Jakarta, Sept 15 - Indonesia's cocoa output may drop to a "critical level" in the next three-to-four years due to pests, disease, and poor farming practices, an official said.
It could fall further if farmers then turn to more profitable crops, the official added.
"If the situation continues as it is now -- meaning that we do not take concrete actions to overcome it -- production will keep falling to 380,000-400,000 tonnes," Halim Abdul Razak, chairman of the Indonesian Cocoa Association (Askindo), told reporters.
"That is a critical level," he said.
The industry expects Indonesia's cocoa output to fall to 480,000 tonnes in 2008, from 530,000 tonnes in 2007, due to the recent spread of a fungal disease called vascular-streak dieback (VSD).
But Razak said if output fell to 380,000-400,000 tonnes, that could prompt cocoa farmers to switch to crops which can be harvested more frequently every year and are cheaper to grow, such as corn, which would result in even lower annual cocoa production.
"If more cocoa farmers switch to corn, production can fall to as low as 100,000 tonnes," he said.
Indonesia, the world's third-biggest cocoa bean producer, sells cocoa to grinders in Asia, the United States, and Brazil.
If production fell as low as 100,000 tonnes, farmers would only make 8 million rupiah ($848) a year per hectare, compared to 28 million rupiah a year per hectare for corn, Razak said. Cocoa prices at the New York Board of Trade have surged around 25 percent since the end of 2007, on fund buying and concerns over output in producing countries.
The benchmark December cocoa contract finished down $54 at $2,540 per tonne, the weakest settlement for the second-position contract since April 10 on a continuation chart.
Indonesia's cocoa industry has been battling a disease, cocoa pod borer, since the 1980s. Pod borer is a worm-like pest which feeds on cocoa beans. The spread of VSD -- which attacks leaves, branches and trunks -- has dealt a further blow to the industry.
Razak said farmers needed training on how to manage cocoa trees and deal with diseases in order to increase productivity.
"We have proved that in plantations where the association has placed its field facilitators, production did not really fall," he told reporters.
Razak said good seeds and fertiliser are also key to helping the farmers.
Indonesia has about 1 million hectares of cocoa trees, of which about 600,000 to 700,000 hectares are located in Sulawesi island. The VSD has spread to about 60 percent of the plantations in Sulawesi, Razak said.