Innovation

Nestlé began its coffee production in Indonesia in 1979. It started its coffee production, NESCAFÉ, at Panjang Factory in Lampung, Indonesia. Lampung is chosen because Nestlé wants to be close to its coffee suppliers, and the fact that Lampung is one the largest green coffee producers in Indonesia.

To produce its high quality standard of NESCAFÉ products, Nestle is looking for a high quality of coffee beans from the coffee farmers around Lampung. Junda Aulia, Head of Agriservice Department of Nestlé in Lampung said “Our standards in selecting beans for our NESCAFÉ are extremely high and this is known by our farmers. They understand that we only accept the finest flavored coffee beans for our product.”

When selecting the locally-grown coffee beans, the taste is the main criteria. The Nestlé’s coffee tasting experts examine samples from the farmers, using their refined sense of taste to choose beans of superior quality and flavor. However, during that time, the farmers were growing their coffee plants in a very traditional way, and the best quality of coffee bean and flavor cannot be easily found.

To educate the importance of taste in coffee production, Nestlé through its Panjang Factory Team began offering Coffee Tasting training sessions to local coffee traders. Failure to achieve an optimum flavor is usually the result of poor harvest management of the coffee beans.

Looking at that situation and the intention to have a sustainable future high quality of coffee sourcing, Nestlé Indonesia decided to work directly with farmers in the villages of Lampung to grow the best quality of coffee beans and ensure the good taste of the product. To drive this initiative, in 1994, Nestlé Indonesia created a special expert team, the AgriService Department, at Panjang Factory. This is a dedicated team who has the agriculture knowledge and expertise in coffee management who will work with farmers to train them with the best coffee growing, harvesting and the post-harvest management techniques of the coffee beans. For this initiative, Nestle chose Ngarip Village as the pilot location for their AgriService experts to start working directly with coffee farmers. Nestlé's AgriService team visited Ngarip on a regular basis to conduct meetings and give training for the farmers' group, helping them implement the techniques as well as giving continuous consultation and progress monitoring on the implementation in the field.

These strategic initiatives are given without charging any fees to farmers. There is also no mandatory contract or a must from the farmers to sell their good quality of coffee beans to Nestlé. The farmers are free to decide where they will sell their harvested coffee beans. They can sell it to Nestlé or to coffee traders. The price of coffee that is bought by Nestlé from the farmers are based on the international Robusta coffee price in London.

Many farmers knew about the success story in Ngarip Village and they eagerly adopted these methods because it helped them double the amount of their crops per acre. The good post-harvest management of coffee beans that they applied was also giving a greatly improved “cup taste” profile. Many groups of farmers also attended training sessions delivered by Nestlé’s AgriService team on evaluating the quality of their coffee products. The higher the quality of their products the higher the price they will get, and this will give them the profits of bringing high-quality coffee to the marketplace

Currently, Nestlé’s Panjang Factory receives more than 80% of its coffee beans directly from farmers' groups. Because Nestlé thoroughly understands the whole process of coffee bean growing in Lampung since the 1990’s, their AgriService Department will continue to provide guidance and support for coffee farmers in Lampung.

The latest support that Nestlé has given to coffee farmers in Lampung is the NESCAFÉ Plan. Through the NESCAFÉ Plan, Nestlé Indonesia seeks to improve the living standards of coffee farmers, increase the quality and quantity of the coffee they produce, ensure Common Code for Coffee Community (4C) verification, promote the responsible farming production, supply and consumption of coffee, and empower women and young people to become leaders in the coffee sector.

Inspiration

Despite the harsh quality of infrastructure to reach Ngarip village during the initial phase of Nestlé's commitment to develop coffee farmers in deep Lampung villages, the Nestle’s AgriService team was strongly committed to visit farmers in their field and continuously work very close with them.

As the result of this continuous development driven by the AgriService team, the farmers can improve their coffee productivity and at the same time they can improve their economic condition. Currently, Nestlé’s Panjang Factory receives more than 80% of its coffee beans directly from farmers' groups.

This effort can be seen as a partnership of mutual benefits for Nestlé and the hard working farmers who strive to provide a good education and better life for their families and children, offering the next generation a better Indonesia.

Overall impact

Currently there are around 18,000 farmers that Nestlé are now reaching in Lampung which its AgriService team has connected with. Nestlé continues its commitment in developing quality awareness and campaigning for the high quality standards of coffee beans to the farmers in Lampung, as well as transferring know-how of agriservice management to ensure the sustainable coffee quality and its supply chain.

Based on the research done by Indonesian Coffee and Cocoa Research Institute (ICCRI) it is found that around 50% of coffee plants in Sumatera have average age of 20 – 25 years old. This will give an impact of a decreased productivity and quality of harvested bean coffee. This fact is also found in the Robusta coffee plantation in Lampung, especially in Ngarip village, Lampung.

NESCAFÉ uses 100% of Robusta coffee bean from 12,000 coffee farmers in Lampung, especially in Kabupaten Tanggamus. Through the NESCAFÉ Plan, Nestle agreed to rejuvenate the coffee plantation in Lampung by providing 18 million superior seeds of Robusta coffee to coffee farmers until 2020. It is expected that this NESCAFÉ Plan initiative will help to improve the coffee productivity in Indonesia, the thirst largest Robusta coffee producer in the world after Brazil and Vietnam. Not only that, the economy of the farmers is also expected to be improved.

“As our previous Nestlé Indonesia’s President Director said, that NESCAFÉ Plan is a proof of commitment of our company to help Lampung province to maintain its status as the largest producer of high quality Robusta coffee in Indonesia. We also committed to provide a sustainable development of our coffee farmers in improving the productivity of their coffee production and the quality of the coffee beans” said Junda Aulia, the Head of AgriService at Nestlé Indonesia.

Business benefit

Both Nestlé and the consumer get the mutual benefit of this partnership. As a corporation, Nestlé gains the benefit of its proximity to coffee suppliers which can fulfill its high standard of quality requirement. Nestlé can also start cutting the layer of coffee buying process until the minimum layers, no more unnecessary traders or coffee collectors, but individual farmers or group of farmers can deal directly with Nestlé. This is a good deal both for farmers and Nestlé where high cost of supply chain can be eliminated, due to leaner layers of coffee purchasing steps/supply chain. The direct connection between farmers and Nestlé will also maintain a strong relationship with coffee communities.

Social and environmental benefit

Ibu Rosmiyati (36) or usually called Ibu Ros is a female farmer who lives in Sumberjaya District, West Lampung Regency. She is one of KWT Melati's (women farmers group) members and she has big motivation and spirit to improve her family income. After joining NESCAFÉ Plan in 2011, she feels that her knowledge about agricultural coffee cultivation has increased and improved in addition to the knowledge and experiences that are given by her father since her youth. All knowledge and practices that are trained in farmer field school such as farming management, quality assessment, health and safety in farming, and fertilizing methods are all useful for her to be a better coffee farmer.

''It was a fascinating experience since I joined the NESCAFÉ Plan. Now I can help my husband with the knowledge from farmer's field school'', she said.

Slamet Hariyanto (41) is the leader of Tunas Harapan Farmers Group in Air Kubang Village. He leads 32 farmers and does many projects of his own that he dedicates for farmers in his surroundings.

He appreciates Nestlé’s AgriService team support that can make him able to apply the learning and technique in developing a better coffee farm. Everything he needs to become a good farmer, he got from the farmer’s field school provided by the AgriService team from Nestlé. Now he hopes that his little actions and steps can become more and more, giving a bigger impact in the future and inspiring other farmers to follow.

Interview

Junda Aulia, Head of AgriService at Panjang Factory, PT Nestlé Indonesia