Barry Callebaut Enters Joint Venture in Indonesia

The news comes as a new Rabobank report finds that Indonesia has emerged as one of the leading Asian countries for economic growth post-global financial crisis and looks set to lead the Southeast Asian growth story for the next decade.

Nov 18 2011 --- Barry Callebaut AG, the world’s leading manufacturer of high-quality cocoa and chocolate products, and P.T. Comextra Majora, a diversified soft commodities trader and a leading exporter of cocoa from Indonesia, have entered into a joint venture and will form a new company together: P.T. Barry Callebaut Comextra Indonesia1. The new company will be headquartered in Makassar (Sulawesi) in Indonesia, the world’s third largest cocoa producing country. Barry Callebaut will own 60%, and P.T. Comextra Majora 40%.

As part of the joint venture, a new cocoa processing facility will be built in Makassar, Sulawesi/Indonesia, with an initial grinding capacity of 28,000 tonnes. Operations will start in early 2013. The new company, P.T. Barry Callebaut Comextra Indonesia, is investing CHF 30 million (EUR 24 million / USD 33 million) to build this facility. Barry Callebaut will be responsible for running the factory and will purchase the products manufactured, whereas P.T. Comextra Majora will use its 20 years of experience in cocoa sourcing to supply the factory with cocoa beans under a long-term supply agreement. Jimmy Wisan, CEO of P.T. Comextra Majora, will serve as President Commissioner of the new company.

The new joint venture will allow Barry Callebaut to increase its sustainable sourcing activities in Indonesia through P.T. Comextra’s strong on-the-ground presence and relationships with local cocoa farmers.

Juergen Steinemann, CEO of Barry Callebaut, said: “After announcing our fourth strategic pillar Sustainable Cocoa a week ago, I am happy to deliver already today a first proof of action that we are diversifying our cocoa sourcing and processing activities. Sustainable Cocoa will ensure a better income for the cocoa farmers and secure sufficient cocoa supplies for our future growth ambitions, scaling up our certified cocoa volumes at the same time. This new joint venture with P.T. Comextra Majora forms part of this program.”

Steven Retzlaff, President Global Sourcing & Cocoa of Barry Callebaut, added: “The joint venture with P.T. Comextra Majora deepens an already proven and long-standing business relationship. The new cocoa processing factory in Indonesia will help Barry Callebaut to satisfy the increasing demand for cocoa products in the fast-growing Asia-Pacific region as well as strengthen our sustainable sourcing activities on the ground.”

Jimmy Wisan, CEO of P.T. Comextra Majora, commented: “We are very pleased to be entering into this joint venture with Barry Callebaut, who we have worked with successfully for more than ten years. This is a natural extension of our business activities and it will nicely leverage our on-the-ground bean sourcing network as well as our business experience and the relationships we have developed in and outside the food industry during decades in Indonesia.”

P.T. Comextra Majora is a leading exporter of cocoa and cashew nuts from Sulawesi, Indonesia, is a long-standing trusted business partner of Barry Callebaut and has a proven track record as a premier Indonesian bean exporter. P.T. Comextra Majora has been the main supplier of Indonesian cocoa beans to Barry Callebaut for many years. Jimmy Wisan, CEO of P.T. Comextra Majora, will serve as President Commissioner of the new company, P.T. Barry Callebaut Comextra Indonesia.

The news comes as a new Rabobank report finds that Indonesia has emerged as one of the leading Asian countries for economic growth post-global financial crisis and looks set to lead the Southeast Asian growth story for the next decade.

The future growth in the Indonesian food and agribusiness sector will be driven by resilient domestic demand for affordable food products from the middle and lower income segments, and exports of agricultural products to growing Asian economies.
 
Key agricultural products will continue to support Indonesia’s economic growth
 
•  Palm oil will continue to be a leading industry for Indonesia’s agribusiness earnings given the country’s position as the largest global producer
•  Rubber demand will be driven by demand for tires from China and India, where vehicle demand appears to be resilient
•  Indonesia’s domestic coffee industry is expected to register robust growth due to a strong investment in marketing and communications, as well as new product developments.
•  With production growth of Indonesian cocoa higher than that of world production, there is a big opportunity for the Indonesian cocoa industry to capture a bigger share of the world market.
•  The growth potential of the Indonesia sugar industry has attracted interest from offshore investors and will continue to attract investment in the future.
•  Growth in the sugar industry coupled with growth of plantation and other field crops will mean that the fertiliser industry will continue to experience positive growth.
• Poultry, being the cheaper source of animal protein, will continue to witness strong growth whereas beef, driven by demand from higher income groups, is expected to witness good demand.
•  With beef consumption expected to rise at a time when the government quota system is in place, the industry would require a focused effort and government support to fill the deficit through domestic production, otherwise supplies would not suffice to meet the demand and imports will increase further from current levels.
•  The consumption of corn and soymeal in Indonesia will remain strong due to rising meat consumption in the country, which will necessitate imports of feed grains to meet demand from domestic feed mills.
•  Indonesia’s ambition to achieve self-sufficiency in sugar and beef industries will result in more investment in plantations, mills, breeding farms and feedlots.
 
“Being a net producer of key commodities such as palm oil, rubber, cocoa and coffee, Indonesia is well positioned as a key and growing Asian food and agribusiness economy”, says Pawan Kumar, lead author of the report at Rabobank’s Food & Agribusiness Research and Advisory department. “The growth in the Indonesian food and agribusiness will be driven by domestic demand for affordable food products from the middle and lower income segments and exports of agricultural products to developing Asian economies,” he continued.
 
Driven by increase in per capita income, the development of modern retail and increasing health awareness, the demand for downstream products such as noodles, soft drinks and bakery products is rising, leading to growth of the local food processing industry.
 
Notwithstanding Indonesia’s food and agribusiness sector’ growth potential, the sector is facing various challenges such as low yields, smallholding farms, sustainability, low-quality produce, low investments, inadequate infrastructure, underdeveloped agricultural practices and restrictive government policies.
 
Indonesia needs therefore balanced policies and regulation and increased investments in land and technology development in order to encourage further growth.