The coffee industries of Sulawesi and Flores are not currently major contributors to Indonesia's total coffee exports in terms of volume (less than 5%). The Sulawesi industry, however, is already an important supplier of the rapidly growing international specialty coffee sector. Coffee roasters in the key markets of Japan and the United States coordinate global supply chains to ensure access to high-quality Arabica coffee grown by smallholders in upland Sulawesi. Competition amongst buyers can be intense, particularly in the preferred growing District of Toraja. Despite substantial foreign investment in both plantations and milling operations in the District, annual production in Toraja is limited to some 2000 tonnes and yields are low by global standards (perhaps only 150 kg/ha). Given the strong international demand for this coffee, there exists significant potential to raise rural incomes through enhanced farm productivity and improved farmer organisation. There are, however, also major constraints to increasing farm productivity in Toraja due to a complex socio-economic setting, where current farm-gate prices are already some of the highest in the world.

The island of Flores has also produced significant volumes of coffee for well over a century. In particular the natural environment in the Districts of Manggarai and Ngada, with high altitudes, seasonal rainfall and extremely fertile soils, is well-suited to coffee production. An estimated 2500 tonnes of Arabica and 4000 tonnes of Robusta coffee are produced annually on Flores, almost all of which is traded through the East Javanese port of Surabaya. Whilst demand for Flores Robusta coffee appears to be good, Flores Arabica coffee is a relatively undeveloped origin and does not currently possess an established market identity. Considerable potential exists for developing heightened quality consciousness along the value chain and establishing Flores as a specialty coffee origin, which would raise rural incomes in coffee-growing villages.

This study focused on the opportunities for value-adding through further processing that involves the smallholder coffee producers in South Sulawesi, and sought to identify a research focus to enhance their international competitiveness. The study also aimed to help Flores smallholder producers to improve their basic management practices as part of a strategy to bring its industry into the global market.