The Indonesian Cacao Industry Association (AIKI) strongly supports the government's new regulation obliging producers and industries to sell and use only fermented cacao beans in order to improve the quality of the country's cacao production.
The association said the new policy would be effective in improving the quality of cacao production, but more importantly added that the government had issued another policy to improve the productivity rate.
The Agriculture Ministry is currently formulating a regulation to enhance the quality of cacao production by first obliging farmers to ferment their harvests and second obliging industries to buy only processed cacao.
The ministry's acting director general for agriculture produce processing and marketing, Haryono, said on Tuesday that the regulation would be finalized this year and would become effective in two years ' giving producers time to adapt to the new rule.
The AIKI's executive director, Sindra Wijaya, said the upcoming regulation was a good move to improve the quality of domestic production, adding that currently industries had to source fermented cacao from Africa to be blended with domestic supply.
Out of Indonesia's annual 800,000 tons of cacao production, Sindra said only 5 percent were fermented, most of which were exported.
Unfermented cacao, he said, did not have a strong aroma that was important for producing cacao-based products.
Farmers are reluctant to ferment their harvest, saying it would take longer and give them more work to do.
Sindra said industries were ready to buy fermented cacao at Rp 20,000 (US$1.94) a kilogram, higher than the Rp 18,000 a kilogram for unfermented cacao.
'This is a good move, but what we have to face today is far beyond that. Cacao is a high value commodity and with the government's move to impose higher taxes on raw cacao, many ' including foreigners ' are interested in investing in building facilities in Indonesia,' Sindra said.
'With rising demand from industries and with stagnating domestic production, we have estimated that by 2015, Indonesia will be a net importer of the commodity, despite being the world's biggest supplier of cacao and despite President [Susilo Bambang Yudhoyono] aiming at making the country the world's biggest supplier by 2020.'
He explained that local industries currently had the capacity to process 400,000 tons of cacao per annum, which saw a 25 percent increase each year.
Sindra said a number of foreign investors had expressed their interest in building facilities in Indonesia, including Switzerland-based Barry Callebaut and Malaysian-based JBCocoa, which will start operating this year.
The latest interested investor is Cargill, which is slated to open its facility (with the capacity to process 70,000 tons of cocoa beans) in mid-2014 in Gresik, East Java. Domestic production saw a 31.46 percent increase from 712,231 tons in 2011 to 936,266 tons in 2012.
Production, however, slumped by 15 percent in 2011 from a previous level of 837,918 tons in 2010. In 2008-2010, production only saw around 2 percent increases annually.
Indonesia Cacao Council (Dekaindo) general secretary Fiman Bakri Anom said the government also needed to improve productivity.