Govt expects global cocoa price hike to impact domestic industry soon

The price of cocoa futures skyrocketed by more than 130% to around US$9,900 per tonne in March. — The Jakarta Post

JAKARTA: Indonesia expects a surge in the global price of cocoa may soon affect domestic food and beverage producers, with the Industry Ministry urging firms to anticipate the impact on their businesses.

The price of cocoa futures skyrocketed by more than 130% to around US$9,900 per tonne in March, compared with the beginning of this year, according to Trading Economics.

Meanwhile, Market Insider data show the cocoa spot price exceeded US$10,000 per tonne by the end of March.

“Things seem stable domestically for now, with no reports from the industry players.

“However, it’s inevitable that we (Indonesia) will be impacted soon,” said the Industry Ministry’s agro-industry director general Putu Juli Ardika last Thursday, as quoted from news site Bisnis.

Indonesia currently imports 55% of its cocoa, with the remaining 45% sourced domestically, according to the Industry Ministry.

A decade ago, the country was able to meet 85% of its chocolate demand domestically, with only 15% being imported.

Rising global cocoa prices were attributed to the El Niño weather phenomenon, which has brought erratic weather patterns to West Africa, according to a report by the International Cocoa Organisation last month.

Major producers like Ivory Coast and Ghana, which produce 70% of the world’s cocoa, had been hit by heavy rains, dry heat and disease outbreaks, squeezing cocoa supplies worldwide.

The ministry’s Putu highlighted major cocoa producers were also facing ageing cocoa trees, which dampened production. Indonesia also faced similar problems domestically, he said.

“Indonesia’s cocoa trees are already ageing as well,” Putu said.

Acknowledging that domestic production levels were stuck at around 55%, he warned that the skyrocketing raw material price would be a challenge for the industry to level up its productivity and its capacity.

To boost local cocoa production, the government has offered replanting schemes of some cocoa trees so growers could potentially boost production up to 600kg per ha, an increase from currently around 200kg per ha.

Amid a surge in global cocoa prices, the Trade Ministry has decided to raise the reference price for cocoa exports by over 33% to US$6,711 per tonne compared with the previous month, according to a statement last Thursday. It attributed the increase to output decline in major producing countries as well as plant diseases ravaging cocoa trees.

Arsil Aliasar, cofounder of homegrown chocolate company Minang Kakao told The Jakarta Post yesterday that his business had largely remained unaffected by the global surge.

The company relies on its own cocoa, which allows it to maintain productivity levels despite external factors. “Many factors contribute to cocoa and chocolate price increases,” Arsil said. — The Jakarta Post/ANN

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