Who’s Driving The Global Choco-industrial Complex? Indonesia is in the top 3 !
Chocolate is made from cocoa beans, which, logically, grow on cacao trees. Historians believe that chocolate consumption originated in the Pre-Columbian societies of Central America at least five millennia ago. Today, however, the production and consumption of this sweet treat is a complex world trade network. Unsurprisingly, most of the top 10 cocoa-producing countries come from warm, wet climates similar to where the bean originated. However, nations across four continents make the top 10, and the largest contingent does not comes from the Americas, with four of the top five nations found in Africa.
So who’s driving the global choco-industrial complex? Indonesia is in the top 3 Cocoa Producing Countrries.
Indonesia grew almost no cocoa before the early 1980s, when production took off like a rocket. Now it is the world’s third leading producer of cocoa beans, growing 740,500 tonnes in 2012, according to the FAO.
One main concern for the Indonesian cocoa crop is the pod borer insect, which has damaged the industry’s growth recently. Until the early 2000s, Indonesia’s cocoa industry had been on a straight upward track, but it has since leveled out. Like Ghana and the Ivory Coast, most of Indonesia’s cocoa crop comes from smallholder farms, which the Overseas Development Institute claims is a much more efficient method than large corporate farms.
The World Cocoa Foundation stated that annual increase in global demand for cocoa has been three percent per year, for the past hundred years. It is estimated that global cocoa demand will increase by similar levels in the coming years and, as such, puts Indonesia in a potentially fortunate position as the country is one of the largest producers and exporters of this commodity. The country's current primary competitive advantage lies in its ability to supply large quantities of cheap (lower quality) cocoa beans.
Throughout its history, the majority of Indonesia's cocoa production has been exported in the form of raw cocoa beans. This has encouraged the government to stimulate national value-added processing industries. One important measure for this was the imposing of an export tax on raw cocoa beans in 2010 (decree No. 67/2010), amounting between five and 15 percent depending on world price fluctuations. Previously, export taxes only applied to processed beans. This new export tax is an incentive for establishing more domestic fermenting industries as well as a signal for processing firms to increase their performance as there have been reports that some cocoa bean processing firms are not operating at full capacity (this could be attributed to various factors.
The main Indonesian cocoa producing region is the island of Sulawesi which accounts for around 75 percent of Indonesia's total cocoa production. As Indonesia’s cocoa productivity per hectare has been lagging behind that of other cocoa-producing countries, the government started a five-year cocoa revitalization program in 2009 to boost production through intensification, rehabilitation and rejuvenation activities, covering a total area of 450 thousand hectares. Factors that are hampering progress in the cocoa industry are aging trees (planted in the 1980s), insufficient improved planting materials and little farm maintenance. More investment in this sector is needed to reach the government's one million tonnes annual production target by 2013-2014.
In terms of export, cocoa forms Indonesia's fourth largest foreign exchange earning from the agriculture sector (after palm oil, rubber, and coconut)