Indonesia’s Cocoa Problems

Since 1980 Indonesia, and specifically its Sulawesi province, has emerged as a major cocoa producer in the world. Starting from inauspicious beginnings, Sulawesi represents on of the successes of the chocolate industry’s diversification strategy. Total production increased from only 12,400 tons in 1979/80 to a predicted harvest of 480,000 tons during the current season. But all is not well with Indonesian cocoa.

The initial prediction for this season’s harvest had been 520,000 tonnes. The shortfall of 40,000 tonnes was caused by the decline in yields due to increasing age of and diseases among the cocoa trees. Planted in the early 1908s, many trees of that generation are reaching the end of their useful lives and are much more prone to diseases.

AntaraNews reported that of the 450,000 hectares planted with cocoa, some 70,000 have suffered from serious attacks by pests and diseases, 230,000 hectares are half damaged and 145,000 are slightly damaged. With Sulawesi producing 62 percent of Indonesia’s cocoa, this is a serious problem.

In response, the Indonesian Ministry of Agriculture will invest $175 million into the rehabilitation of cocoa produciton in Sulawesi. Reuters reported that the initiative will include the distribution of newly developed hybrid seedlings and fertilizer to farmers to replant some 200,000 hectares. The Agriculture Ministry has predicted that the rehabilitation will be complete in 2011 and that, by 2013, Indonesia will export 1 million tonnes of cocoa.

That must sound like music to the ears of the chocolate industry. A doubling of Indonesian output would help to keep cocoa prices down. But given the problems associated with replanting existing cocoa farms, a point I have made in earlier posts, I wonder how successful this investment will be.

Indonesia is a great example of how the promise of high cocoa prices has led to the spread of the crop to thousands of small farmers. Several studies have shown that farmers all over Sulawesi adopted cocoa as a crop when they saw their neighbors’ successes (check François Ruf’s chapter on Indonesia in Clarence-Smith’s book Cocoa Pioneer Fronts and the article by Pomp and Burger in World Development, Vol 23, 1995). However, as cocoa prices declined over the next decades, these farmers turned their attention to other crops and neglected their cocoa farms.

If Indonesia is indeed as successful as its Ministry projects and if the other cocoa producers react to the current price incentives in similar ways, then it’s quite likely that farmers will react to the inevitable price declines with similar neglect. The new hybrids, however, are much more dependent on proper fertilization, watering and pest control. So that neglect won’t take 30 years to materialize

Finally, there is the question of how good the new hybrid beans are. Currently, Sulawesi beans trade at a $200 discount compared the Ghanian beans on the spot market. Quantity does not necessarily mean quality.

Share: Email this to someoneTweet about this on TwitterShare on TumblrShare on FacebookPrint this page
Tagged on: ,