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REPORT OF THE 10 TH MEETING ON THE NATIONAL FOCAL POINT FOR THE ASEAN COCOA CLUB (ACC) ON ASEAN COOPERATION AND JOINT APPROACHES IN AGRICULTURE AND FOREST PRODUCTS PROMOTION SCHEME

26 – 27 June 2007 Inna Kuta Beach, Hotel, Cottage and Spa, Denpasar, Bali, Indonesia

Beach, Hotel, Cottage and Spa, Denpasar, Bali, Indonesia INTRODUCTION 1. The 10 th Meeting of the

INTRODUCTION 1. The 10 th Meeting of the National Focal Point for the ASEAN Cocoa Club (ACC) on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme was held on 26 – 27 June 2007 at Inna Kuta Beach, Hotel, Cottage and Spa, Denpasar, Bali, Indonesia.

The Meeting was attended by 41 delegates from the government and private sectors from Indonesia, Malaysia, Myanmar, Philippines, Singapore and Vietnam. The list of the delegates appears in ANNEX 1.

AGENDA ITEM 1: OPENING SESSION Welcoming Remarks from the Chairman of ASEAN Cocoa Club

The Chairman of the ACC, Dato' Dr. Azhar Ismail, Director General of the Malaysian Cocoa Board expressed his appreciation and gratitude to Indonesia and especially to the Directorate General of Estate Crops, Ministry of Agriculture, Indonesia for hosting the 10 th Meeting of the National Focal Points for Cocoa on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme and welcomed delegates from Indonesia, Malaysia, Myanmar, Philippines, Singapore and Vietnam to the Meeting.

In his speech, t he Chairman highlighted the present world cocoa scenario and ASEAN’s contribution to the world cocoa economy. It was well known that the rate of development of the cocoa industry in each of the ASEAN countries is at different stages and levels. Apart from that, there was also a different standard of cocoa in terms of quality among the ASEAN countries. Despite all these differences, ASEAN cocoa had attained significant recognition in the

global market. ASEAN has increasingly become an important source of not only cocoa beans but also semi-processed cocoa products such as cocoa liquor, cocoa butter, cocoa cake and cocoa powder for chocolate manufacturers and confectioneries. This was due to the fact that some members of the ASEAN countries do not only have the technology, expertise and experience in the processing of cocoa into semi-processed products, but also are major producers and exporters of cocoa beans and cocoa products. Therefore, the ASEAN countries could not depend on the traditional market alone but must strive further and ready to face global challenges.

He also recalled the establishment of the ACC with an aim to enhance collaborative efforts among ASEAN member countries in strengthening and enhancing the Intra-ASEAN Trade on cocoa and cocoa products in the international market as well as to collectively overcome tariff and non-tariff barriers (NTBs) and unfair trade practices imposed by the importing countries. As such, the private sectors should play a more active and important role in marketing their products, especially in ensuring that ASEAN member countries are able to supply a required standard of quality cocoa products.

He highlighted the situation of the ASEAN cocoa economy and the need for the ASEAN member countries to continue working together to facilitate cocoa trade particularly in addressing issues affecting cocoa trade, standardizing standard requirement, easing lengthy procedures and documentations as well as to continue cooperation and networking that will benefit member countries.

He also highlighted that a number of programmes and areas of cooperation on cocoa and cocoa products have been formulated and implemented by the ACC to increase the market share and consumer knowledge that eventually gives mutual benefit to all members. The welcoming speech appears in ANNEX 2.

Opening Address from the Director General of Estate Crops, Ministry of Agriculture, Republic of Indonesia

The Honourable Mr. Achmad Mangga Barani, Director General of Estate Crops, Ministry of Agriculture, Republic of Indonesia declared open the 10 th Meeting of the National Focal Points for the ACC on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme.

In his opening address, he welcomed all participants to Bali, Indonesia and hope that the 10 th ACC Meeting would be able to promote stronger ties and better cooperation among the ASEAN member countries particularly in the development of cocoa trade and industrial arrangements in the region.

He highlighted the situation of the cocoa industry in the Indonesia which was largely cultivated by smallholders involving 0.5 millions farmers. Therefore, the sustainability of the cocoa industry development is very much related to continuous supply from smallholders. In the effort to improve cocoa productivity, the government has developed Cocoa Revitalization Program through new planting, rehabilitation and replanting by applying Good Agricultural Practice (GAP) as well as high yielding clones. It is estimated that during period of 2007 – 2010, the revitalization program will reach about 200 thousand hectares.

He further highlighted that Indonesia was focusing on improving the cocoa beans quality produced by cocoa smallholders through improved processing to meet the requirements of international and local markets. This is due to the

fact that the price of Indonesian cocoa products in the world market is comparatively lower than other producing countries. The full text of his speech appears in ANNEX 3.

AGENDA ITEM 2: ELECTION OF CHAIRMAN AND VICE-CHAIRMAN

The Meeting agreed the appointment of Dato’ Dr. Azhar Ismail, Director General of Malaysian Cocoa Board and Chairman of the ACC as chairman of the 10 th ACC Meeting and Dr. Ir. Har Adi Basri, Executive Secretary of Indonesian Cocoa Commission was elected as the Vice–Chairman.

AGENDA ITEM 3: ADOPTION OF AGENDA

The Meeting adopted the Agenda of the 10 th ACC Meeting as appears in ANNEX 4.

AGENDA ITEM 4: BUSINESS ARRANGEMENTS

The Meeting was held in plenary.

AGENDA ITEM 5: Matters Arising from the 28 th SOM–AMAF, 13–14 November 2006; 6 th SOM–AMAF + 3, 15 November 2006, Singapore; 28 th AMAF, 16 November 2006 and 6 th AMAF + 3, 17 November 2006, Singapore

The ACC Secretariat informed the Meeting that no inputs were received from the ASEAN Secretariat on these meetings. The reports submitted by the ASEAN Secretariat were attached for references as appears in ANNEX 5.

AGENDA ITEM 6: Matters Arising From the 13 th Meeting of the Joint Committee on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme, 2 – 4 August 2006, Chiang Mai, Thailand

In the absence of the input from the ASEAN Secretariat, the Meeting was asked to refer to the report submitted by the ASEAN Secretariat on the 13 th Meeting of the Joint Committee on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme held in Chiang Mai, Thailand from 2 nd – 4 th August 2006 as appears in ANNEX 6 .

AGENDA ITEM 7: ENHANCEMENT OF INTERNATIONAL COMPETITIVENESS OF ASEAN FOOD AND AGRICULTURAL PRODUCTS/COMMODITIES Formulation of ASEAN Cocoa Contract

The ACC Secretariat briefed the Meeting on the progress of drafting of the ASEAN Cocoa Contract. The draft ASEAN Cocoa Contract appears in ANNEX 7.

The Chairman congratulated the Cocoa Association of Asia (CAA) on their efforts to produce the draft of the ASEAN cocoa contract.

The Chairman of the Cocoa Association of Asia (CAA) apologized for the delay in coming up with the draft contract due to initial differences in opinions on certain matters. He highlighted that in drafting the contract, they had taken note of the views from market players and the contract reflected the current trade practices. The draft contract is yet to include the arbitration section.

The ACC Secretariat informed the Meeting the status of membership of the ASEAN Cocoa Contract Working Group as reported in the 9 th ACC Meeting as follows:

o

Dr. Ir Har Adi Basri, Msc – Directorate of Processing and Marketing of Estate Crop Products, Ministry of Agriculture Indonesia

o

Ir. Zulhefi Sikumbang – Indonesia Cocoa Association (INCA)

o

Mr. Peter Andow – Indonesian Cocoa and Chocolate Manufacturer Association/APIKCI

o

Mr. Yeong Chye – Cocoa Association of Asia (CAA)

o

Tuan Hj. Omar Hj. Tompang – Malaysian Cocoa Board

o

Mr. B. Y. Ng – Cocoa Manufacturing Group (CMG), Malaysia

o

2 other representatives from Indonesian

o

Mr. Francisco A. Ramos III – Department of Agriculture, Philippines

o

Ms. Gregoria B. Santos – Department of Agriculture, Philippines

o

Mr. Edward F. David – Cocoa Foundation of the Philippines

o

Ms. Josephine Ramos – Cocoa Foundation of the Philippines

o

Others – Brunei, Cambodia, Laos PDR, Myanmar, Thailand and Vietnam have to yet to submit their representatives

With regards to the membership ACC Working Group on cocoa contract, Indonesia will review her representatives due to some changing in the organization and will inform in written notice to the ACC Secretariat in due course.

The Meeting agreed on the following schedule:

o

The ASEAN cocoa contract is to be finalized within one year period from this Meeting.

o

The Working Group should hold its first meeting in November 2007.

o

The Working Group should have three meetings prior to the adoptions of the ASEAN cocoa contract.

The Meeting agreed that the meeting of the Working Group should be led by Indonesia. Indonesia was appointed earlier as the lead country to formulate the ASEAN cocoa contract.

The Meeting agreed that the ACC Secretariat would coordinate the meetings of the Working Group.

The Meeting also agreed that any issues and comments pertaining to the ASEAN cocoa contract should be discussed and settled in this Working Group meeting and only the final draft will be presented to the 11 th ACC Meeting for adoption. Tariff and Non–Tariff Barriers on Cocoa Beans and Cocoa Products

The ACC Secretariat informed the Meeting that under the Common Effective Preferential Tariffs (CEPT) Scheme, two member countries namely Brunei and Singapore had no tariffs on cocoa beans and products. Indonesia, Malaysia, Lao PDR, Philippines, Thailand and Vietnam had import tariffs on cocoa and cocoa products between 0–5%. Myanmar had reduced its import tariffs on cocoa and cocoa products from 15–10% to between 5–10% and Cambodia reduced its import tariffs on cocoa and cocoa products from 11– 20% to between 10–20%. Although there was a difference in the implementation period for Cambodia, Myanmar, Lao PDR and Vietnam (CMLV), they were allowed to have longer period of tariff reduction up to 2008, Lao PDR and Vietnam are ahead of the schedule. The latest matrix CEPT reduction schedule on cocoa and cocoa products appears in ANNEX 8.

The Meeting was informed that the issue on discriminatory tariffs imposed by EU had been highlighted previously and ACC was not the only forum that discussed this issue. The Meeting agreed that this issue should be addressed

by ASEAN as a group at the ASEAN – EU Forum so that ASEAN could be given a similar tariff preferential treatment as those of the African, Caribbean and Pacific (ACP) countries and this issue should be highlighted to the Joint Committee on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme through ASEAN Secretariat.

The Meeting was informed that the Free Trade Area (FTA) negotiations on ASEAN – China and ASEAN – Korea had been concluded. Whereas the FTA negotiations on ASEAN – Japan, ASEAN – India and ASEAN – Australia/New Zealand are currently in progress.

AGENDA ITEM 8: ENHANCEMENT OF ASEAN COOPERATION AND JOINT APPROACHES IN INTERNATIONAL AND REGIONAL ISSUES Codex Committee on Cocoa Products and Chocolate

The Meeting took note on the report presented by Malaysia on the Codex Committee on Cocoa and Chocolate as appears in ANNEX 9. The four issues highlighted were:

a) Contaminants in Foods

b) Food Additives

c) Pesticides Maximum Residue Limits (MRLs)

d) Food Labeling

The Meeting was in the view that the importing countries should not be implementing their own standards instead to use the CODEX Standard.

The Meeting agreed that the ACC should highlight at the ASEAN forum the issue on regulations imposed by importing countries which are not inline with CODEX Standard.

The Meeting also agreed to form a Technical Working Group on Food Safety to carry out research, collect information as well as provide advice and recommendations. Malaysia will lead this Technical Working Group and membership should comprise of the Food Safety experts including technical and non-technical members.

AGENDA ITEM 9: DEVELOPMENT, ACCELERATION OF TRANSFER AND ADOPTION OF NEW TECHNOLOGIES Proposed Trials on Selected Cocoa Progenies in Selected ASEAN Regions

The meeting took note on the progress report on the Proposed Progenies Trials in Selected ASEAN Regions reported by Malaysia and Indonesia as appears in ANNEX 10 and ANNEX 11.

The Chairman of ACC congratulated Malaysia and Indonesia on making good progress on the progenies trials. Indonesia informed that a clone KW514 was found to show resistance to cocoa pod borer (CPB). The Meeting invited Vietnam and Myanmar to join the collaboration on these research projects.

Myanmar informed the meeting that the cocoa industry in Myanmar is still in the early stage. They still lack technology and therefore needed technical assistance and cooperation from ASEAN member countries.

Myanmar was advised to forward their proposals and requests to the ACC Secretariat.

AGENDA ITEM 10: ENHANCEMENT OF PRIVATE SECTOR INVOLVEMENT

The Meeting took note on the progress and activities conducted by the Cocoa Association of Asia (CAA) and Indonesian Cocoa Commission (ICC) as appears in ANNEX 12 and ANNEX 13.

AGENDA ITEM 11: FORMATION OF WORKING GROUP UNDER ACC TO INCREASE THE EFFECTIVENESS IN THE IMPLEMENTATION OF ACC ACTION PLAN ACC Food Safety Working Group

The Meeting agreed to assimilate this working group into the newly formed Technical Working Group on Food Safety (TWGFS).

The Meeting agreed for the member countries to nominate their representative in the Technical Working Group and submit the appointed member to the ACC Secretariat by 30 th July 2007. The number of membership for each country would comprise of two technical and two non- technical representatives.

The TWGFS was requested to discuss and detail out the Terms of Reference (TOR) for the Working Group. The Meeting suggested the followings to be

included as part of their Terms of Reference (TOR):

a. to monitor and update information on food safety requirements which impose as

Non-Tariffs Barriers (NTBs) by the importing countries.

b. to develop database on food safety.

c. to harmonize and to have mutual recognition agreement (MRA) on standard for

ASEAN countries. ACC Sub Committee on Bean Quality

The Meeting took note on the report presented by the Chairman of the ACC Sub- Committee on Bean Quality which indicated that farmer’s field school program has brought about improvement in quality and yield at the farm level but the adoption process is slow. The market place realism on bean quality is that the market participant of buyers and sellers determine the price and the discount/premium of the beans while the government or authority sanction by the government determines the quality of the exported beans. The update on the cocoa beans quality status in South East Asia appears in ANNEX 14.

The Meeting took note on the report by Indonesia on the progress of the revision of cocoa beans quality standard under the Standard National Indonesia (SNI) and their plan to make the SNI as mandatory in the later stage.

AGENDA ITEM 12: OTHER MATTERS ACC Database

The ACC Secretariat informed the Meeting on the latest status of the ACC database which remained incomplete especially on the statistics, as some member countries had not provided and updated the necessary information requested by the Secretariat. Member countries were requested to furnish the information to the ACC Secretariat for inclusion in the database. The submission, except for tariffs, should cover the period from 1991 onwards and to be updated every six months or whenever necessary. The data on tariff should be the current import tariffs on cocoa and cocoa products.

The Meeting took note on the suggestion from Indonesia to do an analysis from the available data for the future planning of the ASEAN cocoa industry.

The Meeting was informed that the analysis could be done pending the availability of time series data requested by the ACC Secretariat. ACC Logo

The ACC Secretariat informed the Meeting that there was no proposal on ACC logos received from member countries after the dateline of 30 th July 2006 set earlier during the 9 th ACC Meeting.

The Meeting agreed to adopt the first option of the proposed logo by Malaysia as ACC logo appears in ANNEX 15.

The meeting agreed on the suggestion by Singapore to change the name of ASEAN Cocoa Club to ASEAN Cocoa Council. The ACC Secretariat will propose the new name to the next Meeting of the Joint Committee on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme. National Focal Point

The ACC Secretariat updated the Meeting on the current National Focal Points submitted by the member countries.

The Meeting agreed to have two focal point representing the public and private sectors for each member countries. Member countries were requested to update their National Focal Points to the ACC Secretariat for future correspondences. 0ther Matters

The Meeting agreed on the suggestion to include the upcoming events for the next 12 months of the ACC member countries in the ACC database. The member countries were requested to submit their list of events to the ACC Secretariat.

The Meeting took note on the information from Philippines on the implementation of the Success Alliance Program Phase II. The program was launched on 27 th October 2006 and funded by the United States Department of Agriculture (USDA) as a three year project under the USDA Food for Progress that aims to train 150 trainers and 15,000 smallholder farmers on cocoa production, post harvest processing, pest and diseases management and marketing through the farmer field school (FFS) methodology and participatory extension methods. The areas covered included Western Mindanao, Palawan, Cordillera, Davao Provinces, Bicol, Panay and selected areas in the Southern Tagalog Region.

The Meeting took note on the invitation extended by Malaysia to all member countries to visit the Malaysian International Commodity Conference and Showcase 2007 (MICCOS 2007) to be held on 3 – 8 July 2007 at Putra World Trade Centre (PWTC), Kuala Lumpur, Malaysia.

AGENDA 13: DATE AND VENUE OF THE NEXT MEETING

Vietnam reaffirmed its agreement to host the 11 th Meeting of the ACC on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme to be held in 2008 at Ho Chi Minh City, Vietnam.

AGENDA 14: ADOPTION OF THE REPORT

The Meeting unanimously adopted the Report of the 10 th Meeting of the ACC on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme held on 26 – 27 June 2007 at Denpasar, Bali, Indonesia.

ACKNOWLEDGEMENT

The Chairman of the ACC expressed his gratitude and thanks to all delegates for their active participation in the meeting.

The delegation of Malaysia, Myanmar, Philippines, Singapore and Vietnam expressed their sincere appreciation to the government of Indonesia in particular the Directorate General of Estate Crops, Ministry of Agriculture, Indonesia for their warm hospitality accorded to them and the excellent arrangements made for the meeting.

The meeting was held in the traditional spirit of ASEAN cordiality and solidarity.