September 18, 2013 / 11:03 AM / 4 years ago

Indonesia needs to lower cocoa import duties -deputy minister

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JAKARTA, Sept 18 (Reuters) - Indonesia needs to lower its cocoa bean import duties to help ward off a possible shortage of the raw chocolate ingredient in 2015 after a successful drive to increase domestic grinding capacity, the country's deputy trade minister said on Wednesday.

Cocoa grindings in Indonesia, the third-largest cocoa bean producer, are expected to rise 25 percent to 500,000 tonnes next year, while bean output is expected at about the same level.

Grinding capacity, meanwhile, is already more than annual bean production and is expected to continue to rise, according to the Indonesian Cocoa Industry Association.

"Given that cocoa bean demand for domestic processing is increasing significantly, we have to review our current import policy," said Bayu Krisnamurthi, deputy trade minister told reporters at an industry event on Wednesday.

Imports are currently subject to a 5 percent duty and cocoa product imports are untaxed, and this should be reversed, said Krisnamurthi, who was unable to give any details about when or how such a tax change would be implemented.

But he warned that Indonesia may see a cocoa bean deficit in 2015 due to rising demand from the local processing industry.

As part of an initiative to encourage local grinding and to feed a growing regional appetite for chocolate treats, Indonesia instituted a monthly export tax for cocoa beans of up to 15 percent in April 2010.

That drew investment into processing facilities by such firms as Cargill and Barry Callebaut and now the grinding capacity is more than the cocoa supply.

Cocoa bean imports into Indonesia are relatively small, but they are seen rising to about 40,000 tonnes this year, and then almost doubling from there to 75,000 tonnes next year, according to industry estimates.

That would still put the beans available from local output and imports far below next year's processing capacity of 740,000 tonnes as forecast by the Indonesian Cocoa Industry Association.

Grinding capacity is forecast to hit an even higher 950,000 tonnes by 2015, Faiz Achmad, director of food and fisheries at the Industry Ministry said, although government figures often differ from industry and international estimates.

On the supply side, the cocoa industry in Indonesia is looking to triple output of the bean by 2020. (Reporting by Yayat Supriatna; Writing by Michael Taylor; Editing by Tom Hogue)

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