Novia D. Rulistia, The Jakarta Post, Jakarta
Silver Queen and Beng Beng are among the few locally produced chocolate bars that have gained any kind of following with Indonesians, while other local brands have ceased to exist or struggle simply to survive.
As the world's third largest producer of cacao beans, it is ironic that there are no Indonesian chocolate brands able to compete with high-profile brands such as Cadbury of Britain or Hershey's of the U.S., whose home countries do not have cacao plantations.
Local cocoa and chocolate associations blame the absence of incentives for local farmers to produce fermented cocoa beans as the primary reason behind the failure to develop the country's downstream chocolate industry.
"The reason (for the underdeveloped local chocolate industry) is that most beans harvested here are not fermented," chairman of the Indonesian Cocoa and Chocolate Entrepreneurs Organization, Sonny Satari, told The Jakarta Post recently.
"Farmers choose to sell their beans directly after harvest without fermenting them first because the process requires more effort and time, while the difference in price with unfermented beans is not that high," he said.
In the process of making chocolate, cacao beans must first undergo fermentation before drying in order to create the special aroma of chocolate.
"Fermented cocoa beans have a higher added value in the market because they have better quality," Sonny said.
Indonesia Cocoa Association (Askindo) chairman Halim Razak said the difference between the price of fermented and non-fermented beans was around Rp 1,500 (15 U.S. cents) per kilogram.
He said that of the total domestic cacao output of around 520,000 tons last year, only 5 percent was fermented.
The limited availability of fermented beans has forced chocolate companies to import cacao beans of good quality.
Askindo secretary-general Zulhefi Sikumbang said that besides the lack of fermented beans, local chocolate producers, most of which make semi-processed products, also faced problems in developing their brands.
Semi-processed products include cocoa butter and powder, while fully processed products usually comprise chocolate bars and candy.
The domination by large multinational manufacturers of fully processed chocolate products is another factor discouraging local producers from competing head-to-head in the local chocolate bar or candy business.
"It's like committing suicide if semi-processed chocolate producers jump directly into the manufacturing of fully processed products because brand image still comes into play," said Zulhefi.
He added that the outdated machinery operated by local producers hampered innovation in the industry.
Only a few locally made chocolate bars have managed to become favorites among Indonesians. Most people here tend to eat chocolate manufactured by international brands, including products made from cacao beans imported from Indonesia.
Zulhefi predicted that in 2008 there would be no new domestic producers of fully processed chocolate, partly because of low chocolate consumption at home despite the abundant stock of cacao beans.
According to Askindo, Indonesia's chocolate consumption is just 0.6 kilograms per capita per year, far lower than 16 kilograms per capita per year in Europe.
The association said the country's cocoa consumption reached 220,000 tons last year.
Zulhefi said that of the 14 chocolate companies in Indonesia, only three make fully processed products.
Rully Junaidi, corporate secretary of PT Davomas Abadi, Indonesia's second biggest chocolate company, said the firm would continue focusing on semi-processed products due to high demand on the international market.
Semi-processed products are also used as intermediaries for making fully processed chocolate.
Rully said the firm exported cocoa butter and powder to countries in Europe and the United States at US$6,000 per ton. That price is far higher than the raw bean price of around $2,000 per ton.
According to Askindo, Indonesia is the third largest producer of cacao beans in the world, with total production of around 560,000 tons a year. It trails only the Ivory Coast, which produces around 1.3 million tons, and Ghana with around 700,000 tons.
Askindo reported that Indonesia saw an 11.8 percent decrease in cacao beans production in 2007 to 520,000 tons from 590,000 tons in 2006, due to the late arrival of the rainy season which hurt the harvest.
It saw an even steeper decline of 38.7 percent in exports to around 300,000 tons last year from around 490,000 in 2006. The three main destination countries for Indonesia's cacao beans were Malaysia, the United States and Brazil.
Halim said the poor skills of farmers meant Indonesia's cacao yield was a low 0.7 tons per hectare.
He said ideally Indonesia should produce 2.5 tons per hectare per year from its almost one million hectares of cacao plantations.
"But there have been several training programs for farmers regarding proper planting systems, so I hope this year's harvest can increase to 590,000 tons," Halim told the Post.
He said increasing cocoa production was important to take advantage of the rising prices for the commodity.
Prices rose to $2,100 per ton this week from around $1,600 per ton in January last year, as demand continues to outstrip supply, he said.
Global demand for cocoa was increasing by around 3.5 percent per annum while supply was rising by only 2.5 percent, he said.(ndr)