The Potential of the Cacao Agribusiness for Poverty Alleviation in West Sumatra, Indonesia

Abstract

The cacao industry has played an important role in the economy of West Sumatra, Indonesia. It is the third largest contributor to export earnings and provides income for many smallholders. The industry has an opportunity to improve its contribution as the international price forecasts for cacao beans and other cacao products are promising. The Government of West Sumatra has implemented several programs to support the development of the industry. Cacao output has increased rapidly, but mainly due to area expansion rather than yield increases. Lack of productivity gains has motivated this study to understand the current problems facing the cacao industry. Identifying these problems and developing strategies for their solution should improve the performance of the cacao industry and enable it better to exploit opportunities in the international market. The study was conducted with three objectives: identifying constraints in the cacao industry, developing potential strategies to alleviate these constraints that lead to rural poverty alleviation, and assessment of the effectiveness of the participatory impact pathway analysis (PIPA) method in designing the strategies to improve the performance of cacao producers in West Sumatra. The study applied three methods: PIPA, path analysis and the Delphi method. Data were collected in three municipalities using a triangulation method involving workshops, surveys and semi-structured interviews.