This paper examines factors that influence Indonesian cocoa exports and uses an econometric model to assess potential policy impacts. Results identified export price, cocoa production growth, exchange rate and time trend as significant influences on cocoa exports (R2 = 0.9473). The author concluded that a fertiliser price subsidy could be expected to increase Indonesia cocoa exports and production for cocoa smallholders. Simulating a 15 per cent fertiliser price subsidy resulted in increased cocoa production (0.38-8.3 per cent) in three out of the four regions included in the study and increased national production (1.93 per cent) and exports (1 per cent). Simulating an export tax of 5 per cent identified possible price transmission impacts on the domestic cocoa price that resulted in a reduction in Indonesian cocoa production and a decline in cocoa exports. The author recommends a devaluation policy as an alternative to an export tax policy to avoid any negative impacts on cocoa production, cocoa exports and smallholder welfare. These findings support previous assessments of similar policies on corn, cocoa and palm oil.

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