JAKARTA, April 12, 2011 - Indonesia's Sulawesi cocoa beans prices fell this week on expectations of a drop in New York prices and a hefty export tax applied for April shipments, an industry official said.
Sulawesi fair-average cocoa beans were offered at around 22,000 rupiah ($2.5) per kg this week, down from an average of 27,000 rupiah per kg in March, said Dakhri Sanusi, secretary general of the Indonesian Cocoa Association.
"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," said Sanusi. 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 a tonne, which means exporters must pay $480.5 a tonne in tax compared to $320.00 in March.
New York's July cocoa contract on ICE Futures U.S. climbed $43 to finish at $3,028 per tonne on Monday even though Ivory Coast's defeated leader, Laurent Gbagbo, was arrested and the European Union lifted sanctions on the country's two main ports, indicating a resumption of shipments was near.
But ICE futures have fallen by a fifth since hitting a 32-year high at $3,775 a tonne 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 locally grown cocoa beans last April in an effort to encourage the retention of cocoa beans for local refining in order to gain a premium in international markets.
But farmers have seen their income fall because middlemen cut farmgate prices to compensate for the export tax. The higher the export tax, the more the middlemen will cut farmgate prices.
Falling income would discourage farmers from tending their crop, which may cut production in the long term, analysts have said.
Indonesian cocoa output is seen flat this year at 600,000 tonnes, as higher production from new planting offsets the impact of heavy rain, the Indonesian Cocoa Association, or 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, a key port for cocoa exports on Sulawesi island, Indonesia'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 a tonne under ICE July or $2,524 a tonne for April shipments.
By comparison, local grinders offered to buy beans at a smaller discount of $300 a tonne or around $2,700 a tonne.
($1 = 8,653.5 Indonesian Rupiahs)
Source : reuters
