Replanting, Rehabilitation, Intensification,

Quality improvement

Replanting, Rehabilitation,

Intensification, Quality improvement, GAP, GMP, Sustainable

Standard (ISCOCOA)

Industry Intermediate product

End product

Industry Big Company & Cooperative/SME run independently

each other

Partnership of Big Company (as Nucleus)

& Coop/SME

Present Status and The Future Challenges

Present Status Future Target

Consumption, kg/caput

0.3 3 (50% of total production)

Government Regulation, Infrastructure,

Grant

Regulation, Infrastructure, Grant

Bank Soft Loan Soft Loan, Nucleus Company as Avalis

Authority/ Regulator

Spread in many institutions

Hold by one institution

Present Status and The Future Challenges

PUBLIC PRIVATE PARTNERSHIP (PPP) IN COCOA

Partnership

Farmers Group

Extension Service/

ICCRI

Buyer/Exporter

Finance provider/

Bank

Cocoa Stakeholders : farmers/group of farmers , Extension service/ICCRI, expert, NGO, traders, Government (centre and local) Industry/consumers

Extension Service/ICCRI gives a training and supervise to farmers how to produce good quality cocoa that meet to buyer standard

Extension service/ICCRI act as a mediator between farmers and buyer in negotiating bean price

Buyer has to buy cocoa beans from farmers in fair price

Finance provider/bank /cooperative provides low interest loan for farmers who need fund for operational cost

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Indonesia Board of commerce : Platform Partnership on Sustainable Agriculture in

Indonesia (PIS Agro)Key Success Factor of The Partnership Supporting

Across the Supply Chain

R&D Farmers Post Efficient Markets

ED-Farm Capabl. Harvest SC

Fermentation

Plant science Farmers Capability Access to an efficient

market building

Nestle R&D Swiss Contac BT Cocoa

ICCRI Nstle AgriServ Armajaro

The Flow Partnership through FarmerGroups

Farmers Farmer GroupsCombined Farmer Groups/

Gapoktan - Koptan Unit Business X Mars Buying Station

ICS area control

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PPP Cocoa Plan (1)

Nestle program

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PPP Cocoa Plan (2)

Nestle program

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CSP Roadmap by Creating The Business Case for Farmers is

Key to Achieve The 2020 Targets

Productivity Farmer of the Future

Farmer productivity should be doubled

Target: double productivity

which will make cocoa a profitable business that will attract a young generation of cocoa farmers.

Target: maintaining an average farmer age of 40across the sector2

02

0 T

arge

ts

Agro-inputs

Planting Material

Knowledge

Access to Finance

Modes of delivery and organization

Role of the government

I. Professional Farmer Package II. Enabling Environment

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CSP (Cocoa Sustainable Partnership) Roadmap

Fertilizer needs to be rolled out at scale Address knowledge gap and trigger product

innovation A coalition should be made, including fertilizer

companies

Agro-inputs

Planting material Roll out of better clones for farmers and nurseries to graft at scale

Build on farmers capacities

Focus Areas Partnership Recommendation

Knowledge Integrate business principles into GAP modules

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Roadmap of Recommendations (2)

Modes of delivery and organization

Stimulate and integrate farmer entrepreneurial spirit into delivery models

Develop large scale farmer organization for more efficient delivery

Focus Areas Partnership Recommendations

Access to Finance

Role of the government

Involve financial institutions at scale and at broader value chain

Organize and mobilize resources atprovincial and district level

Create beneficial policy framework Have a more active national government

role in CSP

16 SEPTEMBER : INDONESIA COCOA DAY

Chocolate Bar and Biscuits

Cocoa Powder and Chocolate

Chocolate Compound for Small Industries

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CSP Members