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Domestic Production, Export, and Consumption of Coffee in Indonesia

Domestic Production, Export, and Consumption of Coffee in Indonesia

Domestic Production, Export, and Consumption of Coffee in Indonesia

  • Posted by globaladmin
  • On November 17, 2020
  • 0 Comments
  • Coffee Bean From Indonesia, Coffee Company Indonesia, Coffee Supplier Indonesia, Consumption of Coffee in Indonesia, Export Coffee, Export Coffee From Indonesia, Export Coffee Indonesia, Famous Coffee From Indonesia, How To Export Coffee From Indonesia, The Best Coffee From Indonesia

Indonesia is one of the largest coffee producing and exporting countries in the world. Most of its production is the lower quality robusta variety. Indonesia is also famous for having a number of specialty coffees such as “kopi luwak” (known as the world’s most expensive coffee) and “Aceh Gayo Coffee”. Regarding agricultural commodities, coffee is the fourth largest foreign exchange earner for Indonesia after palm oil, rubber, and cocoa.

Coffee was introduced to the archipelago by the Dutch who initially planted coffee trees around their territory in Batavia but then quickly expanded coffee production to the Bogor and Sukabumi areas in West Java in the 17th and 18th centuries. Indonesia proved to have an almost ideal climate for coffee production and as such plantations were soon established in other areas of Java, Sumatra, and also Sulawesi.

Analysis of International Coffee Export Development in Indonesia

Indonesia’s Coffee Plantations

At present, Indonesia’s coffee plantations cover a total area of ​​approximately 1.24 million hectares, 933 hectares of robusta plantations, and 307 hectares of arabica plantations. More than 90% of the total plantation is cultivated by small-scale farmers who have relatively small plantations of around 1-2 hectares, each.

In contrast to competitors such as Vietnam, Indonesia does not have large coffee plantations and therefore finds it more difficult to maintain stable production volumes and quality, so the competitiveness of Indonesian coffee in the international market is less strong.

As mentioned above and similar to the regional coffee giant Vietnam, most of Indonesia’s coffee bean production is the lower quality robusta variety. The higher-quality Arabica beans are produced mostly by South American countries such as Brazil, Colombia, El Salvador, and Costa Rica. Therefore, most of Indonesia’s coffee exports (roughly 80%) consist of robusta beans. Processed coffee exports are only a small part of Indonesia’s total coffee exports.

The provinces that contribute the most to Indonesian coffee production are:

RobustaArabica
1. Bengkulu (Sumatra)1 Aceh (Sumatra)
2. South Sulawesi2. North Sumatra
3. Lampung (Sumatra)

 

Starting from the 90s, Indonesia has shown a small but steady increase in world coffee production. However, according to data from the Central Statistics Agency (BPS), the area of ​​coffee plantations in Indonesia is decreasing because farmers have shifted their production focus to palm oil (such as crude palm oil and palm kernel oil), rubber, and cocoa which all provide higher income in the international market. Therefore, coffee plantations-or a part of them have been transformed into other commodity plantations.

In 2018, approximately 70% of the total annual production of Indonesian coffee beans was exported, primarily to customers in Japan, South Africa, Western Europe, and the United States. However, as domestic consumption of Indonesian coffee has grown, total exports have declined. Coffee consumption in Indonesia has increased with a compound annual growth rate (CAGR) of 7.7% in 2017-2020. Still, at 1.0 kilograms, per capita, coffee consumption remains low in Indonesia.

 

Indonesian specialty coffees

Apart from producing regular coffee, Indonesia also produces several specialty coffees. The most famous among these specialty coffees is Luwak coffee, Toraja coffee, Aceh Gayo coffee, and Mandailing coffee. The first type of coffee-civet coffee is probably the most famous type of coffee because it is known as the most expensive coffee in the world.

This coffee is extracted from coffee beans that have passed through the digestive system of the Asian civet (cat-like animal). Due to the special fermentation process in the animal’s stomach (and also due to the fact that the mongoose can pick the juiciest coffee cherries), this coffee is believed to have a richer taste. The production process which requires a lot of labor and its scarcity in the international market causes the price to be expensive.

The Development of Indonesian Coffee Exports to the Global Market

Future Prospects of Indonesian Coffee

According to data from the Indonesian Coffee Exporters Association (AEKI), Indonesian farmers together with relevant ministries are planning to expand Indonesian coffee plantations, while rejuvenating old plantations through an intensification program. By increasing the plantation area, Indonesia’s coffee production in the next 10 years is targeted to reach between 900 thousand tons and 1.2 million tons per year.

Due to increasing global and domestic demand, investment is needed in the country’s coffee sector. Apart from increasing the number of coffee beans, the quality is also predicted to increase due to technological innovations.

Even so, coffee production per hectare in Indonesia is still low compared to other major coffee-producing countries. In 2019, Indonesia produced 741 kilograms of robusta beans per hectare and 808 kilograms of arabica beans per hectare. In Vietnam, this figure is 1,500 kilograms per hectare, in Brazil, it is 2,000 kilograms per hectare.

In the 2018-2019 harvest season, there was a global shortage of 6.4 million packs of coffee beans (leading to a sharp increase in coffee prices in 2014). This deficiency is due to a combination of increased coffee consumption in developing countries and lower coffee production due to weather factors.

In the 2019-2020 harvest season, this coffee shortage may decrease to 3.5 million packs. Despite these shortcomings, coffee prices have weakened in 2019 as the Brazilian currency has fallen sharply against the US dollar.

 

Contact dan Information

By bringing quality Indonesia coffee beans to the global market, Global Coffee Indonesia is a part of the solution in promoting Indonesia commodities and community empowerment.

  • Address : AKR Tower 16th floor, Jalan Panjang No.5, Jakarta, Indonesia
  • Contact Person : +62 812 75070 897
  • Email : customerservice@globalcoffeeindo.com
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