Cocoa Cultivation in Nanggroe Aceh Darussalam

ASSESSMENT AND RECOMMENDATIONS FOR ACTIVITIES TO INCREASE EMPLOYMENT AND INCREASING INCOMES THROUGH SUSTAINABLE COCOA CULTIVATION IN NANGGROE ACEH DARUSSALAM

APRIL 2009 This publication was produced by Development Alternatives, Inc. for review by the United States Agency for International Development under Contract No. 497-M-00-05-00005-00

Photo Credit: ESP NAD Women in Aloe Krueng, Aceh Jaya learn about grafting. These women all work with cocoa. One of these women lost her husband in the period before the MOU. Cocoa-based livelihoods development led the way. Two ToT’s for 20 farmers, plus three forestry extension workers and ESP Field Assistants were conducted in Medan. The 20 farmers from the TOT trained over 300 other farmers in Aceh Jaya and Aceh Besar. Other livelihoods activities include the start-up of a program for Forum Alur Mancang Saree in local tourism development, the development of a co-operative for FORSAKA and the establishment of cocoa learning centers in Aceh Jaya. A vigorous campaign was begun with the Forestry and Plantations Departments in Aceh Jaya, Aceh Besar and Pidie to increase their support for cocoa programs.

ASSESSMENT AND RECOMMENDATIONS FOR ACTIVITIES TO INCREASE EMPLOYMENT AND INCREASING INCOMES THROUGH SUSTAINABLE COCOA CULTIVATION IN NANGGROE ACEH DARUSSALAM Title: Assessment and Recommendations for

Activities to Increase Employment and Increasing Incomes through Sustainable Cocoa Cultivation in Nanggroe Aceh Darussalam

Program, activity, or project number: Environmental Services Program, DAI Project Number: 5300201. Strategic objective number: SO No. 2, Higher Quality Basic Human

Services Utilized (BHS). Sponsoring USAID office and contract number: USAID/Indonesia, 497-M-00-05-00005-00. Contractor name: DAI. Date of publication: April 2009

Development Alternatives, Inc.

In collaboration with:

The Urban Institute Hatch Mott MacDonald

Johns Hopkins Center for Communications Programs FIELD Indonesia John Snow, Inc.

Rare Center for Tropical Conservation PERPAMSI/FORKAMI

Social Impact CO2OL-USA

Kleiman International Consultants, Inc. Evensen Dodge International

Mayflower Partners LLC

TABLE OF CONTENTS

1. REVIEW OF AND GROUND “TRUTHING” OF SECONDARY DATA ON COCOA DEVELOPMENT IN ACEH....................................................................................................... 1

2. FARM LEVEL ECONOMICS AND MARKET PROSPECTS FOR ACEHNESE COCOA .. 2 3. RECOMMENDATIONS FOR STRENGTHENING ON-GOING FIELD ACTIVITIES....... 2 4. SUGGESTIONS FOR 3-MONTH WORKPLAN..................................................................... 5

1. REVIEW OF AND GROUND “TRUTHING” OF SECONDARY DATA ON COCOA DEVELOPMENT IN ACEH

The consultant reviewed background documents such as the ICRAF “Livelihoods and Forest Resources for Aceh and Nias”, the IFC Report for “Developing a Sustainable Cocoa Sector in Aceh”, and the Aceh Green Concept Paper. The principal and relevant findings from the ICRAF and IFC reports were verified during the consultant’s trip to Aceh. These are:

• With the 2005 Helsinki Accord, combatants ceased hostilities, and this removed the “fear factor” from cultivating plots in rural and remote communities. People are returning to the land and looking for viable and profitable uses of abandoned farmland.

• Many farm families depend on a combination of tree crops for their livelihood, but the technology and knowledge of these tree crops is very limited due to poor extension/technical assistance.

• Interviewed farmers are greatly enthused about cocoa cultivation, which is consistent with ICRAF survey of tree crops preferred by farmers in NAD.

• Farmers are impressed by the recent results from pruning and better farm management facilitated by ESP over the previous 2 months. Neighbors are taking notice of this, improving their management practices and also converting hereto abandoned farmland into new cocoa plantings.

• This consultant agrees with the recommendations of the IFC Report on “Developing a Sustainable Cocoa Sector,” with the exception of emphasis on organic cocoa. A broader based and less risky option is to increase production on existing farms for the mainstream market, and at the same time, position farmers to produce cocoa that is certified under such regimes as the Sustainable Agriculture Network or UTZ certification process, if any certification process is pursued.

• Within the limited timeframe of the ESP, focus should be on farmer training that will increase productivity in the short to medium term, which is pruning of existing farms and providing information on main pest and disease threats.


2. FARM LEVEL ECONOMICS AND MARKET PROSPECTS FOR ACEHNESE COCOA

The farm gate price for cocoa in NAD during this consultancy was between 18,000 – 20,000 Rp./kg. This is approximately 80% of the spot New York price for Indonesia beans of Fair Average Quality (FAQ) at the time. This ratio is competitive with other cocoa growing areas in Indonesia in terms of marketing efficiency. As a comparison, West African farmers often receive only 40-60% of the terminal price for cocoa. In each village the consultant visited, farmers did not have any concern about how to market their cocoa. They said that traders frequented their farm or villages, and would buy any amount of cocoa that was available. Farmer production costs are estimated at 10,000 Rp./kg, including the opportunity costs of the farmers’ time and labor. The resulting margin is 8,000 to 10,000 Rp/kg. Cocoa does not require large capital investment to establish, and begins production as early as 2 years after planting. It is suitable for smallholder plots, especially in a mixed farming system. This analysis is supported by the strong interest in farmers to begin planting cocoa.

3. RECOMMENDATIONS FOR STRENGTHENING ON-GOING FIELD ACTIVITIES

The Environmental Services Program (ESP) cocoa development program Nanggroe Aceh Darussalam (NAD) began cocoa field activities in the first quarter of CY2009. These activities were to increase technical knowledge and capacity of key farmers from target villages in the district of Aceh Besar and Aceh Jaya. This capacity is being increased through a network of 10 key farmers (petani pelapor), who are supported and coordinated by ESP field staff. This is supplemented by monthly visits from experienced cocoa farmers and trainers from neighboring North Sumatra, who train the key farmers in crop management, pruning, and side-grafting. Villages and districts selected by ESP are not currently significant producers of cocoa relative to other districts in NAD. ESP selected these villages because it had previously worked in these communities to improve water access and watershed protection. ESP had good local knowledge and contacts and thus could more efficiently accommodate the new activity of improving livelihoods. Survey of the villages where ESP is promoting cocoa found that climatic and soil conditions are suitable for cocoa. The suitable companion crops for cocoa are present, and that cocoa trees were thriving in these environments.

ENVIRONMENTAL SERVICES PROGRAM WWW.ESP.OR.ID 2


Activities that will have a dramatic effect to increase incomes for participating farmers is pruning of existing cocoa trees and side-grafting of improved planting material (i.e. proven clonal varieties1) and education of farmers on identification and prevention of primary pest and disease threats and better post-harvest solar drying practices. Planting of new cocoa farms will need three years to achieve income impact and is therefore beyond the scope of the remaining project life of ESP, which is only five months to the end of September 30, 2009. The following are recommendations on increase and better document short term measures:

• Standardizing Farmer Interface: There is a target of 1,500 farm households assisted through this activity, but the nature and extent of interface or assistance with beneficiaries is highly variable. The people that organize, implement, and report on this interface are the key farmers (petani pelapor). In order to demonstrate consistent inputs and results across project areas, there should be a more standardized input of assistance to beneficiaries (i.e. hours of training on pruning, pest-diseases, etc.)

• Measuring Production Impact: At present, the measurement of impact is anecdotal and few or no baseline has been established. The consultant observed that trees that had been pruned had started to produce more flowers and fruits within 1-2 months. The consultant recommends impact measurement to be done through 5-10 sample plots of 10 trees each, chosen at random. A baseline production will be made based upon farmer interviews. The tree will then be inspected to count for total pods at intervals of one, two, and three months after pruning. Based on these samples, ESP will be able to estimate the increase in production across all trees and all farms assisted by the project. An initial target is to raise annual yields by 25% from this intervention, from 0.8MT/HA (the estimated average yield in NAD) to 1.0MT/HA.

• Increase Availability of Information on Cocoa Cropping: Former and current USAID interventions in the Indonesian cocoa sector have produced highly effective and useful training and information aids for farmers in Indonesian language. These should be made available in NAD to the lead farmers at least and hopefully to all participating farmers to deepen their understanding of cocoa cropping.

ESP can also play a positive role in the future expansion of cocoa in the project areas of Aceh Jaya and Aceh Besar beyond the end of the project. It can do so by preparing a good foundation for future cocoa development in the following three areas:

1) Continue to increase technical capacity and knowledge of the current key farmers, who will continue to be a source of extension, advice, and leadership for sustainable cocoa systems in their area.

2) Establish three to five Cocoa Learning Centers in the target project areas that will have the following facilities:

a. A simple wooden structure (Sanggar Tani) for farmer meetings and training.

1 This term refers to material that is propagated vegetatively, such as through grafting, and thus is genetically identical. A “proven” clonal variety has been tested and verified to provide superior performance in different climatic and soil conditions for a range of parameters, such yields, disease and pest resistance, etc.)



b. A bud wood garden that will contain 5 to 10 proven clonal cocoa varieties that will be a source of registered planting material for farms in the area.2

c. Nursery structure (level ground, shade netting, and water availability) for purpose of producing clonal seedlings and demonstrating good nursery practices.

3) Form and strengthen linkages with other cocoa development efforts in NAD (e.g. Aceh Cocoa Forum) and in so doing, influence the NAD governor’s office to increase focus on agriculture land use in the Aceh Green more on “Sustainable Cocoa”.

It is the opinion of this consultant that cocoa production in NAD will increase greatly beyond its current annual production of 16,000 – 18,000MT with or without the assistance of ESP or other projects. Farmers will realize increased incomes through cocoa cultivation and will therefore invest in expansion into agriculture and non-agriculture lands. However, the manor of increase and areas of expansion can be influenced at these earlier stages. The rate of increase will be, in part, a function of the productivity of existing cocoa farms. If current cocoa farms are producing far below their capacity due to poor management practices and ineffective pest and disease controls, then farmers will resort to opening new cocoa farms in more marginal land or, most likely, into “virgin” or forested land. Therefore, efforts to increase production and improve production quality on existing farms will reduce the pressure on non-agricultural forested lands. For example, according to the only cocoa exporter in Aceh, Armajaro, the main cause of crop loss is due to poor cocoa bean drying during on-farm post –harvest processing. This causes the beans to be moldy, and as such, will be rejected by buyers. During the peak harvest, as much as 30% of the crop is thus rejected because of mold damage. Improving post-harvest seed drying through simple, affordable practices is one way to increase incomes without increasing area planted. There is also a need for a harmonization and consensus among different projects and NAD government agencies regarding the direction and manner of cocoa development. This is especially important in making consistent technical recommendations. A cocoa development master plan is needed and the European development organization, Swiss Contact, has indicated that it wants to take the lead on this. ESP, even in the next few months, can have an effective impact on this plan by implementing the first necessary steps to improve cocoa production using Best Agriculture Practices, and emphasizing the concept of “sustainable cocoa production”, as laid out in the Sustainable Agriculture Network and adopted by the Rainforest Alliance as the template for certifying cocoa as Rainforest Alliance cocoa.

2 A list of recommended cocoa clones for Indonesia, preferred attributes, and potential sources are attached as an annex.



4. SUGGESTIONS FOR 3-MONTH WORKPLAN

Attached (Attachment 1) is a diagram with a suggested workplan for the period May-July 2009. Given the high level of activity planned during this period, the consultant recommends ESP to bring on an experienced Indonesian cocoa agronomist and trainer during this period to advise and assist the ESP team to set up the Cocoa Learning Centers, source and graft improved planting clones, and increase the training and technical skills of the key farmers. The Cocoa Development Specialist consultant is also available for a return visit during either the month of May or June for the purpose of working with ESP to further this work plan, and to coordinate with other projects, and the Aceh Green team to develop a more comprehensive and consistent technical and strategic approach to developing cocoa in NAD. This could be organized around a meeting or half-day conference on “Sustainable Cocoa”, attended by leading Indonesians in this field and relevant stakeholders in Aceh.

Attachment 1: Suggested Workplan Schedule for Increasing Incomes in NAD through Sustainable Cocoa Development



Attachment 2: Consultancy Schedule

Date Activity

Wednesday, April 15 • Background research and reading for consultancy • Phone discussions with cocoa traders and other parties (i.e. Amarta, IFC)

Thursday, April 16 • Travel from Jakarta to Banda Aceh • Visit cocoa training on the Teladang Desa, Slopes of Mt. Seulawah,

observe pruning and training in cocoa farm Friday, April 17 • Visit to cocoa farmers in Simpang Tiga Sarei and Suka Damai, the slopes

of Mt. Seulawah. Visit to cocoa farms there, and observe results of pruning and side-grafting

• Meet with John and work in ESP office in the afternoon Saturday, April 18 • Day Off Sunday, April 19 • Travel 1 hour to Jantho

• Observe meeting in Jantho. Visit Datukut Desa • Visit community nursery in Jeruk Bale Village • Prepare presentation for Forum meeting the next day

Monday, April 20 • Travel 1 hour to Jantho • Joined Forum meeting in Jantho • Presented to Forum members on Market outlook for cocoa and chaired

panel of industry representatives from Armajaro • Travel to 5 hours to Aceh Jaya

Tuesday, April 21 • Visit to cocoa villages in Aceh Jaya (Pandang, Pante Kuyon, and Rentang ) to observe ESP interventions, meet with farmers and evaluate results.

• Met with farmers and ESP staff at Gunong Meunasah Cocoa Learning Center

Wednesday, April 22 • Visited ESP assisted cocoa farms in Alue Krueng, Aceh Jaya • Traveled 3.5 hours back to Banda Aceh • Worked on report

Thursday, April 23 • Work in ESP Office • Planned meeting at Governors Office • Meeting with Manfred Borer, Swiss Contact

Friday, April 24 • Work in ESP Office • Present results to ESP cocoa team • Return to Jakarta


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Jl. Jend. Sudirman No. 9 Jakarta 10270

Indonesia

Tel. +62-21-720-9594 Fax. +62-21-720-4546

www.esp.or.id

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Cocoa Cultivation in Nanggroe Aceh Darussalam