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Research Report Needs Assesment of Cocoa Business Development Using the Value Chain Approach & National Movement of Cocoa Pr

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Research Report Needs Assesment of Cocoa Business Development Using the Value Chain Approach & National Movement of Cocoa Pr Research Report Needs Assesment of Cocoa Business Development Using The Value Chain Approach & National Movement of Cocoa Production and Quality Improvement (GERNAS KAKAO) Case study on Sikka Regency, East Nusa Tenggara RESEARCH REPORT Needs Assesment of Cocoa Business Development Using The Value Chain Approach IN COOPERATION: FORD FOUNDATION and Regional Autonomy Watch Jakarta 2013 Research Team KPPOD: Ig. Sigit Murwito Sri Mulyati 2013 Komite Pemantauan Pelaksanaan Otonomi Daerah Regional Autonomy Watch Permata Kuningan Building Fl.10th Kuningan Mulia Street Kav. 9C Guntur Setiabudi, South Jakarta 12980 Phone: +62 21 8378 0642/53, Fax.: +62 21 8378 0643 LIST OF CONTENTS List of Contents ....................................................................................................................................................... i List of Figure and Table ......................................................................................................................................... ii I. Introduction ................................................................................................................................................... 1 1.1. Background ........................................................................................................................................ 1 1.2. Formulation of Problem .................................................................................................................... 2 1.3. Study Objectives ................................................................................................................................. 2 1.4. Study Benefi ts ..................................................................................................................................... 2 II. Terms of Thought .......................................................................................................................................... 2 III. Methodology of The Study .......................................................................................................................... 3 3.1. Study Approach .................................................................................................................................. 3 3.2. Location and Time of Study .............................................................................................................. 3 3.3. Types and Sources of Data ................................................................................................................. 3 3.4. Method of Data Collection and Selection of Respondents ............................................................. 3 3.5. Method of Analysis ............................................................................................................................ 4 IV. Potential, Obstacles, and Opportunities of Cocoa Development in Sikka ........................................... 4 4.1. Background of Cocoa Farming in Sikka .......................................................................................... 4 4.2. Problems Faced by Farmers .............................................................................................................. 5 4.3. Identifi cation of Cocoa Development Internal Factors in Sikka .................................................. 5 4.4. Identifi cation of Cocoa Development Value Chain in Sikka ......................................................... 7 4.5. Regulations Associated with Cocoa Business Activity Value Chain in Sikka ............................... 9 4.6. Identifi cation of Cocoa Development External Factors in Sikka .................................................. 9 4.7. Development Strategy Analysis ........................................................................................................ 14 4.8. Stakeholders and their Role in the Cocoa Value Chain in Sikka ................................................... 18 V. Closing ............................................................................................................................................................ 24 i LIST OF FIGURE AND TABLE Figure 1. Agribusiness Systems in Indonesia (Baga, 2003) ........................................................................2 Figure 2. Study Framework ............................................................................................................................ 3 Figure 3. Cocoa Business Value Chain in Sikka Regency ...........................................................................8 Figure 4. Cocoa Farming Stakeholders in Sikka Regency .......................................................................... 19 Table 1. Land Area of Cocoa Trees, Production, Productivity, and Number of Households Involved in Cocoa Cultivation in Sikka (2012) ............................................................................ 6 Table 2. Matrix of Problems and Action Plan of Cocoa Development Value Chain in Sikka Regency ............................................................................................................................................. 14 Table 3. Matrix of Cocoa Development Stakeholders Analysis in Sikka Regency ............................... 20 Table 4. Matrix of Stakeholders with a Non-Optimal Role ...................................................................... 23 ii Needs Assesment of Cocoa Business Development Using the Value Chain Approach, Case Study on Sikka Regency, NTT I. INTRODUCTION 1.1. Background potential, farming is likely to be addressed, both technically and in terms of institutional governance. One approach to agricultural development is through agribusiness activities that are oriented Given the strategic position of the cocoa commodity, to increasing the competitiveness and ongoing a large number of Local Governments (LG) has economic development of the people’s economy, launched the cocoa farming business as a regional conducted within the regional autonomy framework economy powerhouse. But of the many local to strengthen the regional economy. Agricultural governments as drivers of the regional economy, sector development involves various aspects of the not many have concrete programs in cocoa business value chain, both at stages of cultivation, collection, development. It can be said that there is no specifi c trade as well as processing. Thus, in order for the intervention in the form of programs and regulations production of agricultural products to have high to accelerate cocoa agribusiness development in the competitiveness, its implementation should consider regions. Cocoa business activities are left to grow the business aspects of the value chain. alone without signifi cant support from the local government. One of the strategic agricultural products is the cocoa crop. Cocoa (Theobrema cacao L.) is one of the At the central level, there is the National Program for important crops that have historically fi rst become Improvement of Production and Quality of Cocoa known in Indonesia in 1560, but has only become (GERNAS). The purpose of the GERNAS program an important commodity since 1951. Later the is to increase cocoa production, farmer’s income government began to pay att ention to and support the and economic growth in the regions. The GERNAS cocoa industry in 1975, ie aft er the PTP VI managed program also serves as a momentum for the revival to increase production of this crop through the use of of the Indonesian cocoa industry to behighly quality seeds, the Upper Amazon Interclonal Hybrid competitive, sustainable, and to make Indonesia as the (Sunanto, 1992). largest cocoa producer in the world. The government claims that GERNAS has signifi cantly impacted on According to the Food and Agriculture Organization the improvement of cocoa productivity, farmers (FAO), Indonesia is the number three largest income, economic growth, and also the empowerment producer of cocoa in the world with a production of farmers.This requires a further evaluation of the of 809,583 tonnes aft er the Ivory Coast with a implementation of the GERNAS pogram. production of 1,223,150 million tonnes. With such production amount, this commodity contributed KPPOD as an institution that is concerned on eff orts to to foreign exchange earnings of U.S. $ 1.4 billion in improve the regional economy intends to contribute 2009 as the third largest foreign exchange earnings on improving the quality of local policies associated in the plantation sector aft er oil palm and rubber. with cocoa development, as well as to provide During 1998 to 2011, cocoa farming area recorded an input and evaluation of the implementation of the increase by 9% per year. Of the 1,746 million hectares GERNAS program. With the assistance of the FORD of cocoa plantations, 94% is managed by the people, Foundation, KPPOD has designed a program called 3.1% by the government and 2.9 % by private sector “Business Climate Development for Improvement of plantations. (Ditjenbun, 2012) the Cocoa Production Value Chain”. This program is expected to contribute to eff orts of creating a favorable Cocoa is strategic for at least two reasons. First, investment environment for cocoa business activities. because this commodity is an international trade This program is also intended for evaluation and commodity with high value, and Indonesia is the feedback of the implementation of the GERNAS third largest producer of cocoa in the world. Second, program. Given the wide scope of the cocoa value 95% of this business activity involves
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