When Cocoa Downstreaming Outpaces the Plantations
The world is entering a new chapter in the cocoa industry. Demand for chocolate, functional foods, cosmetics, and various cocoa-based products continues to rise alongside the growth of the global middle class. Yet, behind the cup of chocolate enjoyed by millions every day, an increasingly fierce competition to control the global cocoa value chain is unfolding. In this competition, Indonesia faces a paradox: the cocoa processing industry is growing rapidly, but the upstream sector is under mounting pressure.
For years, Indonesia was known as one of the world’s largest cocoa producers. However, that position has begun to erode. Data from the Directorate General of Plantations shows national cocoa production declined from approximately 734,000 tonnes in 2019 to around 642,000 tonnes in 2023. This decline is not merely a statistical fluctuation but a signal that the foundation of the national cocoa industry is facing structural problems.
Ironically, this production decline is occurring while the capacity of the national cocoa processing industry continues to increase. Over the past two decades, the government has pushed a downstreaming policy so that exports are no longer dominated by raw cocoa beans, but rather by processed products such as cocoa liquor, cocoa butter, cocoa cake, and cocoa powder. This strategy has proven successful in increasing export added value and strengthening Indonesia’s position as a cocoa processing hub in Asia.
However, the success of downstreaming brings new challenges. As the domestic supply of cocoa beans continues to dwindle, some industries must meet their raw material needs through imports. This creates a paradox. Indonesia has successfully built a processing industry but has not yet fully guaranteed the availability of raw materials from its own plantations. If this situation persists, the downstream industry risks growing without strong upstream support.
The main problem actually lies at the plantation level. More than 95 percent of Indonesia’s cocoa is cultivated by smallholder farmers with relatively low productivity. Most trees are old, many use non-superior planting materials, and the adoption of cultivation technology remains limited. As a result, national productivity still lags behind other major producing countries.
This pressure is compounded because pest attacks remain a classic problem that has not been fully resolved. The Cocoa Pod Borer (Conopomorpha cramerella) remains the main pest reducing the quantity and quality of cocoa beans. Meanwhile, Vascular Streak Dieback (VSD) disease continues to be a serious threat in many production centres. Both problems not only reduce yields but also degrade bean quality, affecting export competitiveness.
As an academic in the field of agroecotechnology, I view that cocoa competitiveness is actually built long before the product enters the factory. Cocoa exports begin on the plantation. Healthy plants, the use of superior clones, proper nutrient management, integrated pest control, regular pruning, and good post-harvest handling are the main foundations for a sustainable cocoa industry. Downstreaming will not yield optimal added value if the quality of the raw material continues to decline.
On the other hand, global competition is tightening. Ecuador, for example, has successfully strengthened its position as a premium cocoa exporter through plantation rejuvenation programmes, the use of superior clones, and a focus on fine-flavour cocoa. The country has not only increased production but also built a quality reputation that commands a premium price in the international market. Meanwhile, Ivory Coast and Ghana still dominate world cocoa production, although in recent years they have faced pressures from climate change, plant diseases, and governance issues.
Interestingly, the difficulties experienced by Ghana and several West African countries actually open opportunities for Indonesia. Production disruptions due to cocoa swollen shoot virus disease, climate change, and illegal mining activities are causing global cocoa supplies to tighten. This condition has pushed international cocoa prices to levels not seen in recent decades. For Indonesia, this situation is a strategic opportunity to strengthen its position in the global market. However, this opportunity can only be seized if plantation productivity can be increased quickly.
The government has actually responded to this challenge through a programme of rehabilitation and rejuvenation of smallholder cocoa plantations. The plan to rejuvenate hundreds of thousands of hectares of cocoa plantations in the coming years is an important step to boost national productivity. However, plant rejuvenation should not be seen as a single solution. Its success depends heavily on the availability of superior planting materials, the quality of technical assistance, strengthened extension services, and farmers’ access to financing and markets.
Beyond rejuvenation, Indonesia needs to build a more robust cocoa innovation ecosystem. Universities, research institutions, industry, and the government must work in a single, integrated innovation chain. The development of pest- and disease-resistant varieties, cultivation technology adaptive to climate change, digital extension services, traceability systems, and fermentation and post-harvest technology must become national priorities. Without serious investment in science, Indonesia will struggle to compete with countries that have already built innovation-based cocoa industries.
Equally important is a shift in development orientation. So far, the success of the cocoa sector has often been measured by production volume or export value. Going forward, the measure of success must shift to increasing farmer productivity, quality, and income. A cocoa industry that grows without improving the welfare of farmers is not a sustainable industry.