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Silver Queen and Beng Beng are among the few locally produced
chocolate bars that have gained any kind of following with Indonesians,
while other local brands have ceased to exist or struggle simply to
survive.
As the world's third largest producer of cacao beans, it is ironic that
there are no Indonesian chocolate brands able to compete with
high-profile brands such as Cadbury of Britain or Hershey's of the
U.S., whose home countries do not have cacao plantations.
Local cocoa and chocolate associations blame the absence of incentives
for local farmers to produce fermented cocoa beans as the primary
reason behind the failure to develop the country's downstream chocolate
industry.
"The reason (for the underdeveloped local chocolate industry) is that
most beans harvested here are not fermented," chairman of the
Indonesian Cocoa and Chocolate Entrepreneurs Organization, Sonny
Satari, told The Jakarta Post recently.
"Farmers choose to sell their beans directly after harvest without
fermenting them first because the process requires more effort and
time, while the difference in price with unfermented beans is not that
high," he said.
In the process of making chocolate, cacao beans must first undergo
fermentation before drying in order to create the special aroma of
chocolate.
"Fermented cocoa beans have a higher added value in the market because
they have better quality," Sonny said.
Indonesia Cocoa Association (Askindo) chairman Halim Razak said the
difference between the price of fermented and non-fermented beans was
around Rp 1,500 (15 U.S. cents) per kilogram.
He said that of the total domestic cacao output of around 520,000 tons
last year, only 5 percent was fermented.
The limited availability of fermented beans has forced chocolate
companies to import cacao beans of good quality.
Askindo secretary-general Zulhefi Sikumbang said that besides the lack
of fermented beans, local chocolate producers, most of which make
semi-processed products, also faced problems in developing their brands.
Semi-processed products include cocoa butter and powder, while fully
processed products usually comprise chocolate bars and candy.
The domination by large multinational manufacturers of fully processed
chocolate products is another factor discouraging local producers from
competing head-to-head in the local chocolate bar or candy business.
"It's like committing suicide if semi-processed chocolate producers
jump directly into the manufacturing of fully processed products
because brand image still comes into play," said Zulhefi.
He added that the outdated machinery operated by local producers
hampered innovation in the industry.
Only a few locally made chocolate bars have managed to become favorites
among Indonesians. Most people here tend to eat chocolate manufactured
by international brands, including products made from cacao beans
imported from Indonesia.
Zulhefi predicted that in 2008 there would be no new domestic producers
of fully processed chocolate, partly because of low chocolate
consumption at home despite the abundant stock of cacao beans.
According to Askindo, Indonesia's chocolate consumption is just 0.6
kilograms per capita per year, far lower than 16 kilograms per capita
per year in Europe.
The association said the country's cocoa consumption reached 220,000
tons last year.
Zulhefi said that of the 14 chocolate companies in Indonesia, only
three make fully processed products.
Rully Junaidi, corporate secretary of PT Davomas Abadi, Indonesia's
second biggest chocolate company, said the firm would continue focusing
on semi-processed products due to high demand on the international
market.
Semi-processed products are also used as intermediaries for making
fully processed chocolate.
Rully said the firm exported cocoa butter and powder to countries in
Europe and the United States at US$6,000 per ton. That price is far
higher than the raw bean price of around $2,000 per ton.
According to Askindo, Indonesia is the third largest producer of cacao
beans in the world, with total production of around 560,000 tons a
year. It trails only the Ivory Coast, which produces around 1.3 million
tons, and Ghana with around 700,000 tons.
Askindo reported that Indonesia saw an 11.8 percent decrease in cacao
beans production in 2007 to 520,000 tons from 590,000 tons in 2006, due
to the late arrival of the rainy season which hurt the harvest.
It saw an even steeper decline of 38.7 percent in exports to around
300,000 tons last year from around 490,000 in 2006. The three main
destination countries for Indonesia's cacao beans were Malaysia, the
United States and Brazil.
Halim said the poor skills of farmers meant Indonesia's cacao yield was
a low 0.7 tons per hectare.
He said ideally Indonesia should produce 2.5 tons per hectare per year
from its almost one million hectares of cacao plantations.
"But there have been several training programs for farmers regarding
proper planting systems, so I hope this year's harvest can increase to
590,000 tons," Halim told the Post.
He said increasing cocoa production was important to take advantage of
the rising prices for the commodity.
Prices rose to $2,100 per ton this week from around $1,600 per ton in
January last year, as demand continues to outstrip supply, he said.
Global demand for cocoa was increasing by around 3.5 percent per annum
while supply was rising by only 2.5 percent, he said.
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