March 14, 2012 / 1:37 PM / 6 years ago

Indonesia Q1 cocoa output to slump 60 pct on heavy rains

JAKARTA (Reuters) - Heavy rains in the first quarter will lead to a 60 percent slump in Indonesia’s cocoa bean output compared to a year ago, an industry group said on Wednesday, although the full-year figure is likely to show a near 10 percent increase.

A worker checks the quality of dry cocoa beans before filling them into a sack at a warehouse in Makassar, in Indonesia's South Sulawesi province, April 7, 2011. REUTERS/Yusuf Ahmad

Wet weather wreaked havoc on the crop last year and brought back Vascular-streak Dieback (VSD) disease to plantations across the main growing island of Sulawesi, killing trees and curbing exports in the world’s third largest producer.

Cocoa bean output in the first three months of this year will fall to 40,000 metric tonnes (44, 092 tons) from 100,000 metric tonnes (110, 231 tons) in the same period last year, Zulhefi Sikumbang, chairman of the Indonesian Cocoa Association (Askindo) told the Reuters Food and Agriculture Summit.

“The big problem is wet weather and some farmers convert the plantation to rubber and palm oil,” said Sikumbang. “In 2011, Indonesian production was only 435,000 tonnes, but this year it looks like the weather is OK for cocoa ... our estimate is only an increase to up to 475,000 tonnes.”

Late last year, Askindo had predicted that better weather conditions would lift production to 500,000 tonnes, down from a previous forecast of 600,000 tonnes.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Asian cocoa consumption: link.reuters.com/bam65s

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Indonesia, the world’s third largest producer of cocoa beans after Ivory Coast and Ghana, usually begins its main cocoa crop in April or May, with peak production in June or July.

“Last year the weather was not too good, but this year the weather will be good,” he said.

Cocoa producers in Southeast Asia’s largest economy will cover 1.5 million hectares this year, down from 1.6 million hectares last year, Sikumbang said, as farmers switch to more profitable crops such as corn, rubber and palm oil.

This could then slip to 1.3 million hectares within the next five years said Sikumbang, who has worked within the cocoa industry for almost 25 years.

“Some areas in west Sumatra, Lampung and in Sulawesi, they convert to rubber plantations and corn,” he said. “In Sumatra, normally they switch to palm oil and rubber.”

Farmers inspect their cocoa plantation in Makassar, South Sulawesi March 25, 2011. REUTERS/Yusuf Ahmad

Indonesia’s animal feed industry will import 57 percent less corn this year compared to 2011 due to a surge in domestic output, while palm oil output is seen up about 9 pct to around 25 million tonnes.

Sikumbang said a farmer can make a minimum of 20 million Indonesian rupiah ($2,200) per year from one hectare growing corn, palm oil or rubber, while cocoa trees over the same area would make only 8 million rupiah ($870).

“There will be no more cocoa expansion,” said Sikumbang, who sees cocoa bean exports at 225,000 tonnes this year. “In the long run, a lot of cocoa plantations in Java and Sulawesi will switch.”

Smallholders own 95 percent of total cocoa plantation areas in Indonesia, with many owning less than 1 hectare of land and using poor farming techniques.

GRINDHOUSE

A growing taste for high quality chocolate in emerging markets, especially in Asia, has seen a number of companies announce cocoa grinding projects in Indonesia.

The country is attracting companies such as U.S. agribusiness giant Cargill CARG.UL and Barry Callebaut (BARN.S), the world’s top chocolate maker.

Indonesia, Asia’s second-largest grinder after Malaysia, now has 15 cocoa grinders with a capacity of 650,000 tonnes, Sikumbang said.

Eight grinders use old equipment, however, and run at less than 50 percent capacity, he said, bringing grinder output down to 250,000 tonnes per year at present.

Cocoa beans are ground into butter and cake, which is later processed into powder. Butter is also used to make spreads, soaps and cosmetics, while powder is used in chocolate- making, beverages and ice cream.

Two new Indonesian cocoa grinders planned for this year, said Sikumbang, are Malaysian firm JB Cocoa’s Surabaya plant and Barry Callebaut’s (BARN.S) Sulawesi project.

He said he also heard of two further cocoa processing plants planned by Cargill CARG.UL in Sulawesi and Archer Daniels Midland Co (ADM.N) in Jakarta.

"The small grinders cannot compete with the big players, and they cannot sell at a good price either because they don't have a brand name on the market," Sikumbang said. ($1=9185.0000 Indonesian rupiah) (For summit blog: blogs.reuters.com/summits/

Follow Reuters Summits on Twitter @Reuters_Summits)

Editing by Clarence Fernandez

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below