'U.S. 'automatic detention' hits local cocoa exporters
JAKARTA (JP): The "automatic detention" measure imposed by the U.S. government on Indonesian cocoa has caused great losses to Indonesian cocoa exporters, according to the Indonesian Cocoa Association (Askindo).
"In 1998 alone, losses (from the measure) ran as high as US$30 million," Askindo's executive director P.S. Siswoputranto told The Jakarta Post.
He complained that the Indonesian government did not pay serious attention to solving the problem and ongoing bilateral talks on the matter were not progressing as expected.
The U.S. Food and Drug Administration, under the automatic detention policy, requires all Indonesian cocoa exports to be quarantined for a number of weeks before being released to buyers.
If the quality of the cocoa does not meet standards, the price of the cocoa is reduced by up to $150 per ton.
Indonesian cocoa beans, which are generally dried improperly, often contain insects, fungi, residuals.
"The detention policy has run since 1992. If losses reach $30 million annually, imagine the total losses from detention," he said.
America is Indonesia's biggest overseas market for cocoa, accounting for 55 percent of its total cocoa exports.
Siswoputranto said part of the reason why Indonesian cocoa exports had insects was because exporters shipped cocoa beans in used bags.
He said the association, in cooperation with related ministries, had promoted the use of new bags in exporting cocoa, but many exporters still used secondhand bags to cut overheads.
"The government has to be firmer and forbid the use of used bags," he said, adding that shipments of cocoa to the U.S. took 40 days, enough time for the cocoa to become infested with pests during the trip.
Siswoputranto said Indonesian cocoa, especially beans from Sulawesi, was graded as poor quality because most cocoa farmers were reluctant to process their cocoa.
"Farmers are unwilling to process their cocoa beans because they want to avoid additional costs, even though the price per ton of processed beans is between $100 and $200 higher," he said.
He said his office, in cooperation with other bodies, was trying to improve cocoa quality by introducing a cocoa processing system.
But the effort has faced difficulties due to efforts of buyers from the United States, who prefer buying cheaper raw beans, to discourage farmers from processing cocoa beans.
"They (American buyers) want Indonesia to be the source of the cheapest cocoa in the world. The move has lowered our foreign exchange earnings by around $40 million per year," he said.
He also said the association successfully revised the national standards for cocoa last year in an attempt to improve the quality of the country's cocoa exports.
The old standards still enabled traders to sell poor quality and unprocessed cocoa. Under the new standards, all producers should process their cocoa beans for both overseas and domestic markets.
"But such standards cannot be fully enforced due to lack of control.The government should impose tighter inspection on cocoa exports and not allow traders to export unprocessed cocoa," he said.
Siswoputranto said Indonesian cocoa production was expected to reach 330,000 tons in the 1998/1999 cocoa production year ending October, a 6 percent increase compared to 310,000 tons produced last production year. Exports are expected to reach 225,000 tons in the same period, the same level as last production year.
According to the association's data, Indonesia exported 227,316 tons of cocoa from January to September last year worth a total $350.44 million.
The United States was the largest importer, with 120,604 tons worth $187.23 million being procured from Indonesia, while Singapore imported 43,784 tons worth $63.76 million in the nine- month period.
Indonesia exports its cocoa beans to 20 countries, including the United States, European countries, Singapore, Thailand, Malaysia and China. Cocoa products are exported to North America, Europe, Japan, Hong Kong, Sri Lanka, Nigeria, Russia and Poland. (gis)