Indonesian Conference To Push For Sustainable Cocoa Production -Association

The need for local producers to adopt sustainable production practices and to obtain international certification for their efforts will likely be a key theme at the two-day cocoa conference starting Thursday on the resort island of Bali, the Indonesian Cocoa Association said.

The country has about 1.5 million hectares of land under cocoa cultivation, of which the output on only 50,000 hectares is certified as sustainably produced, Zulhefi Sikumbang, chairman of the association known as Askindo, host of the Fifth Indonesian International Cocoa Conference, said by phone late Monday.

The need for certification is gaining momentum, as more consumers are becoming aware of and sensitive to environmental and labour concerns, both in Western countries and in Asia, he said.

Major global chocolate makers such as Mars Inc., Nestle SA (NSRGY), Hershey Co. (HSY), and Cadbury (CDSCY) are among those who are already promoting the use of cocoa certified under labels such as the Rainforest Alliance, Fairtrade and UTZ Certified. Mars has committed to switch all products to certified and sustainably produced cocoa by 2020.

The process has become an imperative for a country that is aiming to raise output to more than 1 million metric tons in the next five-10 years, Sikumbang said.

"We're on our way to achieving more certification," he said.

The International Cocoa Organization expects 2010-11 cocoa output in Indonesia, the world's third-largest producer, at 510,000 tons. However, Sikumbang said that the country's production is likely to be well below the recent ICCO estimates because excessive rainfall in Sulawesi, a major cocoa growing province, has damaged the beans.

Despite the fall expected in Indonesian output, the global balance will likely be in a surplus this year due to higher cocoa production in the top two producers--Ivory Coast and Ghana.

ICCO has forecast a swing to a global cocoa surplus in the crop year ending in September to 187,000 metric tons from an estimated deficit of 89,000 tons in the previous crop year, due mostly to good weather conditions in the major cocoa producing countries.

Sikumbang said the surplus may not be sustained in the future, but his comments indicated that the balance may be less of a concern for Indonesian producers seeking to raise production than to ensure that they don't lose access to major markets to other producers who have taken the necessary steps.

Under the German UTZ Certified program, a total of 40,119 tons of cocoa were certified in 2010, up more than eight-fold from 2009, UTZ said in a press release.

Archer Daniels Midland Co. (ADM), a global supplier of cocoa and chocolate ingredients, said last month that it will expand its program, Socially and Environmentally Responsible Agricultural Practices, into Lambandia, South East Sulawesi.

The SERAP program, developed in Ivory Coast in 205-2206, provides training and financial incentives to help cocoa farmers implement sustainable practices. It has since provided more than US$6 million in premiums to cooperatives and their members, the company said.

-By Surabhi Choudhary, Dow Jones Newswires; +65 6415 4086; surabhi.choudhary@dowjones.com

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