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Cocoa Farming in Indonesia

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Cocoa Farming in Indonesia View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Hasanuddin University Repository Cocoa Farming in Indonesia: Present Challenges Cocoa is an engine of national growth in Indonesia, which is poised to become the world’s largest producer of cocoa beans. Muhammad Junaid The University of Hasanuddin hocolate or cocoa is becoming an Indonesia for a production capacity of about Cengine of national economic growth in 70 thousand mt , starting in 2014 (Aldhin, many parts of the world, particularly in 2013). Other cocoa grinders are General Indonesia. By 2012, although a number of Food Industry (Singapore), Bumi countries in the target export areas had been Tangerang, Effem Indonesia and Davomas affected by economic crisis, it was obvious Abadi Tbk. A company from Malaysia, that the world demand for chocolate had Guan Chong Berhad, has established a increased significantly. In fact, a more than cocoa factory projected to produce about twofold rise in demand was reported, com - 150,000 mt per year in Batam Island, Suma - tra. Another cocoa grinder from the United Muhammad Junaid is pared to previous years, and it is predicted a junior lecturer and States, Barry Callebaut, is investing about to continue to increase, reaching more than research plant pathol - US$150 million in this sector in Indonesia. 15 percent of total global production. The ogist at the University Interestingly, cocoa is not a native crop in demand for cocoa beans has grown as well of Hasanuddin. He most of the main production areas in the has received the Nor - (Guest, 2013). world. However, cocoa growing has trans - man Borlaug Pro - As one of Indonesia’s most popular formed communities in many areas. As gram grant and has export commodities, cocoa enables people published several Samuels et al. (2012) state, cocoa is native to to gain profit, provides employment and studies about cacao. the higher zones of Amazonia, but it is now brings well-being to communities. Currently, grown in almost all tropical countries. Cocoa the number of cocoa factories established in has become an economic essential wherever Indonesia, including those processing cocoa it is grown. It is believed that over 15 per - into cocoa powder, cocoa butter and indus - cent of the total world cocoa production trial chocolates, is about 18 companies, pre - comes from Indonesia (Natawidjaja, 2009). dicted to grow to 20 cocoa bean processors Certainly, cocoa farmers play a vital role in by 2015. The cocoa industries require large this sector, with approximately 1.6 million numbers of employees (up to 6,000) as well hectares (ha) of cocoa plantation. as cocoa beans from the farmers. Further - The total area devoted to cocoa planta - more, it has been reported that Cargill Com - tions in Indonesia in 2008 was about 1.5 mil - pany, one of the cocoa grinders, is eager to lion ha before rising by about 10 percent in invest seriously in Indonesia. As the presi - recent years. National cocoa plantations dent of Cargill Company, de Loor, claims, totaled over 1.67 million ha, of which about over US$100 million will be invested in 94 percent was held by the cocoa farmers’ ➤ 68th PMCA Production Conference, 2014 1 Cocoa Farming in Indonesia National cocoa community, and 4 percent, or over 57,000 duction, the export volume of cocoa beans bean production is ha, belonged to the government of Indone - has fallen. Meanwhile, it has been claimed likely to peak at sia (Indonesia Investment Coordinating that the cocoa bean supply in Asia is rely - 1.5 million metric Board, 2013). Other private sector entities ing on Indonesian exports (Kompas, 2013). tons. Once this managed only about 51,000 ha or 2 per - Tempo (2013) reports that the export vol - cent of the total area. The majority of the ume was about 210,000 mt in 2011, then production target is cocoa beans come from smallholders with fell by 29 percent in 2012 and is forecasted achieved, Indonesia over 90 percent of the total production, to continue to fall next year. The depletion will most likely while the government contributed over of cocoa bean exports is commonly overtake the 36,000 mt of cocoa beans, or about 4.5 per - believed to be due to the imposition of a biggest world cent, and private plantations produced less 15 percent tax, which has burdened the producers of than 36,000 mt (Natawidjaja 2009 cited in raw material exporters since 2010. cocoa beans. Junaid, et al., 2009). Although this imposition tends to have The average cocoa bean production of drawbacks for certain international cocoa Indonesia is 857,000 mt annually. Cocoa exporters, generally speaking it seems to bean production overall has shown an have enormous benefits for other mem - upward trend during the last decade, stand - bers of the cocoa community such as the ing at 928,000 mt in 2005, falling slightly to farmers, and for the grinders and choco - 712,000 in 2011 –12, before reaching a peak late companies which might potentially at over 1 million mt by 2013 (Directorate settle in Indonesia, stimulating the growth General of Estate Crop of Indonesia) (Fig - of chocolate factories downstream. In fact, ure 1). Cocoa bean production is predicted farmers can sell the cocoa beans directly to to grow to approximately 1.5 million mt by local factories and exporters as well. Also, 2016. In Jawapos (2013), a Minister of Agri - investors can gain noticeable merits in their culture of Indonesia, Suswono, pointed out investment around farmers’ communities that potential national cocoa bean produc - due to the low costs in the supply chains. tion is likely to peak at 1.5 million mt . Once According to the Minister of Trade, Wir - this production target is achieved, Indone - jawan, there was a significant increase in sia will most likely overtake the biggest the number of chocolate factories in recent world producers of cocoa beans in forth - years, from only six factories to about 20 coming years. This is mainly due to cocoa currently, dominated by several interna - revitalization schemes which have been tional companies. Because of the impact promulgated for five years. of regulation, local chocolate factories tend In contrast to national cocoa bean pro - to import enormous quantities of cocoa beans from Africa for ingredient and taste Indonesia Avg. Cocoa Bean Production purposes. The number of chocolate facto - ries investing in Indonesia has increased and also national chocolate companies have imported more cocoa beans from Africa, from 31,000 mt in 2012 to about 100,000 mt by 2013. During the last four years there was a noticeable increase in cocoa grinding, from 130,000 mt in 2009 / 10 to 265,000 mt in 2011 / 12 (Abdoellah, 2013). Meanwhile, Figure 1 Deptan & Ditjenbun, 2013 there was a negative correlation between ➤ 2 68th PMCA Production Conference, 2014 Cocoa Farming in Indonesia cocoa bean exports and semifinished prod - ever, it is believed that globally many cocoa- The vast majority of ucts. There were approximately 400,000 mt producing countries are facing a reduction national cocoa of cocoa bean exports in 2010, 200,000 mt in cocoa productivity. Taking Nigeria and production is from in 2011, then falling slightly to about Côte d’Ivoire as examples, the largest cocoa the island of 130,000 mt in 2012. Semifinished products producers in the world are experiencing a Sulawesi, which grew from about 100,000 mt to 200,000 mt decline in cocoa yield. Similarly, Indonesia produces about in 2012 (Deptan, 2013) (Figure 2). The Vice has cocoa challenges, namely aging trees, 67 percent of total Minister of Trade, Heriawan (n.d), points poor farmer skills and knowledge, pest and national cocoa out that the largest quantity of Indonesian disease management, soil and postharvest cocoa beans is exported to Malaysia with management. These obstacles may have a production. The 47 percent, and then the second largest is significant detrimental effect on production second-largest to the United States with 21 percent. Other in the future. amount is from the countries such as Singapore, Brazil and island of Sumatra. China are 12 percent, 7 percent and 4 per - CHALLENGES FACING COCOA cent of the total respectively (Kemenperin, Cocoa, both on farm and off farm, is facing 2012). Regarding the volume of factory four main threats. First of all, cocoa plan - capacity, in 2012 it was about 350,000 mt tations suffer from low productivity. Many in cocoa beans and will increase to cocoa plantations are getting older, reach - 600,000 mt during 2013 (Tempo, 2012). In ing over 25 years of cultivation. Second, East Java, cocoa production reached cocoa plantations have been hit by serious 26,000 mt in 2012 and was predicted to rise pests and diseases, in particular cocoa pests to 32,000 mt in 2013. East Java exports such as cocoa pod borer and fruit suckers cocoa beans mainly to Europe (75% of (Helopelthis sp.), and cocoa diseases like total) and the rest is sold on the domestic Exports: Cocoa Beans and market (Deliknews, 2013). Semifinished Goods Looking at Indonesian domestic cocoa bean production by regions (Figure 3), it is clear that the vast majority of national cocoa production is from the island of Sulawesi, which produces about 67 percent of total national cocoa production. The second- largest amount is from the island of Suma - tra, which contributes about 22 percent. Meanwhile, Papua and Maluku and Java combined contribute 4 percent of cocoa Figure 2 Deptan, 2013 productivity. Although their contribution is small, Papua and Maluku and Java are Domestic Cocoa Bean Production potential areas in which to develop cocoa Cocoa bean production by region, 2008-12 21% Sumatera Island plantations.
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