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Sunrise for Gayo Coffee


Gayo is on the rise among Indonesia’s world-class coffees, thanks to a unique blend of geography, NGO aid and tradition.

By Ulisari Eslita

Gayo’s star is rising, especially amongst those who are looking for organic and fair-trade products.

At 2,000 meters above sea level, the mountains are high enough to trap the clouds, which nestle the hills around the Laut Tawar Lake in central Aceh just before dawn. As the sun rises over the hills, the temperature climbs from a chilly 18 degrees and the cloud dissipates, revealing a wide vista of lush green coffee plants spread out over thousands of hectares up the hillsides surrounding the lake.

This area is home to Gayo coffee, among the most sought-after coffees in the world. To be sure, other Indonesian coffees are more widely known, such Sulawesi Toraja, Sumatra Mandheling and even the notorious Kopi Luwak. Yet Gayo’s star is rising, especially amongst those who are looking for organic and fair-trade products. Also on pure taste, some say Gayo—which is 100% Arabica—ranks among the world’s best, compared favorably to other high-growth coffees such as Blue Mountain from Jamaica. It is found here in this part of Aceh and nowhere else.

The name Gayo is taken from the names for the indigenous tribe that inhabits the central Aceh, Bener Meriah, and Gayo Lues regencies, where this coffee is mostly grown. Starting with the Dutch colonialists, who pioneered coffee growing in this part of the country in 1908, the Gayo people have continued the tradition, earning a living mostly as coffee farmers and traders. . Mostly, more than 65,000 people earn their living as coffee farmers. Today, the Gayo highlands are the largest producer of Arabica coffee beans in Asia with total area of 94,800 hectares.

Apart from its taste, the organic method of growing Gayo also makes this commodity a target for world coffee exporters, resulting in a high price due to demand for organic coffee. Almost 80% of coffee growers in Central Aceh have organic plantations. Currently, Gayo coffee sells for $7.5 to $8 per kilogram for green beans.

“We encourage the farmers here to use organic fertilizers in order to keep Gayo’s organic status but we notice there are a few farmers using chemical fertilizers,” says Sholi Pohan, supply chain coordinator at the International Organization for Migration (IOM), an NGO set up in 1951 and based in Geneva, Switzerland. The IOM helping implement the Sustainable Economic Growth for Aceh (SEGA) project, funded with $50 million from the World Bank. Through the project, the IOM helps farmers maintain and develop their organic farming techniques.

Aside from organic status, Gayo coffee farmers also benefit from paid under a fair trade scheme run by the Fairtrade International, an NGO based in Bonn, Germany. “Our coffee farmers not only can sell their coffee beans at a very good price with the fair trade certificate, but also get a fairtrade premium,” says Rizwan Husin, director of the Baburrayyan Coffee Cooperative, which has 7,000 farmer members. A fair trade premium is money paid on top of the fair trade price for investment in social, environmental or economic development projects, decided by the coffee farmers themselves. “We got Rp3.4 billion, Rp3 billion and Rp3.8 billion respectively starting in 2009 from the premium,” says Rizwan. Over the last five years, Baburrayyan annually exported 1.5 million tonnes of coffee. Last year, the cooperative shipped 1.7 million tonnes, about two-thirds of it shipped to the U.S.

Along with that, two years ago, the Gayo Coffee Protection Society registered Gayo coffee within the Ministry of Law in order to get a copyright for the brandname. Previously, Gayo coffee farmers are prohibited from using the “Gayo Coffee” brand in their marketing due to a claim by an Amsterdam-based company Holland Coffee B.V. to the trademark Gayo in Europe and America. The company demanded others to not use the term Gayo coffee or face legal action. “With this certificate, that Dutch company can’t use Gayo Coffee brand anymore,” says Mustafa Ali, chairman of the Gayo Coffee Protection Society. The future for Gayo now has some strong elements for growth: organic stature, fairtrade pricing and a protected brandname.

Introduction to Finance

Before coffee cooperatives were set up in Gayo highlands, the coffee beans supply chain was complicated. Beans had to pass three levels of middlemen before it reached exporters or buyers. As the consequences, farmers were paid very little. “Now farmers simply sell the green beans to the cooperative, then we sell them directly to overseas buyers with no middlemen,” says Rizwan. The one disadvantage of the system is that farmers cannot be paid until the beans are sold, which sometimes be a long time after harvest.

To overcome this issue, the IOM set up a warehouse receipt system at the end of last year. The warehouse receipt is a proof of ownership of commodities stored in a warehouse, awaiting sale. The receipt can be used as a collateral, so farmers can get paid within three to four days after the coffee goes into storage, rather than have to wait until the final sale. “This system will teach coffee farmers how to deal with financial institutions,” says Indrajit, a warehouse system specialist at IOM.

Coffee A’Plenty

The distribution of Gayo coffee across Aceh

Regencies

Area (hectares)

Central Aceh

48,000

Bener Meriah

39,000

Gayo Lues

7,800

total

94,800

   Source: Forbes Indonesia research

Filling the Cup

Over the past six years, Indonesia’s coffee exports have somewhat volatile.

(million tonnes)

Year

Arabica

Robusta

2006

68

228

2007

51

248

2008

60

348

2009

63

434

2010

78

361

2011

74

265

Source: Coffee exporters association

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