BANDUNG INDONESIA (ISL News) - In a discussion with journalists and economists at his residence in Hambalang, Bogor Regency (20/3/2026), President Prabowo Subianto questioned the import of coffee and chocolate even though Indonesia has the best raw materials.
Indonesia is a major global producer of cocoa and coffee, producing around 600,000 tons of cocoa and 700,000–800,000 tons of coffee annually. However, the domestic industry remains reliant on imports to meet raw material needs with consistent quality, volume, and continuity standards.
Setijadi, Founder and CEO of Supply Chain Indonesia (SCI), explained that this situation demonstrates a paradox within the national industrial structure. The main problem lies not in production, but rather in an unintegrated supply chain and an inefficient logistics system. Production dominated by smallholder farmers results in scattered supply and inconsistent quality, making it difficult to meet large-scale industrial demand.
Downstream, the national cocoa processing industry has reached approximately 739,000 tons per year, but actual production is only around 422,000 tons, or only 50-60 percent of capacity. Meanwhile, cocoa imports still reach around 157,000 tons, valued at approximately USD 1.1 billion per year, indicating that the domestic industry is not yet fully reliant on domestic supply.
From a logistical perspective, the main challenges lie in post-harvest and distribution systems. Fermentation, drying, storage, and harvesting processes are not yet standardized, while domestic distribution costs are still higher than imports in some cases. This makes imported raw materials more competitive in terms of quality and supply security.
Improvements in logistics and supply chains can unlock significant economic potential. A 25 percent import substitution could potentially save around USD 275 million in foreign exchange, and up to USD 550 million if it reaches 50 percent. Furthermore, increasing industrial utilization to 75 percent could generate additional economic value of over USD 1 billion per year.
Recommendations for Improvement
SCI provides five recommendations for increasing the competitiveness of cocoa commodities, which are generally also very important for other commodities.
First, downstreaming is encouraged through the development of domestically sourced raw material-based processing industries with investment incentives, ease of licensing, and the development of industrial clusters near production centers to strengthen upstream-downstream integration.
Second, strengthening logistics and supply chains is carried out through upstream to downstream integration, including farmer aggregation, increasing the role of offtakers, and quality standardization.
Third, improvements focused on post-harvest systems such as fermentation, drying, and warehousing, as well as increasing multimodal connectivity and distribution efficiency.
Fourth, ministries/institutions and local governments should improve institutional integration and align policies and programs in developing the downstream ecosystem, including regulatory support, infrastructure, and increasing supply chain capacity.
Fifth, business actors and logistics service providers are developing partnerships through contract farming, strengthening the role of aggregators, and leveraging digitalization to integrate supply and demand.
(ISL News Editorial Team/SCI Public Relations).
