Indonesia's 2011 cocoa output seen flat

Cocoa output in Indonesia, the world's third-largest cocoa producer, will be flat this year as increased output from new planting offsets the impact of heavy rains, the Indonesian Cocoa Association said on Friday. Indonesia produced around 600,000 tonnes of cocoa last year, as extreme weather caused by La Nina hit the archipelago, and the association had forecast in January that heavy rains would cause output to be 5 percent lower in 2011.
"This year it will be about the same," Zulhefi Sikumbang, chairman of an association known as Askindo, told Reuters. Indonesia currently has 1.5 million hectares of cocoa plantations, mostly in Sulawesi island in eastern Indonesia, with an extra 10,000-20,000 hectares of additional production due this year, Sikumbang said.
The latest Askindo forecast is more positive than the London-based International Cocoa Organisation's (ICCO) recent forecast that Indonesia's cocoa output may fall by an estimated 6.5 percent to 500,000 tonnes due to a pest attack and disease.
Indonesian cocoa farmers have been battling the pod borer, worm-like creatures which eat cocoa beans, as well as the spread of fungal disease Vascular Streak Dieback. Sikumbang said Indonesian producers need to invest in new farming techniques and to improve output, but said they have little access to capital and interest rates for loans were too high. Around 90 percent of the cocoa farmers are smallholders.
Becoming a member of the ICCO, which Indonesia will officially join in October 2012, would benefit the country with access to training for farmers, to help them take advantage of cocoa prices that hit a 32-year peak this month. Sikumbang sees average prices in 2011 at $3,000 a tonne, versus $3,203 per tonne in New York on Thursday.
However, Indonesian cocoa beans are known for their poor quality - they are small and have a lot of waste, partly because they are not fermented, so need to be blended with other beans to produce cocoa powder. The main export markets are Malaysia, the United States and Brazil.