Indonesia's cocoa grinding capacity to soar as output lags -industry groups

Reuters

JAKARTA, April 3 (Reuters) - Cocoa grinding capacity in Indonesia will jump 85 percent to 600,000 tonnes by the end of this year, an industry group said on Thursday, with output in the world's third-largest cocoa bean producer set to slip to its lowest level in more than a decade.

Cocoa processing capacity in Indonesia, which hopes to feed a growing regional appetite for chocolate, is being boosted by investments from by such firms as Cargill, Barry Callebaut and JB Cocoa.

As cocoa grinding capacity climbs in Indonesia, where output lags fellow cocoa producers Ivory Coast and Ghana, exports are likely to dwindle in coming years.

Cocoa grinding capacity in Southeast Asia's biggest economy will be 600,000 tonnes in 2014, Piter Jasman, chairman of the Indonesian Cocoa Industries Association told Reuters, up from 324,000 tonnes last year.

"Indonesia's cocoa bean grinding industry needs to import 120,000 tonnes of beans annually or 20 percent of national cocoa grinding capacity of 600,000 tonnes per year," said Jasman, who did not give an import figure for 2013.

Jasman's 120,000 tonnes cocoa bean import forecast is 30,000 tonnes less than an estimate by the Indonesia Cocoa Association (ASKINDO), which represents exporters and traders.

Cocoa bean production in Indonesia is likely to dip 2 percent to 410,000 tonnes in 2013/2014, the International Cocoa Organization said in an email response to a Reuters question, its lowest level since 2002/2003.

ASKINDO forecast 2014 output to fall 6 percent to 425,000 tonnes. On the supply side, the cocoa industry in Indonesia is looking to triple output of the bean by 2020.

Despite the government spending more than $300 million trying to rejuvenate cocoa output, farmers have struggled to contain increased crop diseases such as cocoa pod borer, as weather conditions become more extreme, industry officials say.

As domestic cocoa bean production fails to keep pace with rising grinding capacity, the government is in talks about whether to lower its cocoa bean import duties.

"Domestic cocoa bean farmers can only provide 480,000 tonnes of cocoa beans," said Jasman, CEO of major Indonesian grinder PT Bumitangerang Mesindotama. "That's why our association supports the proposal to scrap the current 5 percent import duty." (Reporting by Yayat Supriatna and Michael Taylor; Editing by Nick Macfie)

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