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.