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Revisiting Sumatra
Grueling travels to the Aceh Province in Sumatra: It begins with more than a full day of plane travel...then once you land, it's another 10-hour (more like 15 in reality!) bus ride to Takengon where the coops are based. But with every trip Coop Coffees makes to the region, we return knowing it was all worth it. In a country where the cooperative model is constantly being challenged and where "fair trade" has yet to grow deep roots, developing strong relationships there is a slow and complicated process. But like on that long and bumpy road in Aceh, we're determined to see this through...and we know it'll all be worth it!
November 2010 - by Florent Gout, Coop Sol staff
At 8.30 pm, darkness had fallen on the roads through the Gayo mountains; we had left Medan at six in the morning, and everybody in the bus was beyond exhaustion. For what must have been the fifth time in less than an hour, the bus’ motor suddenly stopped. We stepped out for a breath of the fresh air of Aceh. Resting on the steps of a mosque entrance on the side of the road, we desperately willed the journey to end. Inside the bus, the smell of petrol made us woozy. Once again, our driver attempted to restart the engine, making it spin as fast as possible. Meanwhile the co-pilot is messing around in the engine area, releasing the oil manually...smoking a cigarette as he goes! This is not a dream -- just another normal evening in Aceh, Sumatra!
The ride from Medan to Takengon was supposed to last 10 to 12 hours...but it ended up becoming a 15-hour adventure. We finally reached Lake Tawar late into the night – this marked the beginning of a week full of surprises! During our visit a year ago, we learned a lot; this year we learned even more...and we know it’ll be a learning experience every time we return. Sumatra is anything but a typical “success story” in the fair trade world.
Two of the groups we work with, APKO and ASKOGO, struggle to find adequate financing – though they’re hoping a new relationship with ITFC (Saudi Arabian development bank that works in Sumatra) might secure support in that area. The other two groups, Permata Gayo Coop and KBQB, are in a better financial situation with the capacity buy the parchment from their members. However, the current local “street” price (i.e. what’s being paid by privately hired intermediaries), set by a new private Chinese exporter, is far too high for these coops to compete with. If they tried to match the local price this harvest, they would end up losing money on several Fair Trade, organic contracts they have already negotiated with buyers. As paradoxical as it is, this is a common reality not only in 
Sumatra but in many areas of the coffee-growing world where record hikes in prices have put coops in an extremely vulnerable position. In Sumatra, however, the complication is heightened by a lack of access to information about the international markets and very little experience or connection with international buyers. Visits from buyers were rare if they happened at all and communication was disjointed and infrequent.
Many of the farmers we met during the visit were struggling to see the benefits of being a part of a coop. They don’t feel a strong connection with the organization – much of which is due to issues concerning the internal structure of the coop. It’s standard practice for a coop to hire an intermediary (called a “collector”) who becomes the only link between farmers and their coop. And with exceptionally high local prices, producers now have little economical incentive to sell their coffee to the coop. The “street market” (private buyers) is enticing: it pays the same price (or higher), in cash, and it’s flexible in what it requires for quality, accepting what the coop might refuse. The managers of the cooperatives struggle to compete with the private buyers – many of them are new to the export market and accept long-term fixed-price contracts when the price is low and then have no resources available to buy the coffee at the time of collection if the price has risen (which it did in 2010). Even in the case of managers who are not new to the negotiation process, it isn’t uncommon for them to lack a strong connection to the actual coop since they’ve been hired to sell the coffee, on commission and focus their efforts on the sale (at all costs) instead of fighting for a price that benefits the actual cooperative.
This situation puts cooperatives in dire straits: without loyalty from their membership, they have neither the coffee to sell to importers nor the capacity to ever grow beyond a third party that sells coffee. It also renders the whole fair trade system much less effective than it should be in a country like Sumatra where farmers could really benefit from better prices and negotiating power. While we’re certainly not hoping for a sudden drop in the international price (which is what is causing such high local prices), stability at a level that the coops could compete with economically is necessary if these groups have any hope of surviving. With such unprecedented rises in the NY “C,” we’re starting to see some of the limitations of the fair trade system (at least as it’s defined by FLO) in that the price differentials simply are not sufficient to allow coops to compete with private entities.
After spending a bit of time on the ground and getting a first-hand view of the situation of coffee farmers in Sumatra, we certainly see that things are far more complicated and complex than we could’ve ever imagined for a country that supplies one of the most widely used specialty coffees in the world!! However, even amidst the complications and less-than-perfect realities that we witnessed during our trip, we also caught a glimpse of a thin but undeniable glimmer of hope. Small groups – like APKO – are slowly emerging with a commitment to creating and fostering more sustainable, long-term relationships with buyers like Coop Coffees. And we truly believe that with clear and persistent communication – along with a handful of visits like this one – we as buyers can help understand the challenges facing these groups...and look for a solution together.
