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Jakarta Post

Cargill launches its first Asian cacao facility in Gresik

  • Wahyoe Boediwardhana

    The Jakarta Post

GRESIK, EAST JAVA   /   Fri, December 12, 2014   /  09:56 am

Global food company Cargill launched on Wednesday a cacao processing facility in Gresik, East Java, the company'€™s first in Asia and the largest of its kind in the region.

The new facility, which commenced construction in May last year and absorbed US$100 million in investment, has the capacity to process up to 70,000 metric tons of cacao a year into premium cocoa powder under the brands Cargill and Gerkens, as well as into high quality cocoa butter and liquor.

Annual production is expected to reach 6,000 metric tons of cocoa liquor, 21,000 metric tons of cocoa butter and 28,000 metric tons of cocoa powder.

Of total production, 75 percent will be exported to other countries in the continent, while the remainder will be distributed locally to meet domestic demand.

Cargill president director David MacLennan had previously said that China would be the top export destination for the factory, which is located in the Maspion industrial estate.

Raw materials for the factory would be a combination of local and imported cacao. The local materials include 20,000 tons from South Sulawesi, which has previously exported raw product to various countries in Southeast Asia, Latin America and the US.

'€œIndonesia is an important market for Cargill, being an agricultural-based country with promising economic growth,'€ MacLennan said during his visit to launch his company'€™s factory.

'€œThat'€™s the reason why we chose Indonesia [to establish the factory], besides the availability of quality cacao.'€

Indonesia, the world'€™s third largest cacao supplier after the African countries Ghana and Ivory Coast, contributed 11 percent to global production. Meanwhile, global demand for cocoa experiences a 2 to 3 percent increase per annum.

Industry Minister Saleh Husin, who witnessed the launch of Cargill'€™s cacao processing factory, said that despite abundant resources, domestic cacao consumption was still very low, or only around 0.6 kilograms per capita a year, compared with European countries at 8 kg per annum.

'€œCacao processing is among our top priority industries in our downstream program,'€ he said.

To support the cacao processing industry, he said the government had provided stimulus through import duty exemption on machinery and export duty for cacao, as well as tax reductions for investment in certain regions and for pioneer industries with a total investment of Rp 1 trillion (US$80.9 million) that had started national production.

'€œWhile production now is still limited to cocoa powder and liquor, we hope the existence of the factory will trigger industrial growth of other processed products,'€ Saleh said.

East Java Industry and Trade Agency head Warno Harisasono said that the new facility was expected to help the province boost it non-oil and gas exports and absorb local labor.

Cargill will employ around 300,000 local workers and train 4,500 cacao farmers in a newly established farming school in South Sulawesi to further support the factory operation.

The company has pledged to pour $1 billion of investment into Indonesia in the next three to four years, larger than its spending of $700 million in the country in the last four years. It is also eyeing entering the poultry business.

MacLennan previously said that Indonesia was right at the top of investment opportunities for Cargill in Southeast Asia, as well as in the top five in growth potential and top 10 in total assets out of 67 countries in which the company operated around the globe.

Cargill, which has been operating globally for nearly 150 years, made its first Indonesian entry through the animal-feed business in 1974. The company'€™s business in Indonesia currently comprises animal nutrition, cacao, grain and oil seeds, palm oil, as well as starches and sweeteners.

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