The Trade Ministry has reaffirmed its plan to reduce the import duty on cocoa beans below the current level of 5 percent to meet growing demand in the country.

'€œWe are responding to the request of the people, and we are now still discussing cutting the import duty on cocoa beans as we need more than what our cocoa industry can supply,'€ Trade Minister Muhammad Lutfi told reporters on Friday.

Lutfi said the country produced around 770,000 tons of cocoa beans in gross per year.

But the country'€™s net production only reached 450,000 tons a year because many of the beans were ruined by pests, he said.

Indonesia, the world'€™s third-largest cocoa producer after the Ivory Coast and Ghana has seen its annual productivity shrink from 800 kilograms per hectare before 2010 to only between 300 and 350 kilograms per hectare at present.

The country'€™s low productivity of cocoa beans and the enforcement of a 10-percent value added tax on cocoa beans traded domestically have pushed growers to export their harvests, causing even scarcer supply in the domestic market.

According to Indonesia Cocoa Association (Askindo) chairman Zulhefi Sikumbang, Indonesia currently exported around 100,000 tons of its cocoa beans to Malaysia, Singapore and the United States.

In 2009, the government launched a five-year revitalization program to raise national cocoa output up to 1.2 million tons this year.

The government also introduced a regulation that imposed a 15-percent export duty on raw cocoa in 2010 to increase supply and encourage imports of fermented cocoa and the growth of the processing industry.

The regulation spurred foreign investment in the downstream industry, but production has failed to improve.

The revitalization program is now in limbo and the target of 1.2 million tons has yet to materialize.

Zulhefi separately said that the country could produce only 450,000 tons of cocoa beans, below its production capacity of 550,000 tons, which equaled the total national demand.

Cocoa bean producers have estimated that national output could only reach 425,000 tons by the end of this year.

'€œTherefore, we still need to import, especially for the fermented beans to create distinct flavor and aroma for our end products,'€ Zulhefi said, adding that the country could not yet produce good quality fermented beans.

He said the national cocoa-processing industry imported between 35,000 and 40,000 tons of fermented cocoa beans last year to produce cocoa powder and other intermediate or end products.

He estimated that the import of fermented beans would jump up to around 40,000 to 45,000 tons this year on higher demand.

'€œWith the government slashing the import duty on cocoa beans, we can have a more competitive price for our products sold in the domestic and international markets,'€ he said, adding that he had requested the government scrap the import duty on fermented cocoa beans since 2007, but had not gotten a response.

Lutfi said that the import tariff reduction, if implemented, was expected to boost the value added of cocoa products in the country.

'€œ[With good quality cocoa beans], cocoa butter has a value added of around 8 percent and chocolate 11 percent,'€ he said.

Zulhefi said he expected that the government would also provide more training for local cocoa farmers to help them protect their plants from pests and boost productivity. (koi)

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