Indonesian cocoa grinders to expand, consume more beans

Indonesian cocoa grinders expect to process 280,000 tonnes of cocoa beans this year, up about 55 percent from last year, as grinders expand capacity to benefit from a recent tax change on cocoa beans exports, an industry official said on Tuesday. The government slapped an export tax on cocoa beans for the first time last April in an effort to encourage the retention of beans for local refining and possibly gain a premium in international markets.
Three local grinders plan to expand capacity and a Malaysian firm plans to set up a new grinding plant on Batam island, off Sumatra, because they can now get more beans as a result of the tax, said Piter Jasman, chairman of the Indonesian Cocoa Industry Association (AIKI). Firms that will expand capacity include local firm Bumitangerang Mesindotama and Singapore-based Petra Foods Limited which already has a grinding unit in West Java, said Jasman.
Malaysia's Guan Chong plans to build a new cocoa grinder, eventually with maximum capacity of 150,000 tonnes, on Batam. "Some existing grinders that had been idle will also resume activity," Jasman told Reuters in a phone interview. "We forecast local grinders may process 280,000 tonnes this year and it will increase in the future because firms are still completing expansion," he said.
Grinders in Indonesia, the world's third-biggest cocoa producer after Ivory Coast and Ghana, processed about 180,000 tonnes of cocoa beans last year, said Jasman who is also president commissioner for PT Bumitangerang, the country's second-largest grinder. That was well below total grinding capacity of 345,000 tonnes.
Local grinders are now offering higher prices to farmers because they are not subject to any export tax, traders said. With expanding local grinders, Jasman said Indonesia had scope to boost exports of higher-value cocoa products such as cocoa butter to the United States. "We should export more cocoa products instead of cocoa beans to get additional value," he said.
Indonesia's cocoa industry is looking to grab a bigger slice of the US market due to unrest in top producer Ivory Coast but it needs more investment to boost quality and output. Indonesia exported 92,499 tonnes of cocoa products including cocoa butter, used in chocolate bars, and cocoa powder, used in chocolate drinks and biscuits, in January-November 2010.
That was already higher than total of 81,993 tonnes in the full year 2009, when the United States was the top buyer of Indonesian cocoa butter while the Philippines and China were the top buyers of powder, data from the state statistics agency shows.