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.