RI cocoa output predicted to increase

RI cocoa output predicted to increase

PANAMA CITY (Reuters): Indonesia's annual cocoa production could reach as much as 500,000 tons by the year 2005, cocoa experts said on Monday.

"Indonesia's cocoa production should steadily increase over the coming years," Francois Ruf, who tracks trends around the world for France's CIRAD crop agency, told Reuters. "By 2005 I believe we'll see production at around 500,000 tons."

Last year's drought gave the cocoa soil in Indonesia's South Sulawesi time to breath, which would result in greater harvests in coming years, said Ruf.

Ruf was attending a cocoa meeting in Panama City focused on finding ways to stabilize cocoa production.

Separately, the U.S. Agriculture Department on Monday released the following report from its staff in Jakarta on the cocoa supply-and-demand situation in Indonesia.

The Jan. 29 report said , among other things: the ongoing El Nino-induced drought and the current economic crisis are both having a significant impact on the Indonesian cocoa industry.

The key production areas of South Sulawesi and East Java were significantly below normal rainfall levels during the second half of 1997.

Over this same period, the Indonesian currency (rupiah) depreciated nearly 70 percent against the U.S. dollar, which translates into over a four fold increase in the rupiah-based price of exported cocoa beans.

For marketing year (MY) 1996, Indonesia's cocoa bean production is estimated at 305,000 metric tons (mt). This matches year-ago levels but below previous projections. The disappointing yields were a result of both the drought and pest infestations. Cocoa bean exports were down 3 percent to 217,432 mt.

The United States remained the biggest market. Exports of cocoa products, however, increased 20 percent to 62,575 mt (bean equivalent).

This reflects increased investment in the processing industry.

For the marketing year 97, dramatically higher prices at the farm level -- a direct result of the rupiah depreciation -- should lead to improved management practices. This, in turn, should help offset the negative impact of the drought. Thus, Indonesia's MY97 cocoa bean production is projected to remain at 305,000 mt. Exports are also forecast to remain near MY96 levels.

This reflects the fact that -- despite strong demand for exported cocoa beans -- the current financial crisis and concomitant credit crunch is making it difficult for exporters to purchase the beans. The financial crisis will also affect cocoa product exports, as limited access to credit will slow down investment in the processing industry.

MY97 exports are therefore projected at below the MY96 level.