Indonesia's cocoa industry, the third largest in the world, wants the government to force planters to produce only high quality beans to make more inroads into world markets, a key industry official said on Wednesday.
A law should be passed by April next year that all beans that come on the market are fermented to meet the needs of global factories making raw materials for chocolate, said Zulkefli Sikumbang, the head of the Indonesian Cocoa Association.
Indonesia ranks after Ivory Coast and Ghana in world cocoa production. But its beans do not have a reputation for quality due to their non-fermented state as well as disease.
Fermenting merely involves putting cocoa beans from freshly harvested fruits into gunny sacks or boxes and leaving them to dry for about five days.
It is a crucial process for creating raw materials such as cocoa butter, powder and liquor that go into end-products like chocolate, confectionery, beverages and ice cream.
Indonesian farmers prefer to sell their beans immediately after harvest for fear that prices may tumble within the time of fermenting. Cocoa is a volatile commodity.
"For 16 years, the character of our farmers has not changed," Sikumbang, who has spent 15 years in the cocoa business, told Reuters after attending an industry conference in Malaysia this week. "I don't think we can let this go on."
"We are going to push the government to pass a regulation that there should be no more unfermented beans in the trade. This is important for the reputation of Indonesia's cocoa industry and will ultimately benefit the farmers."
Approval is almost certain, said Sikumbang, if Jakarta could be made to realise the additional tens of millions of dollars it could earn a year from cocoa with the shift.
In Indonesia, non-fermented beans are mostly turned into cocoa cake - the lowest in the value chain of raw cocoa products. To make butter, powder and liquor, fermented beans have to be mixed with the cake during grinding.
"There's no market for cocoa cake now," Sikumbang said. "We have 20,000 tonnes of that lying all around Indonesia. That's money locked up in warehouses."
Cocoa cake fetches about $400 a tonne. Powder, used in confectionery, beverages and ice cream, is priced at about $1,000 a tonne. Butter, a key ingredient for chocolate, is going at around $3,500 a tonne. By selling fermented beans alone, growers could make $125 more for a tonne, Sikumbang said.
Trade statistic show Indonesia exported over 300,000 tonnes of cocoa beans for the first 11 months of this year for around $445 million. Had the beans been fermented, it would have made about $37 million more. During the same period, the country imported about 50,000 tonnes of fermented beans from West African producers for around $80 million - money it could have saved.
Sikumbang said fermenting could also be one way for Indonesia to catch up with Malaysia's sophisticated cocoa grinding industry, which supplied raw materials to chocolate makers such as Nestle, Mars, Cadbury and Hershey using selected Indonesian beans.