The move comes soon after a report from market analysts Rabobank that said Indonesia was becoming attractive for global cocoa companies.
New site and majority control
The deal sees Barry Callebaut take a 60% share of the Indonesian exporter and includes construction of a new cocoa processing facility in Makassar, Sulawesi that will begin processing around 28,000 tonnes per year when the site becomes operational in early 2013.
The two firms will form a new company: P.T. Barry Callebaut Comextra Indonesia.
Barry Callebaut said it would run the factory while P.T. Comextra Majora would supply cocoa beans.
Steven Retzlaff, president for global sourcing and cocoa at Barry Callebaut said: “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," he said.
Growing market: Rabobank
Indonesia is the third largest cocoa producing country worldwide.
Rabobank’s recent report Indonesia Food & Agribusiness Outlook said the Indonesian market was becoming more appealing for global players.
“With the 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,” it said.
According to Rabobank, the country’s 10-year compound annual growth rate stands at 8%.
In 2010, Indonesia produced 844,626 tonnes of cocoa and has set targets to produce 1.1m tonnes by 2014.
“Indonesia’s cocoa industry has the highest productivity in the world. However, there is a still room for improvement,” said Rabobank.
The country has just 13 cocoa processing companies, and according to Rabobank, not all are actively producing because the domestic market is small due to a “relatively underdeveloped” cocoa processing industry.
Indonesia exported 553,000 tonnes of cocoa and cocoa based products in 2010, worth €1.1bn.
In 2010, the government announced it would adopt an Indonesian National Standard for cocoa to improve the quality of exports.
Rabobank said the cocoa industry had been in decline between 2005 and 2007, but in 2010 the Government imposed exports taxes of up to 15% which has helped grinds soar 38% on the previous year.
Rabobank expects grinds to be up another 56% for 2011 on 2010 figures, which could make the market attractive to multinational firms.