War has small impact on Indonesia's cocoa exports

War has small impact on Indonesia's cocoa exports

The Jakarta Post, Jakarta

The Iraq war has thus far had no significant impact on the
country's cocoa exports as the global demand for the commodity
remains high due to a shortage of supply, the Indonesian Cacao
Association (Askindo) said.

The association's executive director, Zulhefy Sikumbang, told
The Jakarta Post on Wednesday that the price for the commodity
slipped to US$1.9 per kilogram from $2.2 per kilogram prior to
the start of the war.

"The decrease in price is not significant. We are all right,
as long as it remains above the production cost of $1 per
kilogram," he said.

He predicted the price would hover at a favorable range above
the production cost given the supply shortage. The world demand
for cocoa currently reaches 3 million tons a year, while only 2.4
million tons are supplied a year.

The cocoa supply started dropping last year due to the civil
war in the Ivory Coast, which was the world's largest cocoa
producer until the war. Following the war, Indonesia has become
the world's single largest producer of cocoa.

"Our primary markets for cocoa are the U.S. and Southeast
Asia, while we export a small amount to Europe. Therefore, the
war has not affected our exports much," he said.

However, in the long term, if the war is prolonged and has
economic repercussions on the U.S., the cocoa price would be
affected significantly, he said.

Last year, Indonesia produced 450,000 tons of cocoa and
supplied 15 percent of the world's demand. This year, Zulhefy
said, the output was expected to drop to 400,000 tons due to a
long drought and pests.