Despite numerous initiatives to address Indonesia's inconsistent and poor cocoa quality, adoption of improved production and post-harvest practices has been limited. This study examines the influence of value chain governance and quality based incentives. The report includes a brief overview of the Indonesian cocoa value chain from producers to international trading and the enabling market. Analysis of the risks and incentives for improved cocoa quality concluded that incentives are either non-existent or not sufficient, but provided some considerations for future development practitioners. Incentives for processors to improve quality and consistency are not yet sufficient for transformation of their procurement operations and a strong cost benefit would need to be realised before they made any commitment to invest. Given strong competition, numerous market channels and the lack of quality price differential there is little incentive for farmers to improve production and post-harvest practices. Even given sufficient incentive, farmers must have the capacity to access and adopt improved practices. The report emphasizes that understanding the risks and incentives at all levels of the value chain is critical in deciding program interventions.
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