Cocoa

Cocoa beans come in three main varieties, namely: Forastero, Criollo and Trinitario. Forastero is the most widely used variety of cocoa, contributing around 90 percent to global cocoa production. Although the quality of Forastero is inferior to the other cocoa types, its beans are the biggest and much more resistant to diseases. The Criollo variety is considered the highest quality cocoa bean but it has lower yields than those of Forastero, while also being less resistant to diseases.

Indonesia in Global Context

Indonesia ranks among the world’s top cocoa bean producing countries. Currently, it is the world’s seventh-biggest cocoa bean producer. However, table 1 does show that Indonesia’s cocoa bean production is rather insignificant when compared to top producer Ivory Coast.

Table 1; Biggest Cocoa Bean Producing Countries (in 1,000 Metric Tons):

Country	2020-2021	2021-2022	2022-2023	2023-2024*
Yvory Coast	2,248	2,121	2,241	1,800
Ghana	1,047	683	654	580
Ecuador	365	365	354	430
Cameroon	292	295	290	300
Nigeria	290	280	280	270
Brazil	200	220	220	220
Indonesia	170	180	180	160

^{Source: www.statista.com}

The International Cocoa Organization (ICCO), an inter-governmental organization established in 1973 under the auspices of the United Nations (UN), estimates that global cocoa production reached 4,382,000 tons in the 2023-2024 marketing year. And considering Indonesia’s cocoa bean production is estimated at 160,000 tons over the same period, it means Indonesia contributes a modest 3.65 percent to global cocoa production.

This is insignificant compared to Ivory Coast which contributes 41.1 percent to the total. And so, when supply problems occur in Ivory Coast it can quickly lead to rising global cocoa prices.

Global Cocoa Bean Price

Chart A shows that since late-2023 global cocoa prices have been rising structurally and rapidly, touching a series of all-time record highs. As a consequence, confectionery prices around the world, ranging from candy bars to hot chocolate, are heavily affected.

Prices are high amid concern over adverse weather conditions and cocoa bean supply tightness in West Africa, which accounts for more than 70 percent of global cocoa production.

A more structural problem is that most cacao bean plantations are run by (poor) smallholder farmers who lack the financial means to engage in proper maintenance as well as in investment in the rejuvenation of their cacao trees.

Chart A; Cocoa Futures in 2014-2024 (in USD per Ton):

These concerns combined, made investors nervous too. Hedge funds (which is a class of investors that use privately pooled money to make speculative bets) began pulling back from trading cocoa futures in the middle of 2023 as price swings in the market were raising their cost of trading, and thus making it harder for them to make profits. The departure of hedge funds and other speculators, whose share of the market peaked at 36 percent in May 2023, caused liquidity in cocoa futures to drop, thereby making it harder to buy and sell, stoking volatility to record highs, and fueling the price spike further.

Cocoa Bean Production in Indonesia

Cocoa is a leading agricultural commodity that provides a livelihood for millions of Indonesian farmers and forms an important foreign exchange earner for the country.

What is quite worrying is that national cocoa bean production of Indonesia has been showing a structural decline since 2018 (see table 2).

Table 2; Cocoa Bean Production in Indonesia:

	2019	2020	2021	2022	2023
Cocoa Bean Production (in tons)	734,795	720,660	688,210	650,612	632,117

	2005	2015	2016	2017	2018
Cocoa Bean Production (in tons)	748,828	593,331	658,399	585,246	767,280

^{Source: Badan Pusat Statistik (BPS)}

It is more interesting to divide Indonesia’s national cocoa production statistics into three producer categories: (1) big government estates, (2) big private estates, and (3) smallholders as this reveals important information about Indonesia’s cocoa sector. Table 3 shows that smallholders account for 99.88 percent of national cocoa bean production. This implies that production at the big government and big private estates play an insignificant role.

Table 3; Cocoa Bean Production in Indonesia per Producer Category (in tons):

Year	Big Government Cocoa Estates	Big Private Cocoa Estates	Smallholders	Total
2003	32,075	31,864	634,877	698,816
2010	34,740	30,407	772,771	837,918
2015	11,616	19,369	562,346	593,331
2020	976	3,084	716,601	720,660
2021	171	1,596	686,443	688,210
2022	53	1,165	649,394	650,612
2023	27	740	631,350	632,117

^{Source: Badan Pusat Statistik (BPS)}

Meanwhile, table 3 also shows that cocoa production at big government and private estates plummeted tremendously over the past two decades (despite the fact that their contribution was already quite modest in 2003). At the same time, production at the smallholder cocoa estates has remained rather stable between 2003 and 2023, although in between those two years we see quite some volatility in production.

Part of the trends reflected in table 3 can be explained by the trends we see in table 4. For example, the strong decline in cocoa bean production at the big government and private estates is highly related to the decline in their cocoa plantation sizes.

Table 4; Cocoa Bean Plantation Size in Indonesia per Producer Category (hectares):

Year	Big Government Cocoa Estates	Big Private Cocoa Estates	Smallholders	Total
2003	49,913	53,211	861,099	964,223
2010	48,935	43,268	1,558,153	1,650,356
2015	15,171	26,776	1,667,337	1,709,284
2020	4,809	11,558	1,492,588	1,508,955
2021	674	8,218	1,451,504	1,460,396
2022	264	4,995	1,415,750	1,421,009
2023	228	4,776	1,388,386	1,393,390

^{Source: Badan Pusat Statistik (BPS)}

Indonesia's main locations of cocoa production are:

1. Sulawesi
2. North Sumatra
3. West Java
4. Papua
5. East Kalimantan

[this page is being updated]

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.