Indonesian Government Aims for Sweeter Deal From West Sulawesi’s Cocoa

20 Februar, 2011 | Source: Jakarta Globe

With ambitions of squeezing more money out of cocoa beans, Vice President Boediono on Friday said the government was planning to develop a value-added processing industry in West Sulawesi, the nation’s main growing region for the commodity.

“We should not stop at exporting raw cocoa beans only, as we will lose in the long run,” Vice President Boediono told farmers in Sondoang village, Mamuju district, West Sulawesi. “If we could have the processing industry in West Sulawesi, there will be more money for our nation that could later be returned to our people.”

West Sulawesi supplies 24 percent of national production, while Sulawesi Island as a whole accounts for around 72 percent.

The raw beans are acquired by foreign firms, which ship them abroad to make goods that are far more profitable than the raw materials. Most of Indonesia’s cocoa beans are purchased by international giants Cargill, ADM Cocoa, Armajaro and Ecom Cocoa, which enjoy cheaper prices compared to the global market.

“The National Cocoa Movement [Gernas] should not only focus on planting and increasing productivity but also create an established framework for lifting the economy,” Boediono said, referring to a policy designed to revive the sector. “Having a cocoa processing industry will be of additional value for us.”

Indonesia is the second-biggest producer of cocoa after Ivory Coast but has a chance to take the lead in exports as the African nation has suspended shipments due to political upheaval. “The Ivory Coast crisis gives Indonesia the potential to corner the market,” said Bayu Krisna Mukti, deputy minister of Agriculture.

The government introduced a 15 percent tax on cocoa exports last year to encourage companies to process the commodity on Indonesia’s shores. The policy has been roundly criticized by the Indonesian Cocoa Association (Askindo), which says it will cut into growers’ incomes. 

West Sulawesi plans to double cocoa production to 300,000 tons by 2013. Governor Anwar Adnan Saleh said 2010 output had increased significantly to 147,000 tons after the National Cocoa Movement was kicked off the year before. “After the national movement began, rehabilitation of cocoa planations has successfully solved problems with pests, low productivity and poor quality,” he said. “With increased production, we hope that by 2014, Indonesia will be the biggest cocoa producer in the world.”

Farmers from Mamuju, however, complained to Boediono about the low price of cocoa, which they said was caused by the long supply chain separating growers from exporters. “We want the government to shorten the market so farmers can sell directly to the industry,” a farmer told Boediono. Farm gate prices for cocoa beans are now Rp 26,000 to Rp 27,000 per kilogram (around $3).



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