Required Report: Required - Public Distribution Date: May 19, 2022

Report Number: ID2022-0014

Report Name: Coffee Annual

Country: Indonesia

Post: Jakarta

Report Category: Coffee

Prepared By: Arif Rahmanulloh

Approved By: Jasmine Osinski

Report Highlights:

Indonesia’s 2022/23 coffee production is forecast to increase by 7 percent from the previous year
to 11.35 million (60 kilogram) bags on favorable weather in southern Sumatra. Improved
demand following the easing of pandemic-related restrictions is expected to raise domestic
coffee consumption to 4.8 million bags in 2022/23. Indonesia’s green bean exports are likely to
increase to 6.5 million bags in 2022/23, with the United States continuing to be its top
destination. Many green bean shipments to Russia, Ukraine, and the Black Sea region were
suspended or rerouted due to logistical and freight insurance complications caused by the
ongoing conflict in Ukraine.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT
NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY
Production
Post forecasts Indonesia’s 2022/23 coffee production at 11.35 million (60 kilogram) bags, an
increase of 7 percent from the previous year on favorable weather in key production areas. In the
Robusta production areas of Lampung, farmers are expecting higher yields than last year as more
cherries have appeared during the first flowering stage in early 2022 in the lowland areas. In the
highlands area, Robusta crop yields are expected to rebound coming out of the off year of their
biennial production cycle. The main harvest season in southern Sumatra began on time in March
and is expected to continue through July 2022. Post forecasts Robusta production at 10 million
bags, an increase of 700,000 bags from 2021/22.

Indonesia’s 2022/23 Arabica production is projected to increase by 5 percent to 1.35 million

bags in 2022/23 on improved maintenance and inputs following higher returns throughout
2021/22. Outside the northern Sumatra region, Arabica crop outputs are expected to increase due
to favorable weather. In northern Sumatra, where more than 60 percent of Indonesian Arabica
beans are produced, the main harvest typically occurs between October to February. The smaller
harvest usually takes place from June to August.

Figure 1: Coffee Harvesting in Lampung, March 2022

Source: FAS Jakarta

Coffee area is expected to remain stable at 1.2 million hectares, and no major replanting
programs or significant plantation expansions have taken place in recent years. Most coffee
plantations are smallholder farms occupying about 1-2 hectares each. A few large plantations
(around 2,000 hectares) located in Sulawesi and Sumatra are owned and maintained by private
companies. A state-owned company in East Java also manages a large Robusta plantation.

Geographically, Arabica crops are mainly grown in northern Sumatra and some mountainous
areas in Java, while Robusta is grown mostly in southern Sumatra. Sumatra accounts for more
than 60 percent of total Indonesian coffee crop area, followed by Java Island with 15 percent,
and Nusa Tenggara and Sulawesi with smaller shares.
 Table 1. Indonesia Coffee Area Characteristics
Topography Key Production
Northern Sumatra Highland areas (>90 pct) Arabica
Southern Sumatra Low (40 pct) and Highland (60 pct) Robusta
Java and others Low and Highland Arabica, Robusta
Source: Industry contacts

Inputs
Indonesian coffee crops are mainly managed by smallholder farmers with minimal access to
fertilizer. In addition to the unavailability of fertilizer in some regions, many smallholders lack
technical knowledge on proper fertilizer application. In Lampung, southern Sumatra,
smallholders often receive inputs such as fertilizers and pesticides from village-level coffee
aggregators on credit to be paid off after harvest. These aggregators are often smallholder coffee
farmers themselves.

Smallholders heavily depend on family labor, mainly for non-harvesting activities. Harvesting is
often carried out on a rotational basis between farms to spread labor costs. Many farmers believe
good planting materials are those that are long-proven suitable to grow in their particular area
and so are reticent to adopt new planting materials from nurseries outside their area.

Yields
Indonesia’s coffee crops rely on a balanced amount of sun and rain after flowering to produce
optimal yields. Crops in highland areas may be comparatively less impacted by low moisture
levels as the area’s morning mists may mitigate drier conditions. Yields are most negatively
affected by excess rain and strong winds during the cherry development stage.

Table 2. Indonesia Coffee Yield (Kg/ha)

2018 2019r 2020r 2021e

Northern Sumatra 891 905 907 933

Southern Sumatra 855 859 864 856

Source: Ministry of Agriculture, r: revised, e: estimate

Consumption
Indonesia’s 2022/23 coffee consumption is forecast at 4.8 million bags, an increase of 50,000
bags compared to previous year, following recovered demand from coffee outlets and greater
consumer mobility due to eased pandemic-related social restrictions.

In 2021, several ready-to-drink (RTD) coffee producers introduced new lines of more affordable
products in smaller packages to consumers whose purchasing power was had diminished due to
pandemic-related social restrictions. In 2022, Indonesian coffee processing capacity is expected
to increase as one of its largest coffee processors recently opened a new plant in Central Java in
anticipation of growing demand for bottled coffee drinks. Consumption of RTD coffee is
projected to climb in line with increasing travel, commuting, public gatherings, and outdoor
events. RTD coffee sales are supported by a wide distribution network of convenience stores
located in transportation hubs and public venues, representing 19 percent of total off-trade sales
in 2021. Before the pandemic, sales of RTD coffee had grown annually by about 42 percent on
average from 2016 to 2019.

Figure 2. Ready-to-Drink Coffee Sales 2016-2021 (million liter)

300.0

250.0
Millions of Liters

200.0

150.0

100.0

50.0

0.0
2016 2017 2018 2019 2020 2021

Source: Euromonitor

Trade
Post forecasts Indonesia green bean exports at 6.5 million bags in 2022/23 on improved demand
in key markets after the lifting of pandemic-related social restrictions. The United States is
expected to continue being Indonesia’s top green bean export destination, followed by Egypt and
Malaysia. From April 2021 to March 2022, those destinations accounted for 15 percent, 13
percent, and 8 percent of Indonesia’s green bean exports, respectively. Latest trade data also
indicates Indonesia’s green bean exports reached 6.3 million bags in 2021/22, a 2 percent
decrease compared to 2020/21.

According to exporters, global supply chain issues affecting shipping containers have begun to
subside as freight costs decline. However, shipments of green beans to Ukraine and some of its
Black Sea neighbors were disrupted and rerouted after the outbreak of the ongoing conflict in
Ukraine in late February 2022. The conflict reportedly caused freight insurance costs to become
prohibitively expensive and payment terms to become much more restrictive. In addition, some
green bean exporters reportedly had to reroute shipments originally destined for Russia due to
the suspension of international financial services. However, Ukraine and Russia only make up
around 2 percent of Indonesia’s total annual green bean exports.

Figure 3. Indonesia Green Bean Exports, 2020-2022

70000

60000

50000
Metric Tons

40000

30000

20000

10000

2020/21 2021/22

Source: Trade Data Monitor

Table 3. Green Bean Shipments to Black Sea Port Region (MT)

Black Sea port

2020/21 2021/22 Change Note
region
Romania 625 358 -43% No shipment in March 2022
Bulgaria 865 476 -45%
March 2022 shipment 76 percent
Georgia 11,872 14,220 20%
higher vs March 2021
Russia 24,184 8,234 -66% No shipment in March 2022
Ukraine 115 170 48% No shipment in Feb-March 2022
37,661 23,458 -38%
Source: Trade Data Monitor

As for imports, Indonesia’s total 2022/23 green bean imports are projected to increase by 56,000
bags to 300,000 bags on recovered demand from roasters and major coffee outlets. Many coffee
outlets are entirely dependent on revenue from foot traffic at shopping malls and other
commercial centers which have gradually reopened since pandemic-related social restrictions
started relaxing in late 2021. Indonesia sources green beans mainly from Vietnam for Robusta
coffee and Brazil for Arabica. Increased global prices for Arabica beans will likely limit import
growth as roasters are expected to procure cheaper beans locally. Global Arabica prices have
risen 81 percent since 2020, while Robusta prices have risen 71 percent over the same period.

Figure 4. Global Arabica vs. Robusta Prices, 2020-2022 ($/KG)

7.00

6.00
U.S. Dollar per Kilogram

5.00

4.00

3.00

2.00

1.00

0.00
Jul-20

Jul-21
Jun-20

Jun-21
Apr-20
May-20

Nov-20

Nov-21
Aug-20

Dec-20

Apr-21
May-21

Aug-21

Dec-21
Sep-20

Jan-21
Feb-21
Mar-21

Sep-21

Jan-22
Feb-22
Oct-20

Oct-21
Coffee, Arabica Coffee, Robusta

Source: World Bank

Table 4: Arabica Spot Price at Medan, 2016-2022 (IDR/kg)

2016 2017 2018 2019 2020 2021 2022
Jan 51,976 57,733 57,495 52,101 54,862 60,558 115,135
Feb 50,242 57,135 56,625 49,683 50,733 61,201 120,659
Mar 50,946 55,772 56,591 48,342 55,802 64,574 109,210
Apr 50,667 54,384 55,820 46,849 62,087 66,022 112,295
May 52,024 53,420 57,515 47,156 55,112 73,426
Jun 53,289 51,575 56,509 51,637 49,194 76,932
Jul 55,739 51,989 54,738 52,010 52,600 83,641
Aug 55,144 52,139 53,079 48,415 60,338 89,133
Sep 57,260 52,359 52,032 49,328 62,736 92,147
Oct 58,042 53,223 60,281 49,062 55,339 97,821
Nov 60,790 54,154 57,451 53,557 55,249 107,508
Dec 55,692 56,846 52,077 62,365 59,127 114,524
Source: Commodity Futures Trading Regulatory Agency (Bappebti)
 Table 5: Robusta Spot Price at Lampung, 2016-2022 (IDR/kg)
2016 2017 2018 2019 2020 2021 2022
Jan 16,460 26,655 24,930 22,528 18,529 19,208 35,694
Feb 15,953 25,741 25,855 22,462 17,980 19,635 35,316
Mar 16,089 25,723 26,317 22,226 18,352 20,693 34,569
Apr 17,092 24,812 25,265 20,628 18,195 20,555 32,711
May 18,795 23,318 26,219 19,829 17,701 22,043
Jun 19,192 23,976 25,686 20,469 16,943 24,333
Jul 20,403 25,981 26,674 20,135 18,353 27,666
Aug 20,806 25,873 25,311 18,998 21,951 28,552
Sep 22,270 24,289 24,104 18,812 22,606 32,259
Oct 24,078 24,545 26,943 17,862 19,073 33,041
Nov 25,767 24,704 25,346 19,491 20,089 35,249
Dec 24,916 24,787 22,758 20,238 20,593 36,428
Source: Commodity Futures Trading Regulatory Agency (Bappebti)

Table 6: Exchange Rate 2016-2022 (IDR/$)

2016 2017 2018 2019 2020 2021 2022
Jan 13,889 13,359 13,380 14,163 13,732 14,062 14,341
Feb 13,516 13,341 13,590 14,035 13,776 14,044 14,350
Mar 13,193 13,346 13,758 14,211 15,195 14,417 14,348
Apr 13,180 13,307 13,803 14,143 15,867 14,551 14,360
May 13,420 13,323 14,060 14,393 14,906 14,334
Jun 13,355 13,297 14,049 14,227 14,196 14,351
Jul 13,116 13,342 14,415 14,044 14,582 14,507
Aug 13,165 13,342 14,560 14,242 14,725 14,390
Sep 13,118 13,303 14,869 14,111 14,848 14,258
Oct 13,017 13,526 15,179 14,118 14,758 14,191
Nov 13,311 13,527 14,697 14,069 14,237 14,270
Dec 13,417 13,557 14,497 14,017 14,166 14,327
Source: Bank of Indonesia
 Table 7: Production, Supply and Distribution: Coffee

Co ffe e , Gre e n 2020/ 2021 2021/ 22 2022/ 23

Ma rk e t B e g in Y e a r A p r-20 A p r-21 A p r-22
USDA New USDA New USDA New
Ind o ne s ia
Offic ia l P o s t Offic ia l P o s t Offic ia l P o s t
Beginning Stocks 2,298 2,298 1,669 1,669 1,072
Arabica Production 1300 1,300 1280 1,280 1,350
Robusta Production 9400 9,400 9,300 9,300 10,000
Other Production - - - -
Total Production 10,700 10,700 10,580 10,580 11,350
Bean Imports 230 230 200 244 300
Roast & Ground Imports 12 12 10 16 15
Soluble Imports 751 751 675 725 800
Total Imports 993 993 885 985 1,115
Total Supply 13,991 13,991 13,134 13,234 13,537
Bean Exports 6,466 6,466 6,500 6,319 6,500
Rst-Grnd Exp. 56 56 50 43 50
Soluble Exports 1,350 1,350 1,000 1,050 1,100
Total Exports 7,872 7,872 7,550 7,412 7,650
Rst,Ground Dom. Consum 3,000 3,000 3,250 3,250 3,280
Soluble Dom. Cons. 1,450 1,450 1,500 1,500 1,520
Domestic Consumption 4,450 4,450 4,750 4,750 4,800
Ending Stocks 1,669 1,669 834 1,072 1,087
Total Distribution 13,991 13,991 13,134 13,234 13,537
- - - - -
(1000 HA) ,(MILLION TREES) ,(1000 60 KG BAGS)

Note: The last column of each Marketing Year is not official USDA data.
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