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Indonesia, the third largest cocoa producer, is also the world’s leading producer of oil palm products. Both cultures face similar challenges in societal issues, responsible natural resources management and economic development.

We will examine the challenges posed by the growth of cocoa production and attempt to analyze cocoa production by learning from the history of palm oil production.

 

How not to repeat the mistakes of the past? What lessons can oil palm cultivation give to that of cocoa? Will Indonesia learn from its history and avoid replicating the same patterns in its cocoa expansion, giving the Indonesian cocoa a long-term place in both domestic and international markets?

Sulawesi

In Sulawesi, we had the opportunity to meet with three communities. The first was in the South of the island, in Gantaran Keke village (Baentaeng province, South Sulawesi). It is a community working closely with Hasanuddin University of Makassar. The other two work in partnership with the Belgian NGO Rikolto (formerly VEKO-Îles de Paix).

However, as producers of bulk, mostly unfermented and nondifferentiated cocoa, they are affected  by the day-by-day price fluctuations as a result of movements in the New York and London Stock Exchanges.

Counting for most of the national production of the third largest cocoa producer in the world, Sulawesi cocoa is mainly unfermented, rarely derived from identified genetic material except for a few lines of universal clones, and primarily sold in the commodities market.

Roughly 80% of the farmers in rural communities grow cocoa on their family farms and the vast majority of them sell to local traders, trackers or large international buyers. Income diversification is therefore vital for producers in Sulawesi, subject to international stock prices.

Bali

In Jembrana, we were able to visit the Kalimajari postharvest plant, an NGO promoting the production of fermented cocoa in a preserved environment in Bali. One of the successes of Kalimajari is the social organization created, modeled on ancestral systems. Subak is indeed a unique structure in the world, recognized as a World Heritage Site by UNESCO.

The (sometimes denounced) Brundtland report defined sustainable development as a “development that meets the needs of the present generation without compromising the ability of future generations to meet theirs”. In 1992, the Rio Earth Summit clarified this definition by adding three pillars (economy / ecology / social): economically efficient, socially equitable and ecologically sustainable development.

The subak, in which each member has the same decisional weight and the same status, and where the economic concept of externality is systematically thwarted, is a system prone to sustainable of development.

Java

Central Java is a relatively important region for cocoa farming. Gadjah Mada University is responsible for research in agricultural technology. There are several university development projects in the area around the city. We were able to visit Klanggeran Farms in Gunung Kidul. Such projects supported by the province to promote tourism and hospitality (eco-tourism and agrotourism) also seek to revitalize various villages in the region.

In East Java we find the only region where the famous light-break cocoa grows: Kendeng Lembu. This very special cocoa has a naturally smokey flavor, even though said cocoa undergoes an exemplary post-harvest treatment with controlled fermentation and solar drying. The state-owned plantation has a quasi-exclusivity on it. Unfortunately, the government-owned farm is the only one entitled to selling seedlings and propagating beans from these lines officially.

The challenge here is that, as long as growers in other producing regions will not be able to produce, ferment, dry and export Java light-breaking beans, the added value of cocoa will remain in the hands of a small number of players. Any producer offering a cocoa other than this one suffers from limited market access. On the one hand, they cannot grow this cocoa for international niche market. On the other hand, the only buyers present on the local market and willing to buy their cocoa are the international buyers seeking massive volumes aimed at the processing industry in order to produce by-products and finished products.

There is therefore no incentive for producers to improve the quality of their post-harvest processing of their current cocoa.

Lessons to learn?

Oil palm cultivation has, in less than a century of intensive cultivation, changed the country. The flip side of the coin, of course, is the ecological disaster represented by oil palm plantations. Today, palm oil has become synonymous with deforestation, the displacement of people (both human and animal), the impoverishment of communities over generations to the point of creating modern serfdom, and the total waste of natural resources.

The history of palm oil in Indonesia, however, allows us to draw some useful conclusions when trying to address the themes and questions raised in cocoa cultivation.

Sustainable certification and natural resource management

Because of the attractiveness of the allocation of primary forests and the wood resources they represent, it is easy for a business to acquire them. Few countries recognize the customary rights of ownership and/or use by indigenous communities. Whereas negotiating with several small farmers, supported by noisy NGOs, may seem daunting, it is easier for a large-scale corporation to negotiate with the state the right on uncultivated land. Deforestation then takes place regardless of the species that is planted: soy, oil palm, sugarcane, cotton or cocoa.

Oil palm does not require intensive monoculture to be profitable. The species adapts relatively well to agroforestry schemes (possibly even together with cocoa trees), an integrated farming system, or a landscape-scale adjustment where cultivated plots are mixed with buffer zones and preserved areas.

There are also certification systems specific to palm oil production, not unlike those for other crops: BonSucro (cane sugar) and Responsible Soybean (soybean). The most famous one is CSPO (Certified Sustainable Palm Oil). The institution responsible for promoting the sustainability of palm oil production is the Roundtable for Sustainable Palm Oil (RSPO), which certifies the different plantations, farms, farms and their respective productions.

Unfortunately, several certification criteria remain unclear: they are very broad, rather conceptual than pragmatic. Their translation into contextualized imperatives is difficult and left to everyone’s appreciation. In addition, the certification offers several traceability channels for certified products: Book & Claim, Mass Balance, Seggregated, Identity Preserved. Only the latter certifies to the consumer that the entire volume of CSPO contained in the finished product is not only certified but also traceable until processing.

The difficulty of maintaining a true traceability system for oil palm products should warn us against similar attempts for cocoa products. There are many lessons to be learnt: clear labeling of finished products and better information on agricultural practices, contextualization of certification criteria, etc.

The stability of the social structure and uncontrolled transmigration

 During the development of oil palm cultivation, a great deal of public-private partnerships were developed. The government conceded the land rights of a plantation to an agricultural enterprise which, in return, had to develop a system of small family farms with an equivalent total surface area. The industrial plantation was therefore a ‘nucleus’ around which a ‘plasma’ was built. This is the NES model (Nucleus Estate and Smallholders). This plasma consisted mainly of small pre-existing landowners and transmigrants who had no land to claim and thus accepted very precarious labour conditions.

As transmigration plans were continuous, the influx of new transmigrants combined with the expansion of the industrial exploitation increased land pressure on. Land prices, the cost of exploiting oil palms, the social pressure to sell or not to sell one’s plot to the industrial exploitation are some of the issues encountered by local communities in the last 40 years.

The influx of new transmigrants into areas without land to cultivate makes competition for labor high, and deteriorates both community spirit and working conditions in the plantations.

Is there not a lesson to be learnt when the action plan for cocoa development announced by the Ministry of Economic Affairs proposes to use the NES model for the same purposes (increased production and from the country to the international)?

Challenges ahead

The bad press of palm oil is mainly due to structural decisions independent of the cultivated species and could apply equally to most agricultural commodities such as cotton, latex and cocoa.

Some of these decisions are the maintenance of an unsuitable agrarian system and the societal system built around it, the dubious interests of some multinationals, the maintenance of an artificially low cost of food in Western markets, the possibility for foreign shareholders to demand ever increasing returns on investment, etc.

The oil palm, as a cultivated species, has nothing to do with it.

Nor is cocoa, as a cultivated species, responsible for child exploitation in other countries of the world.

A major challenge for Indonesia as a producing country will be to promote education and training in agricultural practices, transparency of labeling and traceability of value chains. Consumers will also need to continue to learn and train in order to have a critical mind independent of environmental lobbies and calls for boycotts.

It will also be interesting to analyze how to export the Balinese subak systems to communities of different ethnic groups, bringing into their new environment equally diverse traditions.

Finally, the main challenge facing cocoa farming in Indonesia will be to translate the altogether too conceptual definition of sustainable development into concrete and pragmatic action.

An ‘economically efficient’ development will not be possible without diversification of incomes, without new opportunities for development of the local economy and without more democratic access to the varietal lines.

A ‘socially fair’ development will require raising awareness of the need to include smallholders in decision-making processes, translating legislation, standards and certification criteria into a contextualized and understandable language for all stakeholders.

An ‘ecologically sustainable’ development will make abundantly clear that the situation is urgent and needs to be tackled. It will provide the necessary means for the preservation and restoration of natural resources.

The “development that meets the needs of the present without compromising the ability of future generations to meet theirs,” will be in Indonesia the one that will evenly address the need for balance, the desire for growth and the will to achieve it.