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Industry Overview: Indonesia Cocoa Industry

Indonesia is currently the third largest Cocoa producing country in the world. Indonesia has around 1.5 million to 1.6 million hectares of cocoa plantations. Today Indonesia is not only known as a major exporter of cocoa but is also acknowledged as a cocoa processing country. Although Indonesia's cocoa bean exports in 2012 is expected to be 150,000 tonnes, down 29% from 210,000 tonnes last year but at same time the grinding capacity has also increased dramatically. In 2011, around 58,010 tons of fully-processed cocoa including cocoa powder and chocolate confectionery was sold overseas for US$209.29 million, up 179.28% from 2009. 

Indonesian cocoa grinding is expected to become fourth biggest in the world. According to the Indonesian Cocoa Industry Association (AIKI) Executive Director Sindra Wijaya, the production capacity of the processing industry will reach 400,000 tons annually after having already crossed 80,000 tons in the first quarter of this year. 

To boost the cocoa grinding, Indonesian government has prepared a number of investment incentive policies to attract investors. The government has introduced a progressive export tax of up to 15 percent on cocoa since 2010 to help & provide a sufficient supply of cocoa beans for the domestic industry, which processes semi-finished and finished products. The tax is decided by the government every month based on export prices.  In 2009, the government also launched a US$350 million program to boost cocoa output to 600,000 tonnes per year by 2013. It distributed free fertilizer to boost productivity of cocoa trees over 145,000 hectares, and produce better seeds and trees.

Cocoa processing company PT Bumi Tangerang (BT Cocoa) has plans to invest US$30 million to expand production capacity. They will increase production capacity by 50,000 tons with investment and raise the firm's production capacity to 110,000 tons per year. Other cocoa processing firms such as Petra Foods will also increase their capacity from 80,000 tons to 120,000 tons per year, while Cocoa Ventures will be raising theirs from 10,000 tons to 15,000 tons.

Further, Cargill plans to invest US$100 million, while Barry Callebaut another global giant, plans to spend US$30 million for their new projects in Indonesia. Cargill also plans to invest US$110 million in a new cocoa process facility with a capacity of 60,000 tons per year in Indonesia.  But there is no fix schedule yet on when Cargill will realize the investment.

Indonesia's annual cocoa grinding capacity is likely to rise above 600,000 tonnes next year as the country expands its grinding sector. Chocolate consumption in Indonesia has scope to grow, with annual cocoa demand estimated at just 0.2 kg per person, against 0.6 kg in neighbour Malaysia and 10 kg in Europe, providing a great opportunity for other major players to enter this industry, thus witnessing magnificent growth of cocoa industry in the coming years. 

(Source: Insight Alpha)

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PT Bumi Tangerang (BT Cocoa)