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Falling production leaves bitter aftertaste in RI's cocoa industry
In hot water: A farmer sun-dries cacao beans in Sambik Bangkol village in North Lombok, West Nusa Tenggara
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n hot water: A farmer sun-dries cacao beans in Sambik Bangkol village in North Lombok, West Nusa Tenggara. Indonesia’s cocoa industry is facing a difficult situation as the supply of cacao beans plunges amid strong domestic and foreign demand. (Antara/Ahmad Subaidi)
Cacao bean output declines rapidly in last five years
Bars of flavorful chocolate displayed on shelves at supermarkets across the country cannot sugar-coat the bitter fact that Indonesia’s cocoa industry is in dire straits.
Several factories have been forced to close due to their failure to cater to soaring demand for chocolate, believed to have various favorable effects on the human body, from improving one’s mood to preventing heart disease, amid a lack of cacao beans.
The head of the beverages, tobacco and refreshments subdirectorate at the Industry Ministry, Mogadishu Djati Ertanto, revealed that nine of 20 cacao-processing factories had stopped production since last year. The remaining 11 factories were running below 59 percent of their capacity to process around 463,060 tons of cacao beans this year.
“We need to import cacao beans, because many factories have stopped operations due to a lack of supply,” he said during a discussion attended by cocoa industry representatives, government officials and agricultural research bodies at the Indonesian Chamber of Commerce and Industry (Kadin) headquarters in Jakarta on Wednesday.
The cocoa industry has been pushing the government to cut the import duty from 5 to 1 percent and eliminate the 10 percent import value added tax (VAT) for cacao beans as imports continue to climb to meet domestic demand.
An International Cocoa Organization (ICCO) report shows that Indonesia’s cacao bean production has declined rapidly from 410,000 tons in 2013 to an estimated 240,000 tons in 2018. The report also reveals that Indonesia, which used to be the third-largest cacao bean producer, is now in fourth place, behind Ivory Coast (2 million tons), Ghana (969,000 tons) and Ecuador (290,000 tons).
As a result, the country’s cacao bean imports more than doubled to 239,377 tons in 2018 from 109,409 tons in 2013, Statistics Indonesia data show.
The production decline could damage the country’s growing cacao-processing industry, which now ranks third globally after Ivory Coast and the Netherlands.
Cacao refers to the raw beans of the cacao tree, whereas cocoa refers to roasted cacao beans, which are usually turned into grinds or powder. Meanwhile, the widely-known ready-to-eat chocolate bars are made from combining cocoa butter, cocoa solids, milk and sugar.
“Our production is declining, because farmers are switching to more profitable crops, such as oil palm, or even changing their profession to become miners or something else,” said Misnawi from the Indonesian Coffee and Cocoa Research Institute.
In addition, diseases and climate change also contributed to low production.
He said farmers had yet to adopt good agricultural practices, as reflected in their unwillingness to rejuvenate plantations even when their trees are more than 20 years old. This was because some cacao farmers could afford to wait three to four years for the new trees to bear fruit, as they had no other source of income, he went on to say.
The Agriculture Ministry plans to boost cacao production by giving farmers 500 quality seeds during the 2020-2024 period, said the ministry’s refreshment crops division head Bagus Hudoro, adding that Rp 100 billion (US$7 million) would be allocated to boost the production of Indonesia’s top eight agricultural products, namely palm oil, rubber, coconut, coffee, cacao, pepper, nutmeg and clove.
He also advised farmers to ferment their beans before selling or exporting them to add value. Currently, only about 10 percent of Indonesia’s cacao beans went through the fermentation process, he added.
“We have begun producing and exporting more value-added products, such as cocoa powder and cocoa butter,” said Indonesian Cacao Council (Dekaindo) chairman Dwi Atmoko Setiono.
The cacao derivatives for export can be categorized as cocoa liquor, cocoa cake, cocoa butter and cocoa powder.
Statistics Indonesia noted that the country exported 365,583 tons of cacao byproducts worth $1.2 million last year.
A study by Fortune Business Insight revealed that the global cocoa and chocolate market would grow at an annual compound rate (CAGR) of 5.7 percent from 2017 to 2025, becoming a $67.22 billion business by that time.
"Cacao trees can only grow in the equator zone, so Indonesia should seize the opportunity to become one of the best cocoa producers," said Kadin horticulture standing committee head Karen Tambayong. (eyc)
