Indonesia plans to develop cocoa, coconut sectors using palm oil fund
JAKARTA, July 10 (Reuters) -Indonesia plans to use funds from its palm oil export levy to finance development of the country's cocoa and coconut sectors, the country's trade minister said on Wednesday.
The world's biggest palm oil exporter has since 2015 collected a levy to fund its palm oil biodiesel mandate, smallholder replanting programme and palm oil research.
"Initially we planned for separate agencies for cocoa and coconut, but it has been decided to merge them with BPDPKS," Trade Minister Zulkifli Hasan told Reuters. BPDPKS refers to the country's agency in charge of collecting a palm oil export levy and disbursing the fund.
"It will be a cross subsidy, for cocoa and coconut development, nursery and seedlings from (the crude palm oil levy)," he said.
Indonesia currently imposed a 0-15% export tax on cocoa beans, which the government will assign to BPDPKS to collect and manage, coordinating minister of economics Airlangga Hartarto said.
Zulkifli said the plans would be implemented soon and the agency has sufficient money so there was no need to impose an additional levy on cocoa and coconut producers.
In a statement, the industry ministry said the plan was needed to ensure security of supply, with cocoa output in the 2015-2023 period shrinking by 8.3% annually.
Indonesia was the world's fourth-biggest exporter of cocoa products last year, though had to import 62% of the cocoa beans needed, the ministry said.
Indonesia's smallholder palm oil group APKASINDO urged the government to reconsider its plan and said there was not yet enough funding for palm oil farmers.
Indonesia plans to double subsidies for palm oil replanting to 60 million rupiah ($3,695.72) per hectare from May, yet in recent budget hearing for 2025 the agency was still allocating 30 million rupiah per hectare budget for the programme.
The replanting programme aimed at improving the yield of palm oil has been struggling due to administrative hurdles and farmer concerns over loss of income while trees mature.
The Indonesian palm oil association (GAPKI) said output in the past five years had stagnated, and accelerating replanting among smallholders is urgent since they account for more than 40% of the country's palm oil plantations.
"We need to accelerate replanting, especially for smallholders. If the fund is used for other commodities, will BPDPKS funds be sufficient?" GAPKI chairman Eddy Martono said.
($1 = 16,235.0000 rupiah)
Reporting by Bernadette Christina
Editing by Ed Davies
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