Sumatra is the main Arabica growing island of Indonesia. Coffee coming from areas like the Gayo Mountains (Gayo Mandheling coffee) and around Lake Toba (Lintong coffee) are all exported through Belawan, the international port of the city of Medan. We were in Medan to chat with several of our long-standing contacts about the latest developments in the area.
Everyone we spoke to is still smiling (as Indonesians always do), but it’s a difficult time. This has several reasons; the present rainfall and disappointing harvest, arrival of large trading houses in the area and the many forward contracts that need to be met. All of which is driving the local prices through the roof. When times get hard we are extra happy with our long-time partners in Sumatra who know how to handle this.
I’ve explained the situation in more detail in the following paragraphs.
The harvest season is generally from October to May, with shipment starting a month later between November-August. Peak harvest time usually starts in December; however, the harvest has proven to be a late this year.
Expectations for a good crop were high in May as the trees were all flowering wonderfully.
However, the summer turned out to be very dry which affected pollination and development of cherries. Many cherries that did manage to form were damaged and fell from the tree prior to maturity. The yield in Lintong area is said to be up to 60% lower and the Gayo (Mandheling) area is suffering a loss of up to 30% of the crop.
Unlike during the summer, the area is receiving a lot of rain at the moment. This is good for the development of the crop of following months but also slows the processing of the present crop.
Guessing about the future
For the second part of the main crop (expected January-March) things are looking a bit better. Available volumes are expected to be higher in those months, so hopefully the local prices will also go down somewhat. This will however not make up for the lack of coffee now.
Expectations for the mid-crop, starting around June, are not too good as the coffee trees are not flowering as much as they should at the moment. Flowering happens around 7 months before harvest and is an indication for the harvest to come.
Local processing method
Sumatra coffee is grown by smallholders (with in average around 1 ha land) and hand-picked. The coffee is then pulped, fermented for around 12 hours and then laid out to dry on large plastic tarps in the villages. Not only the dislike of getting wet will stop farmers from going out to pick the berries, but the rain will also slow the drying process. If there is no space on the drying beds, farmers will leave the berries on the trees.
Though they are longer and heavier than normal, the afternoon showers are not new to the area. The unpredictable, wet weather is one of the main reasons for the characteristic ‘Gilling Basah’ processing method. After pulping and fermentation the beans (then called parchment) are dried to 35%. Then the parchment is brought to small processing facilities for hulling after which they are dried further to the 12% moisture content needed for export.
Why we try to avoid forward contracts
Mandheling has become increasingly popular in the last 10 years and large trading houses have started to move in. Consequently, each year larger volumes are being sold (far) in advance, through forward contracts.
When harvests are bad or late (like this year) more coffee is sold than is actually available and consequently local prices are sky high. This leads to delivery problems, with huge consequences for those involved. Especially the small, local exporters and cooperatives who have been tempted into forward contracts get into trouble. They don’t have the financial buffers and possibilities for hedging that larger organisations have.
Matahari works directly with farmer cooperatives and local exporters with close relations to the farmers. They are well informed and very experienced. They know possible consequences of forward contracts and are not lured into gambling with (too many of) them. If clients ask to buy in advance we don’t do this too far in advance, in relatively small volumes and only through our larger exporters who we can trust to deliver.
We were intrigued to see that also on the Indonesian side the interest in specialty coffees is increasing. One exporter is buying small volumes to try at home and calls it a personal hobby, while another is actively promoting special processing methods under farmers. These are the specialties that are increasingly available and their (Gayo) processing method:
– Honey process: berries are pulped (not washed or fermented) and dried on drying tables to 12% moisture content. This can take up to one month. After this hulling takes place.
– Fully Washed process: berries are pulped, then fermented for 12-14 hours, washed thoroughly and then dried to 12%. Then hulling takes place.
– Winey process: cherries are fermented for 2-3 days, then dried to 12% moisture (without being washed) on drying beds which takes more than a month. After this they are hulled.
– Red cherry semi washed process: the standard Semi-washed and wet-hulled process is used but before pulping all green and over ripe cherries are removed.
If you are interested in having a taste or want some more information please let us know. We are happy to arrange sample for you and provide you with all information available.
Frans & Marianne