Indonesia Eager Work Together to Boost Coffee Export to China
The Consulate General of Indonesia in Guangzhou (China) said Indonesia's coffee exports to China reached USD $34.1 million in the January-September 2017 period, hence Indonesia now ranks second in terms of biggest coffee exporters to China. Vietnam ranks first, by a distance, with a coffee export value of USD $368.8 million in the same period.
Considering Indonesia is a big coffee exporting country, while coffee consumption is rising steeply in China, the eight big Indonesian coffee companies met various Chinese entrepreneurs last week with the aim to come up with a strategy to increase the volume and value of Indonesian coffee exports to China, the world's most populous country.
This meeting was also attended by the Association of Indonesian Entrepreneurs in South China (SCIBA) and the Indonesian Coffee Experts Association (SCAI) as well as entrepreneurs from Guangzhou, Shanghai and Hong Kong.
Ratu Silvy Gayatri, Consul General of Republic of Indonesia in Guangzhou, believes Indonesia is able to replace Vietnam in the long-term as key supplier of coffee on the Chinese market because of several matters, including the fact that Indonesia has "excellent competitive coffee products". With Brazil, Vietnam and Colombia, Indonesia is among the four-largest coffee producing countries in the world.
Meanwhile, growth in per capita coffee consumption in China continues at an impressive pace of between 15 - 30 percent per year. For comparison, the increase in global coffee consumption touches a modest 2.3 percent per year.
Based on the estimate of the Consulate General of Indonesia in Guangzhou, by 2020 the value of the coffee market in mainland China will reach around IDR 600 trillion (approx. USD $44 billion). "This growth is triggered by the changing lifestyles in Chinese society, where the young generation of Chinese people is increasingly consuming coffee as part of the modern lifestyle.
China's domestic coffee production (centered in Yunnan and Hainan), on the other hand, is unable to meet all coffee demand in China, hence imports are necessary.
To increase Indonesian coffee exports to China, the Consulate General says coffee business actors in both nations need to work together while the government should act as a facilitator.
Meanwhile, Tjin Pek Yan, Chairman of SCIBA, added that Indonesian coffee producers need to increase their focus on the production of the higher quality arabica coffee beans (thus able to charge the premium price to customers). Indonesia, however, is primarily a robusta coffee grower. Coffee that originates from Panama, for example, is priced up to over USD $20 per pound as the country focuses on premium coffee, whereas coffee from Indonesia is only priced around USD $2 per pound.
Another important matter is that Indonesia needs to establish big coffee plantations as this would make production more effective and stable, while it also helps to make coffee prices more competitive. Generally, Indonesian coffee farmers have relatively small coffee plantations with a size of about 1 to 2 hectares, each. Vietnam, Brazil and Colombia, on the contrary, contain big coffee plantations and can therefore safeguard stable production volumes and prices.