Upgrading farming activities

5.3.1.1 Finding technical solutions

The identification of Cocoa Pod Borer (CPB) infestations on the island of Sulawesi in the early-mid 1990s was considered a major threat to cocoa production in Indonesia. The majority of cocoa farmers at the time were still enjoying ‘forest rent’, with relatively few agricultural inputs. Thus, in anticipation of a massive infestation, a research project was conducted to find low cost practical solutions that would enable farmers to control CPB.

To this end, a project funded by USDA in collaboration with the Indonesian Coffee and Cocoa Research Institute (ICCRI) and the ASKINDO was conducted in Sulawesi between 1995 and 1998, known as the CPB Management Project (personal communication with ASKINDO, 18 August 2010). The project was initiated to identify a method of controlling CPB. The result was the introduction of four main farming activities: frequent harvesting (Panen sering); pruning (Pemangkasan); sanitation of pod husks and litter (Sanitasi); and, fertilising (Pemupukan), activities commonly recognised by the Indonesian acronym PsPSP’ (Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance (ACDI VOCA), 2005, pp. 18-19).

The method was promoted as a low cost practice to control CPB that would ensure productivity improvement of the cocoa trees. It was considered low cost, given that

the major practice relied on mechanical prevention rather than using high cost pesticides and other chemical inputs, although it did require increased allocation of labour. In order to prevent the CPB inside the pods from multiplying, infested pods were regularly removed from gardens. The second practice involved pruning activities. Pruning not only creates better air circulation, but allows more sunlight into the gardens, a practice that impacts unfavorably on the adult CPB moth environment. The third practice, sanitation, cuts into the life cycle of the CPB. Larvas living in the pod husks are killed either by burying them or covering them with plastic for several days. The last practice is fertilizing. Cocoa plants rendered healthy through better soil fertility and nutrition, cab better resist CPB Infection. However, farmers were advised to compost and use organic fertilisers rather than chemical fertilisers (ACDI VOCA, 2005).

Contrasting with the above argument of introducing supposedly low cost practices, Ruf6 observed two major points about standard practices resulting from the project. First, a hidden aim of USDA funded research was to eliminate the use of pesticides in CPB management, since there were concerns over pesticide residues in cocoa shipments to the US. In fact, pesticides had been used as an effective control of CPB in the mind 1990s, mainly in the Island of Sulawesi and in Sabah (Ruf & Yoddang, 2004, p. 156). Secondly, frequent harvesting had been widespread during the high yield-forest rent period, but had been progressively abandoned due to declining yields.

In any ways, the research project succeeded in combined low material input practices that had been expected to control CPB with increased labour allocation. The recommended practices were, therefore, promoted to become a minimum standard practice in cocoa farming activities.

5.3.1.2 Technology transfer

In order to disseminate the method, the USDA funded a project called the Sustainable Cocoa Enterprise Solutions (SUCCESS) project, which was launched in 2000 in Sulawesi. The main aim of the project was to develop and disseminate the

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PsPSP techniques among cocoa farmers. Farming practice techniques that emphasised non-pesticide usage were promoted using the Farmers Field School (FFS) method. The information was then passed on to those cocoa farmers who were considered lacking in technical knowledge using various project interventions, the main aim being to disseminate technical knowledge.

At the end of the three year program, in 2003, ACDI VOCA, the implementer of the project reported successful dissemination using the FFS method. The project reportedly trained approximately 35,000 farmers and disseminated a Video Compact Disc (VCD) containing the CPB control method. Ultimately, it was estimated to reach 59,000 farmers (ACDI VOCA 2005, pp. 11-12)

Building upon the SUCCESS project, and the dissemination of PsPSP farming methods, USAID Indonesia, Mars Inc, and the World Cocoa Foundation (WCF) formed the SUCCESS Alliance Project. The alliance reflected the increasing involvement of global buyers, such as Mars Inc and the numerous international buyers represented through the WCF, as partners in development interventions. The project was established to achieve two main objectives (ACDI VOCA, 2005, p. 13):

(1) Improve the quantity and quality of smallholder farmer-grown cocoa in Indonesia through the adoption of good crop husbandry methods and effective integrated pest management practices and maintain a regular source of income for cocoa farmers

(2) Strengthen the partnership between the local governments, universities and farmer groups and the US private sector to better utilize resources to support the sustainable development of the cocoa industry while ensuring the conservation of the forest base.

The main three distinctions from the previous SUCCESS project were: (1) additional bio-control methods as Integrated Pest Management (IPM) and the promotion of a side grafting method to rehabilitate the aging cocoa trees; (2) the support of farmer groups and the establishment of a business development service that was prepared to continue to serve cocoa farmers; and, (3) wider coverage areas. This SUCCESS Alliance project, extended the coverage areas, not only in Sulawesi and Papua, but also in North Sumatera, and Bali.

The SUCCESS Alliance project succeeded in training 30,665 farmers using the FFS method, including trained farmers in side-grafting and in business management. The project formed and trained 31 farmer groups, disseminated VCDs containing standard farming practice among 69,439 farmers, and estimated approximately 271,000 beneficiaries of communication programs through this media. The project claimed to have increased individual farmers’ savings of $435 as a result of their participation in the FFS during the three year implementation period (ACDI VOCA, 2005, p. 16).

It seems that the SUCCESS and the SUCCESS Alliance projects emphasized reaching targets for the number of farmers trained. This approach reflected the USAID Result-Based Management approach that was embraced during the 1990s. According to Lancaster (2007), Result-Based Management was a tool that was created to manage public programs and expenditure. It was adopted by the private sector, where a project was measured based on measurable results expected within a given time period. But, as Lancaster points out, there were limitations to this kind of approach wherein data used for indicators was sometimes unreliable; and, attributing changes to the indicators to aid interventions was problematic. In addition, Lancaster highlighted that this approach only emphasised the dissemination of technology: it poorly incorporated any understanding of the complex social conditions of aid beneficiaries.

In the final year of the SUCCESS Alliance project, my interviews with several field technicians identified the various economic and social factors that hindered farmers’ implementation of the full practices of the recommended method. These included economic factors such as lack of motivation due to the unavailability of price incentives for better quality, lack of cash to buy fertilisers, and competing crops and income generation which divided the time they spent in the cocoa gardens. The social factors were mainly rooted in a ‘zero maintenance’ mindset derived from the advantages of ‘forest rent’, uncertainty of land ownership due to historical land opening (which was either owned by the government or by local ethnic groups as a part of customary land), and from the local practice of short-term share cropping arrangements. Share croppers focused more on harvesting pods and avoided re-investing in the next harvest seasons (ACDI VOCA, 2005).

The Success Alliance project ended in 2005. It had tried to resolve as many main economic issues as possible in a relatively short period of time, including market linkages for a better price. An initial partner was PT. Mitra Celebes, a subsidiary of Continaf and a supplier of Blommer Chocolate USA. Blommer were traditional buyers of Sulawesi cocoa beans; but, since the CPB outbreak, Bloomer’s supply from Sulawesi had declined. The partnership involving three organisations - Bloomer, SUCCESS and Continaf (BSC) - was intended to increase the flow of quality cocoa to Blommer USA by increasing the linkages between SUCCESS Alumni farmers, intermediate traders and Continaf/PT. Mitra Celebes. It was reported that by October 2005, Blommer had purchased close to nine million US dollars worth of cocoa beans through the program (ACDI VOCA, 2005, p. 61).

Even though some farmers succeeded in accessing the market, this market linkage program only existed during the last several months of the project, and in response to farmers’ requests regarding incentives to provide good quality beans. It was clear that the project was not directly designed to conduct a market linkage program, but mainly to provide a technical solution to addressing pest and disease infestations.

In summary, the three projects applied a ‘supply driven’ intervention approach to upgrade the technical capacity of Indonesia’s cocoa farmers. The PsPSP method was promoted intensively and disseminated among the cocoa farmers, the main target being to train as many cocoa farmers as possible. This dissemination project was conducted from one particular area to another during the whole year of the project intervention. In effect, this was the main weaknesses of the ‘supply driven’ approach. The approach was founded on a project basis: everybody got a similar package of knowledge (Berry, 2012), whereas the fact was that the farmers had different demands relevant to solving their varied farming issues.

5.3.1.3 Integration of market linkage and technical support

After three consecutive projects aimed to support cocoa farmers through technological means, USAID then supported a project that was specifically designed to apply a Value Chain Linkage approach (known as the Agribusiness Market and Support Activity (AMARTA) program). AMARTA built on the market linkages that were being formed during the latter stages of the SUCCESS Alliance program

(Badcock, Matlick, & Baon, 2007, p. 15). The design document claimed that the main reason driving the approach involved:

Utilizing ‘market pull’ as a catalyst for improvements to smallholder cocoa production and quality, farmers have been slow to adopt interventions that control CPB because there has been an absence of market linkages. AMARTA will develop and implement models that connect farmer groups with exporters and processors. The result expected is that the quality premium paid by processors will reach the farmer, encouraging the farmer to adopt measures that will improve the quality (Badcock et al., 2007, p. 15) This happened because the premium price paid by the exporters was only enjoyed by some traders and collectors.

Generally speaking, collectors and traders were maximizing profit by combining high-quality beans with sub-standard beans. This resulted in average export standard beans by combining cocoa waste to reach a maximum 2.5 per cent, the highest waste limit of the Indonesian national standard. At the exporter level, sometimes this waste was separated again before exporting to international buyers. For the grading and cleaning activities conducted by exporters, the international buyers paid a premium price to the exporters. Thus, this premium price did not filter through to the smallholder farmers. The ultimate outcome was that the farmers were discouraged from producing good quality beans, due to lack of incentive to do so.

For this reason, the AMARTA project was delivered to improve the adoption of the recommended farming method by integrating technical assistance into the supply chain. Price incentives would be delivered through local collectors and traders in the traditional supply chain of cocoa beans. AMARTA supported a cocoa exporter to establish buying stations in major producing districts, and to recruit the new field staff required for each buying station. By supporting and incorporating technical support through the supply chain, it was expected that technical support would continuously be available to smallholder farmers (Badcock et al., 2007).

At this point, USAID’s support became integrated within the supply chain of global buyers. AMARTA decided to work with Blommer Chocolate and one of its suppliers, and international exporter, PT. Olam Indonesia.

According to an internal evaluation of the program (AMARTA, 2010), it was reported that during the technical assistance period 2007-2008, the assisted cocoa farmers increased their production by 44 per cent in West Sulawesi, 37 per cent in South Sulawesi, and 27 per cent in South East Sulawesi. In terms of quality improvement, 48 per cent of farmers reached appropriate bean size, 35 per cent fulfilled the standard moisture content, 47 per cent got full price due to meeting the waste standard, and 40 per cent delivered mould-free beans. Over all, farmers received a 20-26 per cent higher price when selling to international buyers (Agribusiness Market and Support Activity (AMARTA), 2010).

The USAID projects were a long standing effort to upgrade smallholder cocoa farmers. Over the 10 year period, USAID changed its tactical approach from capacity development through to providing support for direct training to market linkage programs with embedded technical support, in collaboration with large buyers.