Jakarta, Oct 13 - Indonesia is pushing ahead with its plan to start replanting ageing cocoa trees in 2009 to boost productivity, despite falling cocoa prices and a global financial crisis, an agricultural ministry official said.
Indonesia's cocoa industry has been battling a disease, cocoa pod borer, a worm-like pest which feeds on cocoa beans, since the 1980s.
More recently, a deadly fungal disease, Vascular-Streak Dieback (VSD), has attacked thousands of cocoa trees in the main producing island of Sulawesi, dealing a further blow to the industry. VSD attacks leaves, branches and trunks.
The Indonesian Cocoa Association (Askindo) has projected the country's cocoa bean output is likely to fall to 480,000 tonnes this year from 520,000 tonnes in 2007 due to the disease.
"If we do not take action, productivity in the main producing regions, the four provinces in Sulawesi, will continue to slide," Achmad Mangga Barani, director general of plantation crops at the Agriculture Ministry, told Reuters in an interview.
There is still no cure for VSD but good quality seeds and better management of soil and trees could make cocoa trees more resilient to disease and more productive, he said.
Barani said commodity prices are unpredictable and current weakness should not delay the replanting programme, which is also aimed at improving beans quality.
Under the programme, about 70,000 hectares of cocoa plantations in Sulawesi, badly affected by VSD, will be replanted within three years.
Over the same period, the government will also rehabilitate cocoa trees over an area of 360,000 hectares, mostly in Sulawesi, to increase their productivity.
"Prices can rise and fall. It is normal. As long as production costs stay lower than prices, we can survive," he said.
U.S. cocoa futures buckled under pressure from sinking global markets to finish at a six-month low on Friday as panic selling mauled global markets amid the worst financial crisis in 80 years, dealers said. [nN10453541]
Benchmark December cocoa <CCZ8> finished down $86, or 3.8 percent, at $2,244 per tonne, the lowest settlement since April 2 for the spot month on a continuation chart.
Cocoa is among Indonesia's top three plantation commodities by export value. In 2007, exports of cocoa beans and products stood at nearly $1.0 billion, government data shows.
The federal government will spend 2.5 trillion rupiah ($255 million) on the programme to rehabilitate the cocoa industry, while provincial and district governments will spend a combined 575 billion rupiah.
Barani said farmers whose cocoa trees will be cut down will receive cash aid, plus rice for one year. They will also get corn seeds that they can grow while waiting for their new cocoa trees to start producing beans, normally in about three years.