Private Sector Initiatives to Boost Productivity of Cocoa, Coffee, and Rubber in Indonesia

Mercyta Jorsvinna Glorya • Arief Nugraha
Discussion paper Center for Indonesian Policy Studies • November 2019 Indonesia


Indonesia is a major producer of cocoa, coffee, and rubber. These three commodities represent an important source of income for Indonesian farmers. However, productivity in cocoa and coffee are significantly lower in Indonesia than in other major producer countries, and rubber productivity has yet to reach its full potential. While there are disputes concerning the accuracy of government productivity data, all organizations involved agree that there is much room for improvement. The national government has implemented a number of policies and programs geared towards increasing farmer productivity including seedling and fertilizer subsidies, facilitated access to financial services, and land expansion programs.

These initiatives, however, are seen by many experts as ineffective as they fail to consider regional differences, provide effective training, or include sufficient on-the-ground supervision. Instead, experts interviewed for this study point to private sector actors as successful support providers. Private sector actors, including multinational companies, domestic producers, and NGOs, implement programs consisting of facilitated access to financial services and financial literacy training, quality control programs which offer farmers premium quality, and contract farming programs that guarantee price stability.

These private sector actors work closely with farmers and are able to consider their individual needs, which allows them to allocate resources more effectively. Some Indonesian government bodies have begun to work in cooperation with private sector initiatives to enhance the livelihood of farmers. This research suggests that the government should continue and increase this cooperation, involving more private stakeholders in its efforts to increase domestic productivity levels.





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