Indonesia, Third-Biggest Cocoa Grower, Poised to Turn Net Buyer

By Yoga Rusmana 

Cocoa imports by Indonesia may more than double next year, transforming the world’s third-largest grower into a net importer, as companies process more beans into powder for chocolate, said the Indonesian Cocoa Association.

Purchases will probably climb to 100,000 metric tons from 40,000 tons this year, said Chairman Zulhefi Sikumbang. Grinding capacity will rise to 550,000 tons in 2014 from less than 500,000 tons now as the harvest stays little changed at 450,000 tons, he said in an interview yesterday. Exports will decline 26 percent this year to 100,000 tons, the lowest level in more than a decade, the group said in January.

Declining supplies from Indonesia may curb the 6.6 percent drop in bean prices in New York this year. Global demand will outstrip supply through 2014-2015 as pests, disease and aging plantations curb production, according to the International Cocoa Organization. The market may have a shortage of 58,000 tons in the 2012-2013 season that started in October, according to Rabobank International.

“Foreign investors are building plants” and facilities are being upgraded, Sikumbang said at an ICCO meeting in Bali, Indonesia. Capacity increased after the government imposed a tax on bean exports in 2010. Rates range from zero if the average price in New York is below $2,000 a ton to 15 percent if it rises above $3,500. The duty is 5 percent this month.

Producing nations from Ivory Coast to Indonesia will process about 50 percent of all beans within three years as they seek to extract more value, the ICCO estimated last year. Grinders in Indonesia imported about 30,000 tons of beans from West Africa last year, and purchases are expected from Papua New Guinea this year and next, Sikumbang said.

Palm, Rubber

Bean exports from Indonesia have been in decline. They fell to an estimated 136,000 tons in 2012 from 439,305 tons three years earlier, association data show. Production from the harvest that starts in April will probably be little changed at 475,000 tons, according to the median of five industry estimates compiled by Bloomberg. The harvest may not rise because trees are aging, said Sikumbang.

“Half of them are more than 20 years old and farmers are shifting to more profitable crops such as oil palm and rubber,” he said. Indonesia has about 1.5 million hectares (3.7 million acres) of plantations, the association says.

Cocoa for May delivery fell 1.3 percent to close at $2,088 a ton on ICE Futures U.S. yesterday.Ivory Coast is the biggest producer, followed by Ghana and Indonesia.

To contact the reporters on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net

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