Indonesia is to seal its place as Asia's top cocoa country
by overtaking Malaysia in processing volumes this season, having long held
first place in regional production.
Indonesian processors are to crush 295,000 tonnes of beans
in 2013-14, which started in October, the International Cocoa Organization
The figure represents a 20,000-tonne upgrade from the
organisation's previous forecast, in February, besides being a jump of 16% year
And it puts Indonesia on course to overtake Malaysia, for
which the grindings volume estimate was cut by 15,000 tonnes to 275,000 tonnes,
a drop of 6% year on year.
Switch to origin
Indonesia's growth as a major cocoa grinding centre reflects
in part a switch by processors to handling more volumes in bean-producing
countries themselves - saving on transport and labour costs, and meeting growing
developing country demand - rather than focusing on Western consumption areas as
in the past.
The likes of Switzerland's Barry Callebaut, US-based Cargill and Guan Chong from Malaysia itself have set up Indonesian cocoa processing operations, with Singapore's Olam International last month unveiling plans for its own plant.
Grindings at origin countries will rise by 72,000 tonnes to 1.835m
tonnes, the ICCO said.
Indonesia is the third-ranked cocoa producing country, with
output expected at 425,000 tonnes in 2013-14, well ahead of Malaysia's 7,000
However, Indonesia has in cocoa, as in other commodities,
used taxation as a tool to support processing in the country, introducing in
2010 a monthly export tax on shipments of the bean itself.
The country also taxes shipments of crude palm oil more than
refined product, and its decision this year to impose a ban on exports of
nickel ore has sent prices of the metal to two-year highs.
Indonesian exports of finished cocoa will overtake those of
raw beans this season, the ICCO said.
The country may also ban a tax on imports to help
processors, which are running well below their capacity, estimated at about
600,000 tonnes a year.
"Local cocoa bean supplies continue to constrain the country's
booming grindings sector," the ICCO said, adding that Indonesia was expected in
2013-14 to prove "the most dynamic countries engaging in processing activity".
Conversely, "intense competition" from Indonesia was seen
taking "a toll" on Malaysia's cocoa processing fortunes.
Asia will overall grind 871,000 tonnes of cocoa in 2013-14,
a rise of some 2% year on year, according to ICCO forecasts.