Coffee chain in Toraja, Sulawesi, Indonesia: sustainable livelihood analysis and chain analysis

BASELINE STUDY 2008 Coffee Tana Toraja District (South Sulawesi) 1. Sustainable Livelihood Analysis 2. Chain analysis 3. Baseline study average income

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Table of contents

1. Sustainable Livelihood Analysis ................................................................................ 3 1.1

Introduction ........................................................................................................ 7

1.1.1 Background ........................................................................................................................ 7 1.1.2 Approach: Creating the baseline ....................................................................................... 7 1.1.3 Report structure ................................................................................................................. 8

1.2

The Livelihood Framework of Toraja Coffer Farmers .......................................... 9

1.2.1 Toraja District .................................................................................................................... 9 1.2.2 Vulnerability context ....................................................................................................... 11 1.2.3 Livelihood assets ............................................................................................................. 13 1.2.4 Policy, Institutional Context and Process ....................................................................... 19 1.2.5 Existing Livelihood Strategies ......................................................................................... 19 1.2.6 Current Livelihood Outcomes ........................................................................................... 22

1.3

Conclusion ......................................................................................................... 23

1.4

Lesson learned from the process ...................................................................... 24

2. Chain Analysis .......................................................................................................... 25 2.1

Chain Map Chain logic & Power relations ............................................................. 26

2.2

Enabling environment ............................................................................................ 27

2.3

Business Development Services ............................................................................ 28

2.4

Bottlenecks barriers & leverages ......................................................................... 28

2.5

Production related issues ...................................................................................... 29

3. Results baseline study average income ................................................................... 30 3.1

Source data ....................................................................................................... 31

3.2

Results baseline average income...................................................................... 31

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1. Sustainable Livelihood Analysis Coffee Producers in Tana Toraja District (South Sulawesi) Rante Pao, 12-15 November 2008 By Sebastian Eliyas Saragih – Independent Consultant CIRCLE Indonesia Peni Agustiyanto– VECO

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Executive Summary This report is a sustainable livelihood framework report for coffee producers in Toraja. This framework was produced by Toraja coffee farmers with facilitators form VECO and Jalesa, and an independent consultant from Circle Indonesia.

Trends making the lives of Toraja coffee farmers more vulnerable are decreasing coffee prices, the downward trend in coffee production, the diminishing negotiating position of coffee farmers in setting prices, increasing conflict over land within families, increased political conflict, and the diminishing interest in farming among young people. Positive trends are the improvement in transport and communication, and the fact that seedlings are easier for farmers to get hold of. Important shocks for coffee farmers have been the fall in the price of coffee, the increase in the price of refined fuel oil, and infestations of swine virus. Important events in the seasonal calendar for coffee farmers are traditional rituals, school holidays, and harvest time.

These changes have affected people to different degrees, and there are people categorised as poor, middle class and rich. In general, coffee farmers in Toraja are in the middle social and economic class. Level of education is an important human asset for coffee farmers, most having completed senior secondary school education. Access to health services and traditional knowledge of farming are two other key human assets. Important natural assets are having land that is suited to cultivating coffee, adequate water supply, and good crop diversity. Important social assets are strong social and religious organisations, and the tongkonan system. Important financial assets are income from coffee, savings in cash and in livestock, access to loans from credit unions, and money sent from family members working outside the village. Important physical assets are electricity supply, and communication and transportation networks.

The policy that most affects coffee farmers is pricing policy. Unfortunately, coffee farmers are not involved in price setting, which is done unilaterally by PT Toarco. Farmers frequently have to deal with middlemen manipulating prices and measures. Another important policy affecting the lives of the farmers is the tongkonan rules of land ownership and management, which differ slightly from village to village. However, men and women have the same rights to tongkonan land. Women also have enormous influence in village decision-making processes.

Besides coffee farming, coffee farmers and their families also grow rice, raise livestock, take part in traditional rituals, organise, build capacity, work as construction workers, take part in health improvement activities, and do other economic activities.

Coffee farmers are generally satisfied with the health outcomes of their livelihood strategies, but some are less than satisfied with the quality of their housing, some are dissatisfied or very dissatisfied with their level of income, and some are not satisfied with the influence that coffee farmers have in setting coffee prices.

Making this baseline facilitated the coffee farmers to look in more detail at the factors that affect their lives, their strengths, and their livelihood outcomes. This was a very interesting process, because the farmers themselves have a saying illustrating that life is a dynamic 4

process, which in Toraja is tallan oi buaya kendek oi sampuari, or literally “the crocodile sometimes lives on the surface of the water, and sometimes below the surface�. In other words, life has its ups and downs. This philosophy teaches that it is important to be aware that there are times when life is hard, but people will bounce back as long as they do not want to drown and die. The process of making this baseline reminded the participants about the importance of consciously managing their lives, of managing the threats and strengths, to keep them on the path towards a better, more sustainable way of life.

This livelihood framework mapping was a learning process for the farmers, those supporting the farmers, and the facilitators. The process also generated facilitation guidelines and facilitators from VECO partners and VECO itself who will be able to facilitate similar workshops in the future. The results of this baseline will inform VECO and its partners to strategise for future programme interventions

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List of Abbreviations and Acronyms BBM PEMDA PKK POSYANDU PUSKESMAS PUSTU SLTA TOR

Bahan Bakar Minyak Pemerintah Daerah Program Kesejahteraan Keluarga Pos Pelayanan Terpadu Pusat Kesehatan Masyarakat Pusat Kesehatan Pembantu Sekolah Lanjutan Tingkat Atas Terms of Reference

Acknowledgements The report team would especially like to express their thanks to the coffee farmers in Toraja for volunteering their time and energy, and sharing their knowledge and understanding of their livelihood systems to the report team. Without their help, this report could never have been produced.

We are also grateful to all the staff and management of Yayasan Jaya Lestari Desa (Jalesa), particularly the late Mr. Julianus, for helping the report team when facilitating the workshops, Ms. Mirna, Ms. Wina, and Mr. Daniel, and all staff that assisted the workshop on November 12 -15, 2008 in Range Pao, Toraja. Mr. Julianus was killed in a tragic accident that took place when this report was being written. Unfortunately, landslides like the one that took Julianus' life when he was working were not identified by the workshop participants as a shock that could result in tragedy for coffee farmers in Toraja.

We would also like to thank VECO Indonesia for entrusting us with facilitating and writing this report. In particular, we thank Mr. Hery Christanto, Mr. Steff Deprez, Mr. Suarja and Ms. Wati for their unstinting support throughout the workshop process and the writing of this report.

Finally, we hope that this baseline report will be of use in designing the programs and monitoring and evaluating the activities carried out by VECO Indonesia together with its partners.

Denpasar-Yogyakarta, 15 December 2008 Sabastian Eliyas Saragih – Independent Consultant Circle Indonesia Peni Agustiyanto– Staff VECO Indonesia

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1.1 Introduction

1.1.1

Background

In preparation of its work program for 2008 – 2013, VECO Indonesia created a baseline. This baseline combined qualitative data collected through interviews and questionnaires, and qualitative data gathered during a workshop attended by a sample group of producers of coffee farmers from Toraja, Sulawesi Selatan. The framework used to present the qualitative/descriptive data collected from the producer group is a sustainable livelihood framework based on the Department for International Development (DFID) sustainable livelihood framework.

This report is a baseline of qualitative/descriptive data mapped using a sustainable livelihood framework.

1.1.2

Approach: Creating the baseline

The steps involved in making this baseline were: ƒ Developing facilitation guidelines and baseline guidelines. ƒ Simulated guidance with prospective facilitators comprising the VECO staff and VECO partner staff that organised the producer groups, under the guidance of an independent consultant.

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ƒ

Livelihood framework mapping workshops with male and female participants from VECO partner target groups, and others. Of the 30 people attending each workshop, give were not from VECO partner support groups.

ƒ

Workshop process: o Introduction to the sustainable livelihood framework adapted to local terms.

- For sustainable livelihood framework, the term roda penghidupan berkelanjutan was used.

- For vulnerability context, the term used was factor luar almiah yang membuat hidup menjadi lebih susah. These non-natural factors were divided into trends, shocks, and seasonality.

- For policy, institution, and process, the term used was factor luar kebijakan.

- For assets, the terms used were modal or sumberdaya.

- For livelihood strategy, the terms kerja or kegiatan-kegiatan untuk menopang hidup atau untuk mencapai tujuan-tujuan hidup were used.

- For livelihood outcomes, the terms tujuan hidup or apa yang diinginkan dicapai dalam setiap kegiatan/kerja yang dilakukan were used.

- Because the diverse opinions of the participants produced very broad pictures, prioritising or ranking was carried out at each session to identify the most important elements of those mapped.

1.1.3

Report structure

This baseline report encompasses: -

-

-

-

-

An overview of the area where the producers live, the history of their involvement in producing the key commodities they now produce (coffee), and the history of the involvement of VECO and its partners in this sector.

The baseline in the form of a diagram Vulnerability context o Trends o Shocks o Seasonality Assets mapping o Human assets o Natural assets o Financial assets o Social assets o Physical assets Structure & process o Institutions o Policy o Process Livelihood strategies Livelihood outcomes Conclusions Lessons learned from the creation of the baseline 8

1.2 The Livelihood Framework of Toraja Coffer Farmers

1.2.1

Toraja District

Tana Toraja District, one of the districts of Sulawesi Selatan province, is situated at 2° 3’ S and 119° - 120° E. Tana Toraja borders Luwu District to the north, Enrekang District to the south, Palopo District to the East, and Mamasa and Mamuju districts to the west. Covering an area of ± 3,205.77 km², Tana Toraja has a population of around 446,000. Most people live in villages, earning a living in the agricultural sector. The distance between Makasar, the provincial capital, and Tana Toraja is around 350 km, or a nine-hour journey by land.

TANA TORAJA DISTRICT

Tana Toraja is an upland area, at an elevation of 350 m – 2889 m above sea level. The area is suited to both food crop farming and horticulture. Rice production is around 133,161 tons, produced on about 32,603 ha of land (4.08 ton/ha); corn production is 1,857 tons, produced on 412 ha (4.11 ton/ha) and 3.162 tons cacao is produced on 4761 ha.

21,804 ha produces 5.579 tons of coffee.

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The History of Coffee Growing in Toraja Coffee was introduced into Toraja in Dutch colonial times. In 1934, a Japanese coffee manufacturer called Kimura Coffee Co. Ltd. advertised Toraja coffee in a Japanese language magazine. But when the Dutch left, the coffee plants in Toraja were left untended until the 1970s, when a Japanese man called Hisashi Ohki, then vice president director and production director of Kimura Coffee Co. Ltd., saw the potential for reviving Toraja coffee. Coffee growing developed rapidly in Toraja after Development Co. Ltd from Japan and the Indonesian firm P.T. UTESCO received approval from then President Soeharto to invest in coffee development in Toraja, under a new company called PT TOARCO. On March 10, 1978, Toarco Toraja coffee made its debut in 41 department stores, 574 discount shops, and 813 coffee shops around Japan. Sales exceeded all expectations. The tagline “The mysterious coffee is back – Toarco Toraja coffee” was known all over Japan, and the coffee received glowing reports from the media and traders throughout Japan.

Toraja coffee was so popular that stocks ran out. But this fluctuation in sales was caused by disease that devastated the coffee harvest. By around 1987, this infestation was under control, and over the period 1991 - 2000, production of Toraja coffee increased sharply.

Today, 796 tons of Toraja coffee are exported; the equivalent of 76% of all coffee exports from Sulawesi Selatan. Most of the Arabica coffee from Sulawesi Selatan comes from Toraja.

Some figures(source: Tana Toraja District, 2006)

Total Area Planted (ha) Production (tons) Number of Farmers

ARABICA COFFEE

ROBUSTA COFFEE

16,697 4,074 31,212

5,107 1,505 8,373

VECO’s support in support of the coffee sector in Toraja - Facilitating establishment of the Toraja Coffee Farmers' Association to increase the farmers' negotiating power in the coffee chains in Toraja.

- Facilitating preparation of the strategic plan of the Toraja Coffee Farmers' Association.

- Facilitating the Toraja Coffee Farmers' Association to become a member of the Indonesian Special Coffee Association.

- Facilitating regular meetings with other stakeholders in Toraja (private sector, government, and NGOs) - Comparative studies to coffee producers - Training in raising coffee seedlings, in cooperation with Jalesa.

- Facilitating PACA to: - Identify the main problems in the Tana Toraja coffee chains.

- Identify solutions to these problems in order to improve the systems within the Tana Toraja coffee chains.

- Build stakeholders' knowledge about the coffee chains -

Capacity building for Jalesa 10

1.2.2

Vulnerability context

Important Trends In the last 10 – 15 years, the livelihood system of coffee farmers has been made more vulnerable by various trends. These trends are: - Decreasing coffee prices. Although the nominal price of coffee is reasonable (although fluctuating) compared with prices ten to fifteen years ago, when it comes to buying production inputs or basic necessities, the purchasing power has decreased.

- There has also been a downward trend in the production and quality of coffee due to the diminishing fertility of the soil, the increasing incidence of pests & diseases, and the advanced age of most of the coffee plants.

- In general, coffee farmers believe that their negotiating position vis-Ă -vis traders is diminishing, generating a feeling that traders are setting coffee prices arbitrarily.

- Another change that has made coffee farmers more vulnerable is the increasingly frequent family conflicts over ownership and management of land. This is happening because of the growing number of family members living in the villages and the influx of people from outside the family into the family, usually through marriage. Envy on the part of other family members sparks conflict when these 'outsiders' get involved in managing the tongkongan (clan) lands.

- Local politics is another source of growing conflict. This has undermined the spirit of mutual self-help (gotong royong) within the community and encouraged the formation of new groups or kobbu' in the villages. Although these groups only actually exist in traditional (adat) rituals, because the culture and tradition of the Toraja is still very strong, this fragmentation has also spread to day to day life.

- Some farmers are aware that young people are becoming less interested in working in agriculture. Meanwhile, the number of young people living in the villages is increasing as it gets more and more difficult for them to obtain work outside the village, and the number of families is increasing, too.

Besides the trends that have made life more vulnerable, there have been some positive trends in the past 10 – 15 years that could be opportunities for the local communities to improve their livelihood systems. These opportunities include: - The improvement in transport and communications that have made it easier for farmers to communicate and move from one place to another. There are also more coffee mills in the villages, making it easier for farmers to mill their coffee to sell on the local market.

- Seedlings are also easier to get hold of at affordable price, so farmers can cultivate new coffee plants. Coffee farmers in general are educated to a higher level as education becomes more affordable and education facilities become more accessible. In turn, the coffee farmers are more able to adapt to new developments.

Important shocks and their impact on the coffee farmers In the past decade, important shocks that the coffee farmers perceive as great disasters have been the fall in the price of coffee and the increase in the price of refined fuel oil.

Both these events were unexpected, and used up a lot of the assets the farmers had for coping and adapting. Early 2008, the price of fuel went up from Rp.4.500/l. to Rp.6.000/l. which impacted on the price of basic necessities and transportation costs. By the end of 2008, the price decreased back to Rp.4.500/l. but the prices of the basic necessities have not decreased. The farmers also say that this gradual, but unexpected, decrease in the price 11

of coffee prompted many farmers to so badly neglect their coffee gardens that they could not be rehabilitated even if prices recovered. Naturally, this puts the farmers in an increasingly vulnerable position. Another shock has been infestations of crop pests and diseases, and a swine virus that scared farmers off pig rearing for several years. However, the farmers feel that they are able to recover from this situation without any significant erosion of assets.

Important events in the seasonal calendar Every year, the coffee harvest season starts in April and ends in November (8 months). The low production season occurs in April, May, June, October and November (average ??) and the high production season occurs in July, August and September (average ??).

July - Sept

Apr - June

0ct-Nov

Fluctuation of coffee production

This fluctuation has an impact on the coffee price. In July and August, the maximum price farmers get can drop to Rp. 15000/kg (Robusta). In November and December, the price can peak to Rp. 24,000 per kg. Farmers can rely on enough skilled local labor force from Toraja and there is no need to bring in workers from outside Tana Toraja.

Coffee farmers in Toraja feel that there are certain months of the year in which life is harder for them. This is particularly in the months in which they have to spend a lot of money. The months in which expenditure is highest are the months when there many celebrations, particularly funeral rites. A funeral rite can cost up to IDR 1 billion, which is usually contributed by family members. The family arisan system used to raise the money means that even if the person who dies is not a direct family member, each member of the arisan group must contribute. Funeral rites are usually held in the holidays, and even if a person dies at another time of year, the funeral rite is still held in the school holidays. So, these rites are generally held in June and July, and December and January. The funeral rites coincide with when the children start school, so in addition to the money they have to spend on funeral rites, families also have to pay out for school fees. Things are a little better in June and July because the coffee farmers have an income during these first months of the main coffee harvest, which reaches its peak in August. But funeral rites in December really deplete the farmers' savings, and some may even have to take out loans.

And the month in which money is most scarce is March.

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Seasonal Calendar

1.2.3

Livelihood assets

In general, coffee farmers in Toraja are in the middle social and economic class. There are three welfare groupings in Toraja: rich, middle-class, and poor. The criteria used by the Toraja coffee farmers to categorise people into these groups are: Poor Substandard house (grass roof, bamboo walls and floor, unhygienic environment) Eats 2x a day Owns no buffalo Parents uneducated and have many children who do not go to school Landless

Middle class Owns a decent house

Rich Owns a luxury house

Eats 3x a day Owns 1 – 2 buffalo Educated to at least senior secondary school or equivalent

Eats 3x a day Owns buffalo Can pay to educate their children to be successful

Owns some dry/wet land

Owns large areas of paddy fields and dry land Additional sources of income Has a great deal of influence in the community

Works as a day labourer

Runs small enterprise

Has no influence in the community (unable to play a role in traditions) No fixed income

Has influence in the community Mostly civil servants

Owns a car & electrical appliances

Human Assets The level of education among Toraja coffee farmers is relatively good, with most having completed a senior secondary school education. This is because coffee farmers in general 13

have no difficulties accessing formal education to this level. In Toraja, basic education to higher education is available and can be easily accessible. Government and private elementary schools are present in the every village while (junior) high schools are only available at sub-district including Rante Pao city. In Rante Pao (Capital of Toraja District), there are 2 universities (Uki-Universitas Kristen Indonesia and the University of Theology (protestant).

No schooling 15% Primary school 19% Junior high shcool 41% High school 18% University 7% (Bureau statistic, 2006)

Children from middle-class farmers (for example, coffee farmers with more than 1000 trees) go to primary school until high school. Children from farmers of higher class often go to university in Toraja or Makasar. Uneducated people often work as labor force in the agriculture force, while educated people often become traders or government staff.

85% of the Toraja people works in agriculture (appr. 85%), other people work in government positions, military or entrepreneurship. Because Makassar - the capital of the Province – is growing, uneducated labor force from the rural areas such as Toraja, often move to Makassar for new job opportunities in the informal sector (carpenters, construction work, ‌).

Primary health centres and auxiliary primary health centres in the villages provide inexpensive and easy access to health services. So far, there have not been cases of child malnutrition.

Access to improving farming skills is very limited because the system of agriculture extension does not function properly. As a result, their farming practice are handed down from one generation to the next.

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Natural Assets Toraja’s land that is very suitable for the cultivation of coffee. They also have adequate water sources for their paddy fields and other uses. The coffee farming developed here is poli-culture, where several types of plants are grown in the coffee gardens that have ecological, economic, and sociological functions. The uru tree, for example, as well as functioning as a shade plant, is also used to mark the boundaries of land and in some traditional rituals, and it has a market value. The coffee farmers' livelihood system also depends on rearing of livestock, such as pigs, buffalo and chickens, as a source of family income. Although most of the coffee grown is Arabica, coffee farmers also grow robusta mainly for the local market.

Land use:

Settlement Dry land Protected & community forest Rice field

2807 ha 7260 ha (used for coffee, cacao, ‌) 9,500 ha 1200 ha

Water for both consumption and agriculture use is available in almost every village. Water sources are managed by AMAN (Alliance National Indigenous Communities). All natural resources including forests, water and land are owned by the indigenous communities which use strict regulations (e.g. resources can be used for the society but cannot be commercialized).

Social Assets Social and religious organisations functions very well in Toraja. These organisations are embedded in the society and provide the people the wherewithal to resolve their day to day problems. These organisations include church organisations, workers' arisan, arisan for rituals, tongkongan, saroan, and the higher level, lembang. One family's problems are considered the problems of the whole tongkongan, which allows the accumulation of the strengths of the individual family members in dealing with these problems. There are also strong ties between the young people, and they rarely, if ever, fight amongst themselves.

THE MEANING OF TONGKONAN FOR DECISION MAKING IN THE LIVES OF THE TORAJA PEOPLE Tongkonan is a symbol in the social strata of Toraja society. If a person does not have a tongkonan, then his or her social standing is not defined.

Tongkonan have the social power to bind families. A person who does not wish to be bound by his or her tongkonan will have sinned in the eyes of his or her relatives, a sin that persists for seven generations. It is this embeddedness that makes the ties of the tongkonan so strong. The tongkonan are also the origin of the community-based groups known as saroan.

A saroan is an organisation with an informal structure, with the ambe saroan functioning as group leader. Unlike a formal organisation, the saroan has no secretary or treasurer. But the mechanisms of the saroan work well because the ambe saroan performs multiple functions in the dynamics of the saroan organisation.

Saroan members obey the ambe saroan and the ambe saroan lead the organisations in a participatory way, although there are concerns that growing rivalry could make the ambe saroan leadership authoritarian.

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THE DECISION-MAKING PROCESSES RELATED TO ESTABLISHING A TONGKONAN If the family members of a saroan decide to build a tongkonan, the initiator is the ambe saroan, who lobbies his relations in the tongkonan.

When an agreement is reached, the ambe saroan and his relations or the members living in that tongkonan (Tonnisung Batuariri) invite all members of the family to sit down together (ma’kombongan) to discuss the strategy for building the tongkonan – who will take up which role, who will do what, who will be responsible for what. These decisions are made through deliberation involving all members of the family who are bound to that tongkonan.

Once this consensus is reached, the ambe saroan functions as the person responsible and the tonnisung batuariri (the people in the tongkonan) function as the main executors.

Other decisions taken by this kombongan tongkonan include: The form and size of the tongkonan The design and carving of the tongkonan The elements of the tongkonan The design and carving of the tongkonan are of enormous consequence to the people associated with that tongkonan. For example, if the house is disalando (simple design), its carving must be simple, too. A simple house with complex carving is imbalanced, which for the Toraja is “taboo”, and could spell economic disaster for those living in the tongkonan.

The elements of the tongkonan are also of enormous consequence in terms of social standing. A tongkonan is ‘complete’ if it has 23 pillars, one of which is the central pillar or posi’na. A tongkonan with 23 pillars is the tongkonan of nobility (tongkonan layuk). Conversely, a tongkonan with less than 23 pillars is an ordinary tongkonan, and its social status is middle to lower class.

Tongkonan Toparengnge’ in the east of Tana Toraja, Tongkonan Tomakaka in the north of Tana Toraja, Tongkonan Puang in the south of Tana Toraja, and Tongkonan Ma’ Dika in the west of Tana Toraja must have 23 pillars, because it is from here that the ambe saroan who lead the saroan come.

And most of today’s leaders in Tana Toraja, at the district, subdistrict and village levels, are of noble stock (Parengnge, Tomakaka’, Puang and Ma’dika).

Conclusion The relationship between a tongkonan and decision-making processes is very close, because the ambe saroan in the tongkonan keep tight control in decision making.

Although women are not permitted to take the position of ambe saroan or saroan leader, they do play a very important role in the saroan. In the planning and building of a tongkonan, the women are involved in the discussions and they are the firs to touch the pillars of the tongkonan when it is ready to set up, because the Toraja believe that women’s hands are cooler than men’s, and by their touching the pillars first, the tongkonan will bring freshness to all the clan members bound to the tongkonan.

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Financial Assets The main financial assets that coffee farmers have is their income from coffee. However, other income is obtained from rice, cacao and vanilla.

However, savings in the form of livestock, especially pigs and buffalo are also important financial assets for them when they are in need of money. These savings are easily exchanged for cash. Another source of finance is money sent by family members working outside Toraja. At least two or three times a year, people working outside Toraja will send money to their family living in the village/tongkonan.

Other important sources of financial assets are credit unions and marking collectives, from which the coffee farmers can obtain loans if needed. In Toraja, there are many financial institutions such as BRI, BNI, Danamon Bank. In addition, there are also projects such as KURK (Kredit Usaha Rakyat Kecil) - the government in cooperation with BRI Bank provide capital for small entrepreneurs and the Balok Toraja cooperative, which has a soft loan scheme for small and medium enterprises, including the agricultural sector. For small-scale coffee farmers in remote areas the existence of the cooperative Balok Toraja has been very helpful to save money and credit. As banks are easily accessible - branch offices of BRI BNI at district level - more than 80% of the Toraja farmers have savings in the Bank. Most of the savings are to cover the cost for traditional feasts/ceremonies for the death.

The flow of funds in the coffee chain (in/out), can be explained as follows: a. Process at farmer level: harvesting Æ milling Æ washing Æ selling (the costs for these process is to be covered by the savings of the farmers) b. Trading at village and sub-district level: traders only buy (cash and carry) dry coffee beans (< 11%) at village, sub-district level c. Trading at the district level: sorting dry beans Æ sell to processors ((cash and carry)

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The interviews with a sample group of 28 coffee farmers indicates that the average annual family gross income derived from Robusta and Arabica coffee is respectively Rp. 65 and 45 million (if 1000 productive trees) while the average expenditure for coffee is Rp.3.490.000 (for 1000 productive trees).

Physical Assets Good power and communication networks are very important physical assets for the coffee farmers. Good communications help the farmers get information about coffee prices and the prices of other commodities from other villages. More than 50% of the rural areas has â&#x20AC;&#x2DC;coverageâ&#x20AC;&#x2122; for mobile phones, and most farmer family have television. This good flow of information also makes the communication between farmers living in the villages and family members living elsewhere easier and cheaper. Most farmers have electricity in their homes Internet is only available in the city Rante Pao. Having sufficient power supply prompted the establishment of coffee mills, making it easier for coffee farmers to grind their beans, especially robusta, for sale on the local market. The existence transport facilities allow the coffee farmers to move around more easily and more cheaply. In Toraja, good roads are available in the city, but roads in the remote areas (village level) are not well developed. In some villages, horses are still commonly used as a form of transport. Small pick-up trucks are used to transport coffee from villages to the processors. Almost every village has a small coffee processing unit (simple technology) whereas warehouses are owned by traders and processors in the cities. In general, Toraja is known for good quality house infrastructure (wooden traditional houses).

The allocation of land and management of land by coffee farmers in Toraja is based on traditional rules. Land ownership is per tongkonan or traditional house. The land owned by the tongkonan is divided up fairly and evenly according to custom. Men and women have equal rights to tongkonan land. Tongkonan land is usually farmed by the family members living in the tongkonan or in the village. There are several models for the division and management of tongkonan lands. One model is that each member of the tongkonan gets an equal share of the land. Another model divides up the tongkonan land in proportion to the number of buffalo a person inherits at the funeral rite of his or her parents. Management of tongkonan lands is usually the responsibility of the family members living in the tongkonan. If the land has been divided up, the owner assert his or her ownership over that land at any time. But if the land has not been divided up, plots that have been managed 18

cannot be taken back, although ownership remains with the tongkonan. Another model involves a certain portion of land being allocated to each person living in the tongkonan.

This land can by managed by the person to whom it is allocated as long as he or she is still living in the tongkonan. Where land has been divided up, it is up to the owner to decide who will manage it.

In Toraja, women are recognised as having the same rights as men to land, and in decisionmaking and development processes in the village, in which women have enormous influence.

1.2.4 Policy, Institutional Context and Process The policy that most affects coffee farmers is the pricing policy. The price of coffee is set unilaterally by PT Toarco, the sole exporter of Arabica coffee. Pt. Toarco sets prices based on its own price standards and measures. The measure it uses in transactions is a litre mug (bonco), which can be easily manipulated by middlemen in the transactions with farmers.

Toraja district government could have an influence over Pt. Toarco, the price setting process and the use of measures. Unfortunately, it seems that the district government is not particularly concerned about price levels, price setting that favours farmers, nor about exercising control over trading measures. Since 2008, there is a coffee farmersâ&#x20AC;&#x2122; association in Toraja but until now it has no involvement whatsoever in the setting of prices, standards and measures.

Coffee price Mechanism: see chain analysis report 2008 The structure and patterns of relationships are influencing the coffee chain. First, farmers are positioned in Strata 4 (servants) in the societal hierarchy which implies they have limited power (to influence) in society. In addition, indigenous groups have strong social relationships (give donation during the death ceremonies, marriages, harvest festivals, etc.), among each other, however, the relationships with traders, processors, â&#x20AC;Ś is a pure business relationship and is not part of the social network/activities.

1.2.5 Existing Livelihood Strategies In general, coffee farmers donâ&#x20AC;&#x2122;t feel they are poor. They measure their well-being based on, among others, the condition of their housing, their role in traditional rites and rituals, their ability to school their children, and the number and type of livestock they own. Paddy is important for coffee farmers to provide food for their families. Thus, the rice they produce is never sold, but is kept in storage. Ownership of paddy is generally very limited. The diagram below shows the paddy rice sufficiency of the workshop participants:

19

Paddy rice sufficiency 6%

19%

No paddy Buys rice > 2 months

31% Buys rice < 2 months

44%

Sufficient rice year round

Although paddy rice generally makes only a very small contribution to the familyâ&#x20AC;&#x2122;s food needs, Toraja coffee farmers say that they allocate the largest portion of livelihood assets to paddy rice farming, followed by coffee farming, festivals, livestock rearing and others.

The allocation of the livelihood assets of Toraja coffee farmers in their livelihood strategy is shown in the diagram below:

10% 6% 4%

20%

Coffee farming Paddy rice farming

1%

Festivals

2%

Livestock rearing Organisations

2%

Health Trade

10% 25%

Capacity building Construction labouring

20%

Other economic activities

Families meet their rice needs from their own paddy or by purchasing rice at the market. In general, production from their own paddy fields is sufficient to meet only 1/3 of the average total family food need, so most coffee farming families have to purchase 2/3 of their food. The money spent on rice is equal to about 30% of their total incomings. Thus, most coffee farming families in Toraja have 70% left over for non food needs. The mechanism used to meet food needs is shown in the diagram below:

20

Rice

Own paddy

Income

30%

Coffee

Annual family rice need is around 2190 kg s

Livestock Money sent

70%

Other needs (70%)

Rice 30%

70%

In carrying out coffee farming activities, there is a division of roles between women farmers and men farmers. The women farmers are usually more involved in harvesting and selling while men tend to be more involved in the preparation of the land, planting, and management, â&#x20AC;Ś. Maintenance is carried out by both men and women. Some of the activities they do have a positive impact on the environment. In the newly formed coffee association a few women are very active in the management and strategic decision making.

The diagram below shows the division of roles between men and women in the main activities in coffee farming, and the impacts of each of these activities on the environment.

21

Tourism in Toraja Toraja is the touristic heart of South Sulawesi, because of its unique scenery and indigenous heritage, such as well-known grave stones, panoramic hills, hot waterfalls, traditional houses and indigenous animals. More and more people are working in the tourism industry (hotels, home stays, handy-crafts, guides, â&#x20AC;Ś) 1.2.6 Current Livelihood Outcomes The ranking of the livelihood goals of coffee farmers indicate that there are some aspects which they are not satisfied with, and that are important current and future goals. These are health, better income, better housing, and having more influence in the setting of coffee prices. The figure below shows in more detail the main current livelihood outcomes of Toraja coffee farmers.

22

1.3 Conclusion This description of the existing livelihood system shows that the condition of Toraja coffee farmers is not vulnerable. The farmers have, in general, achieved decent and satisfying standard of living. They are dissatisfied with their lack of influence in the setting of coffee prices and the ‘cheating’ of traders with the measure standards used. Naturally, this means that prices are set arbitrarily. There are also several trends that could undermine or drive the livelihood framework of the farmers in an undesirable direction. But with their strong social assets, there are opportunities for coffee farmers to influence the pricing process.

Especially now that the Toraja Coffee Farmers’ Association has been established.

Some suggestion for improvement of the coffee chain are: 1. To strengthen the Coffee Association of Toraja and their potential role in the chain (purchase from farmer groups Æ drying Æ sorting ) 2. To advocate with TOARCO to purchase directly from farmers (in order the shorten the chain ensure higher income for farmers).

3. To develop a transparent information system on prices, quality, volumes, payment systems, … through SMS, radio and local media This baseline was helpful to the participants in mapping their strengths and threats, and their livelihood strategy outcomes. Decisions about how to deal with these threats and 23

make use of existing strengths in order to achieve sustainable goals need to be negotiated between the coffee farmers and Jalesa and VECO as the support organisations.

When an intervention program is agreed by the coffee farmers, Jalesa and VECO, this baseline will be instrumental in the implementation this program because: - it was produced in a participatory way - it can be used to measure and monitor program progress, in the sense of to what extent the changes generated by the program contribute to changes in the coffee farmersâ&#x20AC;&#x2122; sustainable livelihood framework.

Therefore, it is suggested that the results of this livelihood study should be distributed to the farmers and those supporting the farmers, and used as discussion material during monitoring and evaluation.

1.4 Lesson learned from the process Making this baseline facilitated the coffee farmers to look in more detail at the factors that affect their lives, their strengths, and their livelihood outcomes. This was a very interesting process, because the farmers themselves have a saying illustrating that life is a dynamic process, which in Toraja is tallan oi buaya kendek oi sampuari, or literally â&#x20AC;&#x153;the crocodile sometimes lives on the surface of the water, and sometimes below the surfaceâ&#x20AC;?. In other words, life has its ups and downs. This philosophy teaches that it is important to be aware that there are times when life is hard, but people will bounce back as long as they do not want to drown and die. The process of making this baseline reminded the participants about the importance of consciously managing their lives, of managing the threats and strengths, to keep them on the path towards a better, more sustainable way of life.

This livelihood framework mapping was a learning process for the farmers, those supporting the farmers, and the facilitators. The process also generated facilitation guidelines and facilitators from VECO partners and VECO itself who will be able to facilitate similar workshops in the future.

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2. Chain Analysis Coffee Producers in Tana Toraja District (South Sulawesi) By Peni Agustiyanto - VECO Alfons Urlings - VECO

25

2.1

Chain Map Chain logic & Power relations

2.1.1 Drawing of a Chain (relation) Map showing links between chain actors, BDS, environment ... showing the value of the product after each chain link Robusta Coffee Chain in Toraja Farmer

Rp 18.000/kg

Rp 19.500/kg

Local Trader : - Salusopai - KUD

Big Trader : - Lion Lestari - Brent Lita - Aneka

Arabica Coffee Chain in Toraja Farmer

Rp 23.000/kg

Rp 24.500/kg

Local Market : - Rantepao Market - Makale Market

Processor : - Toarco (70% all of Arabica)

Export to Japan

2.1.2 Description of the power relations between the chain actors within the chain (who has the power to act and who has the power to define the actions of others) -

-

Farmers sell not only to middlemen (collectors) but also to large traders. Farmers also process coffee into coffee beans.

Middlemen (traders) collect coffee not only from farmers but from village middlemen (collectors) as well.

Middlemen pay farmers cash advances to meet their needs in the off season.

Repayment is made in coffee during the harvest season, without being bound to set a price.

Collectors can sell the coffee to various parties: PT. Toarco Jaya, village cooperatives (KUD), coffee-powder factories.

2.1.3 Value of product after each link ($), distribution of benefits of each actor (%, based on profitability of each link) -

Farmer : selling price = added value Local trader : Rp. 280-560/kg = added value Big trader : Rp. 280-560/kg = added value Processor : Rp. 6,000-6,400/kg = added value 26

2.1.4 Risk assessment for each link

2.2

-

Farmers : production dependence on climate changes.

-

Local Trader : depending on down-payments from big traders at district or province level.

-

Broker : almost no risk, because the broker only get money directly from local trader

-

Big trader : they take substantial risks in the chain because they risk depreciation of the coffee stock during processing (drying).

-

Processor: large risk due to possible depreciation of coffee stock during processing (drying, sorting/grading & blending).

Enabling environment

2.2.1 Description of the environment in which the chain is immersed (rules, regulations, laws, standards, norms, institutions…) (This part corresponds well with the part ‘Policies, Structures and Processes’ in LHA Role of the each actors in coffee chain in Toraja : Farmers : Maintain production quality.

Maintain production stability.

Form coffee farmers’ organisation Government : • Sector integrated extension.

• Create systems and regulations to protect coffee farmers.

• Facilitate farmers’ access to financial institutions.

• Facilitate marketing by coffee farmers.

Facilitate coffee farmers to set up a coffee farmers’ association NGO : • Facilitate Toraja coffee farmers to get training in coffee quality standards.

• Facilitate farmers to ensure their rights are protected.

• Facilitate Toraja coffee farmers to get fair prices.

Facilitate Toraja farmers’ coffee association Trader : • Provide seedlings and each year communicate information about coffee plants and processing coffee. Exports ground coffee.

• Traders get capital funding from overseas to enable them to produce more.

Processor: • Providing farmers seedling and post harvesting training 27

•

2.3

Buying the coffee with special price based on quality standards after farmers have participated in post harvest training (by Toarco).

Business Development Services

2.3.1 Which BDS are actually provided to the different chain actors and by who/which (type of) organizations?

Jalesa (NGO),Tani Lestari (NGO),Toarco (private sector-processor), Salusopai (local trader),Coffee Farmers Association (Farmer Organization) 2.3.2 What is the quality of the services?

Jalesa (NGO)-Æ Training of coffee farmers to increase the quantity and quality of production. Additional training on coffee quality standards.

Tani Lestari (NGO) -Æ Training of coffee farmers to increase the quantity and quality of production. Additional training on coffee quality standards.

Toarco (private sector-processor) -Æ providing seedling and conduct training for post harvesting Salusopai (local trader) -Æ buying Robusta coffee with a higher price for a specialty (tourist niche) market.

2.4

Bottlenecks barriers & leverages

2.4.1 Which elements (Elements related to the farmer groups/organizations (quality, quantity…), related to the other chain actors, BDS, enabling environment and to the relations between the chain actors and non-chain actors) are bottlenecks and hamper further development of the chain?

Buying practices of small local traders because they use inaccurate weighing equipment (cheat on the scale) and also they are not transparent about the price.

2.4.2 Which barriers does the chain present for participation/inclusion of organized family farmers?

• • •

Lack of technical knowledge of farmers about post harvesting technologies an coffee processing.

Lack of working capital.

Not enough information readily available on prices of different quality standards (AEKI, private actors, and other associations).

2.4.3 Which are the necessary elements that have to be present to upgrade the chain?

Implementation government regulations regarding the use of weighing equipment by local traders.

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2.4.5 Which elements or opportunities can be leverages for pro-poor farmer inclusion and for giving a boost to SACD • • • • • • 2.5

Market opportunity for farmers to sell directly to AEKI (exporter which has transparent buying practices).

Establish a coffee farmer association to facilitate a better bargaining position to sell the coffee Market opportunity in local & national market for Liberica coffee (= local Toraja coffee variety).

Practical support from government for coffee development.

Improve relationship between exporter and farmer concerning quality standards & price.

Availability of credit for farmers to buy production inputs.

Production related issues

2.5.1 Number of ha of the chain crop (and % of main crop occupation when intercropped) Total area planted with Arabica : 16,697 ha, Robusta : 5,107 ha 2.5.2 Production system: chemical, low-external input, organic, standards, norms applied, certification…

Production system is low external input and in some areas in Northern Toraja they use organic manure 2.5.3 Production costs: - Hired labour – Inputs - Transaction costs Hired labour : Rp. 3,000,000/ha/year Input : Rp. 420,000/ha/year Marketing cost : Rp. 70,000/ha/year Total: Rp. 3,490,000/ha/year 2.5.4 Yield per ha (kg) Yield per ha : 2 ton/ha/year 2.5.5 Profitability (gross – net profit) Profitability : Rp. 38,500,000/ha/year 2.5.6 Sales volume The sales volume from Toraja : 1,500 ton/year for export 2.5.7 Sales value Not available 29

3. Results baseline study average income Coffee Producers in Tana Toraja District (South Sulawesi) By Bernadeta sutrisnowati- Consultant Steff Deprez - VECO

30

Commodity: District:

COFFEE TORAJA (South Sulawesi)

3.1 Source data 1.

2.

3.

4.

Key informant: Yayasan Jaya Lestari Desa (JALESA), partner VECO Indonesia Participatory Agriculture Chain Assessment (PACA) for Coffee in Tana Toraja District Individual interviews: sample group of 28 coffee farmers in Toraja District Local Government (disbun) www.sulsel.gv.id

3.2 Results baseline average income GENERAL DATA: COFFEE Total area Tana Toraja Total farmland in Tana Toraja Total number of coffee farmers ARABICA Total farmland Arabica Coffee Annual production/year Arabica Coffee Average production Arabica Coffee/ha ROBUSTA Total farmland Robusta Coffee Annual production/year Robusta Coffee Average production/ha Robusta Coffee

IN TANA TORAJA DISTRICT 320.577 ha 72.291 ha

Source Local Gov Local Gov

61.517 farmers

Local Gov

16.697 ha

Local Gov

4074 ton

Local Gov

0.23 ton/ha

Local Gov

(ha refers here to the total geographical area and not to an area with a standard number of trees e.g. 1000 trees/ha)

5.107 ha

Local Gov

1505 ton

Local Gov

0.28 ton/ha

Local Gov

(ha refers here to the total geographical area and not to an area with a standard number of trees e.g. 1000 trees/ha)

GENERAL FARMING DATA: COFFEE Varieties of Coffee Coffee Arabica Coffee Robusta Seasons Coffee in Toraja There are 8 months harvest of coffee High season: July, August Low season: April, May, June, September, October and November

Source

PACA & interviews

31

Average trees /ha

% (average) income coffee % (average) income other farming crops and livestock % (average) income non-farming activities

Theory oArabic: 2m > average 2500 trees/ha Robusa: 3m > average 1111 trees/ha

PACA

Situation Toraja Sample group farmers: average 980 trees/ha

interviews

45%

Interviews

25%

30%

Cacao, rice, livestock (pig, chicken), vegetables (onion, chili, cabbage), Fruits (Markisah, tamarello) Teacher, Skilled labor (cemetery maker, carpenter), daily labor, driver public transport, selling buffalos, …

Interviews

Interviews

COST OF COFFEE PRODUCTION & MARKETING Input production costs/1000 trees/yr Rp. 420.000 Paid labor costs/1000 trees/yr Rp. 3.000.000 Total own labor days/1000 trees/yr 52 man days Marketing costs/1000 trees/yr Rp. 70.000 Total costs / 1000 trees /yr Rp. 3.490.000

Source Interviews Interviews Interviews Interviews

PRODUCTION OF COFFEE / HA Production robusta/tree 3.5 kg/tree

Source JALESA, PACA

Production arabica/tree

JALESA, PACA

2 kg/tree

% SOLD vs OWN CONSUMPTION % (average) of No data production sold % (average) of No data production for own consumption + social activities

Source

AVERAGE PRICE/KG COFFEE Price Robusta / kg 2008 Rp. 18.000 - 19.000/kg

Source Interviews, PACA, JALESA Interviews, PACA, JALESA

Price Arabica / kg 2008

Rp. 22.000 – 23.000/kg

32

AVERAGE INCOME COFFEE(calculated with the data above) ROBUSTA (Rp. 18.500/kg) Estimations average gross income 3.500 kg/ha Rp. 64.700.000/ha (for productive 1000 trees/ha) ARABICA (Rp. 22.500/kg) 2000 kg/ha Rp. 45.000.000/ha Estimations average nett income/ha (for 1000 productive trees/ha)

Average production costs = Rp. 3.490.000/ha ROBUSTA (Rp. 18.500/kg) Rp. 61.210.000 ARABICA (Rp. 22.500/ha) Rp. 41.500.000

33