Local cocoa exporters ask govt impose quota scheme

JAKARTA(JP): Local cocoa exporters have asked for help from newly installed Minister of Industry and Trade Rini M.S. Soewandi, calling on her to introduce a quota scheme to limit the market share of foreign exporters.

The Association of Indonesian Cocoa Exporters (Askindo) said a quota for cocoa exports was needed to enable local cocoa exporters to compete with foreign cocoa exporters who have strong financial backing.

"We hope Ibu Rini can impose quotas on cocoa exports in an effort to protect local cocoa exporters," Zulhefi Sikumbang, a senior executive at Askindo told The Jakarta Post, adding that the economic crisis had been dealt a blow to local cocoa exporters.

Zulhefi said that without such a quota policy, local exporters would be unable to compete and the country's cocoa exports would be fully controlled by foreign exporting companies.

However, he did not specify whether the quota level should be imposed on foreign exporters.

Zulhefi said foreign exporters entered the business with strong financial backing, at a time when local cocoa exporters were suffering from the devastating impact of the economic crisis, which began to hit the country in 1997.

Around 85 percent of the country's cocoa exports were currently controlled by foreign cocoa exporters, leaving only 15 percent to local exporters, he said.

"Aside from strong financial funding, they (foreign exporters) also have other advantages including greater access to buyers in the international market," he said.

Indonesia exports cocoa beans mainly to the United States, Singapore, Malaysia and Brazil.

Other buyers included Japan, China, Thailand, the Philippines, India, Sri Lanka, Palestine, UEA, Botswana, Canada, Mexico, the Netherlands, France, Germany, Belgium, Switzerland, Italy, Spain and Bulgaria.

The country's cocoa bean exports this year was expected to remain the same as last year at 275,000 tons.

The association also expected the new minister to help local exporters to obtain credits to boost their competitiveness, Zulhefi said.

"At present, the main problem hampering our business activities is the lack of fresh cash to meet "cash-and-carry" requirements in purchasing cocoa from farmers," he said, noting that the economic crisis has squeezed the value of local exporters' assets to just one third.

Cocoa traders have been required by farmers to pay in cash for their yields to avoid failure of payment as the economic crisis has bankrupted many companies and forced many others to default on their financial obligations.

Zulhefi said the country's cocoa production was predicted to fall to 300,000 tons this year, or 20 percent lower than last year's 375,000 tons due to a pest outbreak, which has been attacking cocoa plants in many parts of the country.

"Around 80,000 hectares of cocoa plants have been attacked by the pest, known as pod borer over the past four years," he said.

So far, though, there was no effective technology available to crack down on the pest.

Indonesia is the world's third largest cocoa producer with 10 percent of the world's supply after the Ivory Coast and Ghana. (03)