FAIRTRADE ASIA PACIFIC COFFEE FORUM INDONESIA Medan, November 2016

The 2nd Fairtrade Asia Pacific Coffee Forum was organized by Network of Asia and Pacific (NAPP) with support from Indonesia Fairtrade Network (NAPP Indonesia). 130 participants representing Fairtrade certified small producers organizations (SPO) from Asia Pacific region, Fairtrade certified traders and roasters from Asia, ANZ, Germany, and UK, National Fairtrade Organisations of Germany, Australia, New Zealand and Japan, Fairtrade Marketing Organisation, Hong Kong and representatives of Fairtrade International participated in the forum. The objectives of the forum were:

  • To build mutual understanding and strengthen trade linkages along Fairtrade supply chain,
  • To facilitate promotion of Fairtrade certified Arabica and Robusta from Asia Pacific Region,
  • To establish Fairtrade Asia Pacific Coffee Producer Network.
All participants with Fairtrade Asia Pacific team at the 2nd Fairtrade Asia Pacific Coffee Forum, Medan, Indonesia, 2016
Day I
  • COO, Fairtrade Asia Pacific welcomed all the participants and summarised the agenda for the Forum.
  • Producer Representatives from the Asia pacific region shared their achievements and challenges.
  • Trader representatives; Ewan Reid from Matthew Algie (UK), Daniel Priscilla from DR Weikfield (UK), Stephen Stratfort from Kokako roasters (New Zealand), Pham Ngoc Bang from Dakman (Vietnam) gave presentations where they shared their experiences of working in the Fairtrade system.
  • Rene (Fairtrade International), Mirjam (Fairtrade ANZ), Yamazaki (Fairtrade Japan), Alexander Bornat (Fairtrade Germany) and Senthil Nathan (NAPP) shared prevailing trends in various markets, developments and challenges faced by Fairtrade and discussed ways to boost Fairtrade demand/market at the consumer side.

Producers Perspectives

  • Producers gave a status update of the Fairtrade premium projects in their areas and emphasized on the need to increase their market access for Arabica and Robusta. Mr Hao, representative of Vietnam coffee producers said that demand for Fairtrade Robusta from Vietnam is low and the price being offered is inadequate.
  • Armiadi, another producer representative from Indonesia said that in the course of last decade benefits from Fairtrade have significantly contracted. He also highlighted that this was also largely due to increase in competition has resulted in fall in sales.
  • Laos producers, represented by Mr. Kitam, shared that although green bean is considered as main business for Laos producers, there is positive development on ground coffee for export and domestic market.
  • Representative from Papua New Guinea expressed that isolation and connectivity are still top challenges faced by their members. In order to support working capital requirements of the producers, there is a need to improve Fairtrade pre-financing mechanism.
  • Hence, to summarize, apart from very few positive developments highlighted by Laos some of the key reasons cited for decline in coffee sales from Asia Pacific were:
  • increase in competition
  • issues of productivity and quality due to climate change
  • lack of adequate working capital
  • low prices

Fairtrade System Perspectives

  • In German market there are around 350 Fairtrade certified coffee products; of which 50% are branded, and another 50% are private labels. Nearly 72% of them are organic certified. However, the most popular coffee comes from Peru and Honduras. Only Indonesian coffee from Asia Pacific is on the top 10 origins list imported by top 6 countries. The consumption of coffee in Germany has increased by more than 21.4% in the last 3 years and can grow further. There is huge scope of sale for Asia Pacific Fairtrade coffee in Germany.
  • Fairtrade Japan shared that there is a declining trend in consumption of instant coffee in Japan and an increase in consumption of specialty coffee. South Korea has also shown a growth in their coffee consumption and is projected to be a larger consumer than Japan in the future. However there is a need to popularize the Fairtrade brand in Japan and South Korea.
  • Australia and New Zealand are growing markets for Fairtrade. A total of 63,000 MT conventional coffee is imported to Australia and 6,000 MT to New Zealand. Fairtrade is an ethical and trusted brands in these countries. However, Fairtrade is facing competition from other ethical labels. Fairtrade Australia and New Zealand focus is on 2 main strategies to build market for Fairtrade products:
  • Create awareness and demand by conducting communication and promotional activities.
  • Grow sales by supporting (new) supply chain partners.
Sessions underway at 2nd Asia Pacific Coffee Forum

Rene Capote, Global Coffee Management Team at Fairtrade International highlighted that Latin America (LAC) has the largest production of Fairtrade coffee compared to Asia Pacific and Africa. It produces +400,000 MT annually, involving +200,000 coffee farmer household. Regarding buyer locations it was observed that within Fairtrade, coffee originating from Africa is mainly exported to European market (+70%), with a small portion to US (-20%) and Asian market. LAC origin coffee mainly goes to Europe (-60%), and to US (-40%). Whereas, Asia Pacific origin coffee is evenly spread among US, Europe and in Asian market.

Fairtrade Traders Perspectives

  • Pham Ngoc Bang, Vice President of Dakman Coffee Company from Vietnam, shared that Vietnam is the second largest coffee producing country with total of 670,000 hectares of coffee plantation. Mainly Robusta is grown here and 10% of the total harvest is consumed locally. Highlighting the limitations of the region he said that high supply of produce in peak season often causes prices to fall for individual farmers, unstable prices of Robusta in the world market and lack of access to working capital causes difficulties for farmers.
  • Fairtrade Minimum Price (FMP) and Fairtrade premium were highly appreciated in the forum. FMP in the region has been higher than the local price, and covers the cost of production. Fairtrade has been able to provide support beyond financial benefits to farmers in the form of skills, leadership qualities through training and local jobs.
  • In UK, the coffee industry was valued at £ 7.9 billion in 2015, with approximately +9.7% turnover growth and +8.9% of outlet growth. It is predicted that by 2025, coffee outlets in UK will reach 30,000 outlets with turnover of up to £ 15 billion. Fairtrade has been popular in UK market wherein 9 out of 10 consumers have seen the logo, 83% of them trust it, and 71% of the consumers choose Fairtrade to decide if the product is ethical. Linking certification to quality has the potential to drive consumer consumption further in the region.
Day II

There were two simultaneous meetings on the second day of the Fairtrade Asia Pacific Coffee Forum. First meeting was for certified producers. The second meeting was for Fairtrade business partners.

Meeting 1: Fairtrade Asia Pacific Coffee Program and Governance

At this meeting, the representatives of Asia Pacific Coffee Producer Network were elected. Its members are:

  • Hasbi (Mr.), from Sara Ate Cooperative in Indonesia. Hasbi was elected as Chairperson of the Fairtrade Asia Pacific coffee forum
  • Ara Siberani (Mr), from Arinagata Cooperative in Indonesia
  • Daniel Kinne (Mr), from Highland Agriculture Coop fin Papua New Guinea
  • Gildo Carmo Santos (Mr), from CCT cooperative in Timor Leste
  • Laddawa (Mrs), from Doi Chaang cooperative in Thailand
  • Nguyen Huu Ha (Mr), from Thuan An Agricultural Fair Cooperative in Vietnam
  • Fr John Joseph (Mr), from WWWS cooperative in India
  • Kitam (Mr.) From Rattapraseud Nhouyvanisvong in Laos.
Sessions at the 2nd Asia Pacific Coffee Forum

Meeting 2: Building Stronger Fairtrade Asia Pacific Supply Chain

  • The discussion among the business partners can be summarized into three questions that they want to be further developed for a future framework to build stronger supply chain for Asia Pacific Coffee, which are:
  • How do we (the entire supply chain and Fairtrade system) expand demand for Fairtrade coffee?
  • How do we communicate quality from roaster and traders to producers?
  • How do we improve the link between producers and the market?
  • Some suggestions revolved around exploring local markets while other around addressing issues of costs and competition in the supply chain along with availability of updated Fairtrade producer profiles.

Coffee tasting

“A show case” of 20 samples of Arabica and Robusta from Asia Pacific region were presented during the Forum. These samples received positive response.

Coffee Tasting
Recommendations
  • Asia Pacific is a diverse region and there is a need to put more effort in facilitating this diversity. A functioning, structured and organized Fairtrade Asia Pacific Coffee Producer Network will enable the coffee producers of the region to have more voice within NAPP and the Fairtrade system.
  • Access to market for both Arabica and Robusta are a challenge for most coffee producers in Asia Pacific. Various strategic communication/promotion channels need to be identified and developed such that they are aligned with the product. Partnerships may be developed with key coffee industry players, popular brands, and with embassies/ consulates.
  • Working closely with the entire supply chain is one of the key elements for success. To be a sustainable and ethical business, open communication throughout the entire supply chain is crucial. Relationship between roasters and suppliers (i.e. producers) needs to be improved.
  • Quality and productivity are still a significant challenge. Climate change and high competition have compounded the issues. There is a need for commitment from the entire supply chain to work closely with the producers to overcome these issues.
  • Asian market is growing, access to domestic/local consumers is crucial to improve sales. NAPP needs to put more effort to fulfill local/ domestic consumer on Fairtrade coffee. Indonesia may be taken up for a pilot project.

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