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Challenges and Threats of Indonesian Coffee Exports to China

Challenges and Threats of Indonesian Coffee Exports to China



Amids the Tremendous Market Potential of China, Indonesia sees challenges and threats of coffee exports to China. Indonesia must be able to handle it and make it becomes opportunities.  What are those all, and how?

As the result of China-ASEAN Forum, China has wiped off the tariff for coffee. China has decided that coffee is a non-tariff commodity. It means, the price of Indonesian coffee can become lower that increases the competitiveness in chinese market.


However, Indonesia must always remember potential threats which arise from Vietnam side as well as China side:
  1. First threat is Vietnam. Vietnam is an ASEAN member and hence receive the facilitation of non-tariff on coffee. Vietnam is geographycally and politically much closer to China. Hence, Vietnamese coffee bean tends to have lower price in the China market than indonesian coffee. We can conclude that Vietnam is surely a significantly strong competitor of Indonesia. 
  2. Second threat is China itself. Nowadays, China extends its coffee plantation area by thousands of hectares. China gives comprehensive supports to coffee growers in form of facilitation such as seeds/seedlings of high yielding varieties and agronomic technology.  
Now, what Indonesia has to do are: 
  1. First, Indonesia must increase coffee through serious efforts such as to extend coffee plantation area from 1,29 million hectares to 1,95 million hectares as well as to increase coffee productivity from low productivity to high productivity.  Indonesia also has to remember that Indonesian coffee production decresed by 19-35% in the last two years while domestic consumtion of coffee is increasing significantly by 10-15%. 
  2. Second, Indonesia has to make serious efforts so that coffee bean price on coffee growers level increase significantly. The existing unfairness in coffee value chain must be avoided. 
  3. Third, Indonesia has to stimulate export diversification. Indonesian coffee must be exported not only in form of raw coffee (green bean) but also (read : primarily) in form of finished goods. Indonesia has qualified human resources in technology of coffee processing.
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Kind regard,

Dr. Sabam Malau
NSCF Chairman

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