T

he Trade Ministry tamed and acquired a green light from the Agriculture Ministry to entirely scrap the 5 percent import duty on cocoa beans after '€œnegotiations'€.

The approval from the Agriculture Ministry, which previously opposed the idea over concerns of local farmers being put in disadvantaged positions, comes with a cap of 100,000 tons and is limited to the import of '€œfermented cocoa'€.

'€œThe Agricultural Ministry has said yes to the zero percent import duty. But it will be for fermented cocoa only, not non-fermented cocoa,'€ said Trade Minister Muhammad Lutfi on Friday. '€œThe allowed amount of such imports may not exceed 100,000 tons [a year].'€

He claimed that the zero percent import duty would not harm local cocoa farmers because most of them produced non-fermented cocoa beans.

Deputy Trade Minister Bayu Krisnamurthi said the measure would be temporary and would be lifted once local cocoa growers could fulfill the national demand for fermented cocoa.

Deputy Agriculture Minister Rusman Heriawan said earlier this week that the elimination of the import duty '€œwill be a tough fist to farmers'€ as it would push down the price of cocoa beans produced by local farmers.

Indonesia has seen its annual productivity of cocoa beans shrink from 800 kilograms per hectare before 2010 to only between 300 and 350 kilograms per hectare at present.

Indonesian Cocoa Association (Askindo) chairman Zulhefi Sikumbang separately said that the zero import duty would help ensure raw material supplies to the cocoa-processing industry in exchange of losses to local farmers.

He said the country traditionally only imported fermented cocoa beans as it produced non-fermented ones.

He said national cocoa grinders'€™ total installed capacity amounted to 550,000 tons of cocoa beans a year.

Despite national production of cocoa beans only reaching 500,000 tons last year, the country still shipped 188,000 tons abroad, causing a shortage in local supplies.

'€œWe imported around 30,000 tons of fermented cocoa beans last year and may import 40,000 tons this year. Is the government sure that our import needs will jump to 100,000 tons next year?'€ Zulhefi told The Jakarta Post.

'€œOnce the government allows free-duty imports of cocoa beans, local cocoa beans will come second as has been the case in imports of soy beans,'€ he said, adding farmers might consider switching to other commodities when cocoa no longer made profits for them.

He said multinational companies processing cocoa already knew of the 5 percent import duty when they decided to invest in the downstream industry, following the government'€™s 15 percent export duty on raw cocoa in 2010 to encourage growth of the processing industry.

'€œTherefore, I don'€™t see any reason why the government needs to scrap the import duty,'€ said Zulhefi. (alz)

Mustaqim Adamrah contributed to the story