15% Tax on Cocoa Exports in Indonesia Helps the Market Competitiveness

LONDON – Indonesia is the biggest producer of cocoa beans in Asia and the third major cocoa producing country in the world. The country’s cacao bean production is recorded at 540,000 tons or 16.2% of the world’s market, while the Ivory Coast and Ghana respectively at 1.22 million tons and 680,000 tons. The cocoa bean value chain in Indonesia has experienced phenomenal growth over the past few decades, but its continued competitiveness is threatened by inconsistent and poor quality production.

So in order to boost local processing industry and increase the added value of farmers cacao production in Indonesia, the government has since April 1, 2010 imposed a 15 percent tax on cacao bean exports. The government hopes that in 2011 its exports of cocoa beans would drop from 80 percent to 50 percent.

In their attempts to improve the competitiveness of the cocoa market in Indonesia, the government launched the PEKA (Peningkatan Ekonomi Kakao Aceh) Program on July 1, 2010. This $6.8 million pilot program is estimated to last 21 months. In collaboration with the international cocoa industry and NGOs, this program will increase and improve revenue, productivity, and quality standards of the Aceh cocoa sector, a tsunami recovery area. The PEKA Program’s aim is to train 12,500 farmers directly which will hopefully increase productivity by 50%. 75% of cocoa beans will meet the Indonesian national standard versus 25% currently.

Also, to somehow secure improvements in cocoa market in Indonesia, the government has taken some opportunities to increase farming productivity through good farming practices and institutional arrangement, or provide investment in post harvest activity: fermented and unfermented cacao bean, drying, sortation, and storage/warehousing. Investment in cacao industry in Indonesia, trading, and retail: the whole spectrum from cacao-paste to cocoa-café would also help the country upgrade its cocoa market.

More information on cocoa market in Indonesia may be found in the report Cocoa Market in Indonesia: Business Report 2011 recently published by The Market Publishers, Ltd.

(Source: http://marketpublishers.com/lists/9313/news.html)