Not only coffee exports, but the USDA also expects Indonesia's coffee production to decline in the 2016/2017 season. This decline is attributed to bad weather, particularly the prolonged El-Nino inflicted droughts in 2015. Both arabica and robusta beans are affected by these weather conditions. Moreover, La Nina brings wetter-than-usual weather conditions to Southeast Asia in the last quarter of 2016 and start of 2017. Considering most of Indonesia's coffee is produced by smallholder farmers (who lack the high quality expertise and equipment) bad weather conditions usually have a big impact on coffee productivity in Indonesia.

Most of Indonesia's coffee production involves the lower quality robusta beans. Large robusta plantations can be found in Lampung (Sumatra), Bengkulu (Sumatra), and South Sulawesi. Meanwhile, arabica bean plantations can be found mostly in Aceh and North Sumatra.

Despite falling domestic coffee output, consumption is estimated to grow in Indonesia in the 2016/2017 season from 3.1 million bags of (60 kilogram) coffee to 3.3 bags of coffee. This growth is attributed to the establishment of new cafes and coffee corners (usually in the business centers and malls in the bigger cities) as well as the increasingly popular "coffee-drinking lifestyle" among the nation's expanding middle class segment. Rising consumption and a drop in production will also push prices to a higher level.

Earlier, Irfan Anwar, Chairman of the Association of Indonesian Coffee Exporter (AEKI), said domestic coffee consumption in Indonesia grows by an average of 8 percent per year. In 2016 total consumption may reach 350,000 ton, about 90 percent of which is absorbed by instant coffee producers.

Examples of popular coffee places that have mushroomed in Indonesia over the past years, especially in the businesses centers and malls are Starbucks (with 248 stores in 20 cities), Excelso (126 stores in 30 cities), Coffee Toffee (155 stores in 25 cities), Coffee Bean (108 stores in 24 cities), Jco (109 stores in 43 cities), Maxx Coffee (50 stores in 21 cities), Bengawan Solo (44 stores in six cities), and Kopi Luwak (17 stores in four cities).

Domestic Coffee Reserves, Production & Export of Indonesia:

  2015/2016 2016/2017
Coffee Reserves
(bags of 60 kilogram)
    94,000     84,000
Coffee Production
(bags of 60 kilogram)
 10,610,000   8,900,000
Coffee Export
(bags of 60 kilogram)

Source: Investor Daily