Post-harvest processing and smallholder cocoa farm profitability: evidence from indonesian cocoa production

Abstract

Indonesia is one of the world's leading cocoa producers; however, smallholder cocoa farmers continue to face low product quality and unstable market prices due to limited adoption of value-adding post-harvest processing. Guided by an agricultural economics and value chain perspective, this study examined how different cocoa bean processing methods influence farm profitability. A cross-sectional comparative survey was conducted from July to September 2024 involving 53 cocoa farmers in Antutan Village, Bulungan Regency, Indonesia. Respondents were selected using a census approach because all active cocoa farmers in the study area were included. Data were collected through structured questionnaires, field observations, and semi-structured interviews. Farm profitability was evaluated using cost and return analysis, gross margin, net farm income, and revenue-cost (R/C) ratio analysis. Differences in profitability among the three processing methods wet beans, non-fermented dry beans, and fermented dry beans were examined using one-way analysis of variance (ANOVA) at a 5% significance level. The results showed that fermented dry bean processing generated the highest economic returns, with average revenue of IDR 38,387,755.10 and net income of IDR 17,480,017.91 per 2 hectares, outperforming both wet bean and non-fermented dry bean marketing systems. The fermented processing system also achieved the highest R/C ratio (1.43), indicating superior economic feasibility and greater profitability. These findings demonstrate that post-harvest fermentation significantly enhances farm income by increasing the market value of cocoa beans. Strengthening farmers' adoption of fermentation technology through targeted extension services, technical training, and improved market and processing infrastructure would support greater value addition and improve the economic sustainability of smallholder cocoa farming.