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Sulawesi Cocoa Prices Fall on Futures and High Export Tax
Fitri Wulandari | April 12, 2011

Workers taking a break at a cocoa bean warehouse in Makassar. The price of the beans fell sharply this week. (Reuters Photo/Yusuf Ahmad) Workers taking a break at a cocoa bean warehouse in Makassar. The price of the beans fell sharply this week. (Reuters Photo/Yusuf Ahmad)
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Sulawesi cocoa bean prices fell this week on expectations of a drop in New York prices and a hefty export tax to be applied for April shipments, an industry official said.

Sulawesi fair-average cocoa beans were offered at around Rp 22,000 ($2.55) per kilogram this week, down from an average of Rp 27,000 per kilogram in March, said Dakhri Sanusi, secretary general of the Indonesian Cocoa Association (Askindo).

“The government increase in export tax in April to 15 percent at a time when New York cocoa prices are expected to fall on resumption of cocoa shipments from Ivory Coast is a piece of bad luck for local farmers,” Dakhri said.

The Trade Ministry has raised the export tax on cocoa beans to 15 percent in April from 10 percent in March and set the base export price — used to calculate the tax — at $3,203 per ton, which means exporters must pay $480.50 per ton in tax compared to $320 in March.

New York’s July cocoa contract on ICE Futures US climbed $43 to finish at $3,028 per ton on Monday even though Ivory Coast’s defeated leader, Laurent Gbagbo, was arrested and the European Union lifted sanctions on the country, indicating a resumption of shipments was near.

ICE futures have fallen by a fifth since hitting a 32-year high at $3,775 per ton a month ago on expectations that shipments from Ivory Coast could resume soon.

The Indonesian government slapped an export tax for the first time on cocoa beans in April last year in an effort to encourage the retention of cocoa beans for local refining in order to gain a premium in international markets.

However, farmers have seen their incomes fall because middlemen cut farmgate prices to compensate for the export tax. Falling incomes would discourage farmers from tending their crops, which may cut long-term production, analysts have said.

Indonesian cocoa output has been flat this year at 600,000 tons as higher production from new planting offset the impact of heavy rain, Askindo said. Exporters are meeting fierce competition from local grinders, who now offer higher prices to farmers because grinders are not subject to any export tax.

“We always have competition with local grinders, but now it is becoming even more difficult,” said a trader in Makassar, the country’s main source of cocoa beans. “Their prices are extremely competitive.”

Sulawesi cocoa beans, which are of poor quality and unfermented, were offered at a discount of $500 per ton under ICE July or $2,524 per ton for April shipments. By comparison, local grinders offered to buy beans at a smaller discount of $300 per ton or around $2,700 per ton.

 

Reuters