'U.S. 'automatic detention' hits local cocoa exporters
'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)