Cocoa price jump to 13-year high

Cocoa price jump to 13-year high

Adianto P. Simamora, The Jakarta Post, Jakarta

The price of cocoa hit a thirteen-year high of Rp 17,000 per
kilogram (about US$1,925) on Monday amid lingering fears of lower
output from the world's largest producer and higher global
demand, executive director of the Indonesian Cocoa Association
(Askindo) Zulhefy Sikumbang said on Tuesday.

He said that the price of cocoa had been on the rise for the
past two years, a development which had encouraged local farmers
to expand their plantations.

"Local farmers are very excited with the higher prices ...
They are now stepping up efforts to take proper care of their
crops to boost production," he told The Jakarta Post.

According to Zulhefy, the Ivory Coast, the world's largest
cocoa producer, is expected to have a smaller output this year at
only 1.1 million tons compared to 1.6 million tons in 2000.

He also predicted that this trend would continue over the next
two years.

Indonesia is currently the world's third largest producer of
cocoa after the Ivory Coast and Ghana with output this year
expected to reach 400,000 tons.

The total area under cocoa is estimated at 700,000 hectares,
with some 350,000 growers being involved.

Zulhefy said that the productivity of local cocoa growers was
still very low at 0.6 tons per hectare, compared to the 1.5 tons
per hectare produced by farmers in the Ivory Coast and Ghana.

"If Indonesia can boost the productivity level to 1.5 tons per
hectare, cocoa exports could contribute (revenue of) some $1.3
billion a year," he said.

Zulhefy predicted that this year's revenue from cocoa exports
would reach about $750 million.

South Sulawesi has the largest area under cocoa in Indonesia
with some 134,000 hectares being devoted to the crop, and
together with the provinces of Southeast and Central Sulawesi
produces some 75 percent of cocoa output in Indonesia.

Meanwhile, Reuters quoted a U.K.-based brokerage, ED&F Man, as
saying that global cocoa production for the 2002 to 2003 period
would increase by 1 percent to 2.815 million tons, but this would
not be enough to cover an estimated increase in consumption by
cocoa processors.

Processors grind down cocoa beans into butter -- the main
ingredient of chocolate -- and powder, which is widely used in
chocolate-based food products.

"We expect grindings to increase in 2002-2003. The extent of
the increase will be dictated by the underlying demand for cocoa
butter and powder," the brokerage firm said.

Forecasting a four percent rise in grindings to 2.925 million
tons, the brokerage predicted a 2002-2003 cocoa shortfall of
135,000 tons.

This follows hot on the heels of an estimated 50,000 ton
supply deficit in 2001-2002 and 250,000 ton shortfall in 2000-
2001.