The Indonesian deputy trade minister has said that after successfully increasing domestic cocoa grinding capacity the country should lower cocoa bean import duties to prevent shortages in the future.
Speaking to journalists at an industry event this week, deputy trade minister Bayu Krisnamurthi reportedly said: “Given that cocoa bean demand for domestic processing is increasing significantly, we have to review our current import policy."
Cocoa product imports are not currently taxed in Indonesia, while bean imports face a 5% duty. Krisnamurthi suggested that this should be reversed, yet he refrained from expanding on the details of such a change.
Reversing these import taxes could encourage imports of the raw material and enable the country to make better use of its grinding capacity. Speaking to the press, Krisnamurthi warned that Indonesia could see a cocoa bean deficit in 2015 if the country remains unable to match the rising local processing demand.
Francisco Redruello, senior analyst for food at Euromonitor, explained that the Indonesian cocoa industry has been going through big changes in an attempt to keep up with West African competition, counter limited production capacity and capitalize on the growing demand for chocolate in nearby countries like India and China.
“Production in Indonesia is not very large if compared with West Africa and the cocoa quality is not bad but not as high as countries like Ivory Coast,” Redruello told ConfectioneryNews.
Low production is due to a variety of reasons such as old, low-yield trees and an inclination towards other more profitable industries, said Redruello. “Farmers and workers tend to look to rubber and palm oil where profits are higher,” he explained.
In order to add value revenue to its cocoa industry, Indonesia has significantly increased its cocoa grinding capacity. Yet the rate at which the country can produce the raw ingredient has lagged behind.
According to the International Cocoa Organization’s quarterly bulletin of cocoa statistics, cocoa production in Indonesia fell from 550000 tons in 2009/10 to 450000 tons in 2011/12, while grindings rose from 130000 tons to 270000 tons in the same space of time.