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Indonesia aims to double cocoa output with 2015 revival plan -industry

By Michael Taylor

JAKARTA, Dec 15 (Reuters) - Indonesia's government will launch a $95 million scheme in early 2015 to help double cocoa bean output in the world's third-largest producer, an industry group said on Monday.

Indonesia has struggled to increase cocoa production in recent years as its ageing trees, most of them planted in the 1980s, are vulnerable to disease that is hard to stamp out because of a vast network of smallholders.

Any significant rise in Indonesian cocoa production could weigh on prices, which have rallied on worries about a global supply shortfall despite some analysts and producers predicting a second successive year of surplus in 2014/15.

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Indonesian production will be between 485,000-500,000 tonnes in 2015, up from 485,000 tonnes in 2014 and 475,000 tonnes last year, Zulhefi Sikumbang, chairman of the Indonesian Cocoa Association (ASKINDO), told Reuters on Monday.

"They want to discuss the plan with us," said Sikumbang, adding that he met with the agriculture minister last week.

"It will maybe start in April (and) is a one-year programme that may be continued. They want above 1 million (tonnes)."

The agriculture ministry could not be reached for immediate comment on Monday.

Investors may be sceptical of the new investment plan after a similar $350 million scheme launched by the last government in 2009 failed to boost output to more than 600,000 tonnes within its five year timeframe.

Dry weather this year and cocoa farmers switching to more financially viable crops, like palm oil and cloves, has been hampering gains in Indonesian production, said Sikumbang.

Rather than distributing new seedlings, the new government scheme must focus on training the more than 1 million Indonesian cocoa farmers in modern farming techniques, Sikumbang added.

Indonesia's cocoa processing industry is changing as commodity giants such as Cargill, Olam International Ltd and Barry Callebaut enter the market.

But domestic grinders are currently running at half their 550,000 tonnes capacity, said Sikumbang, while many independent and older grinders unable to compete with multinational firms had permanently closed down in recent years.

As domestic processing capacity has risen, exports have fallen while imports have steadily increased.

Indonesia's cocoa bean exports will drop to 30,000 tonnes in 2015 from 70,000 tonnes this year, Sikumbang said, with imports set to climb to 70,000 tonnes next year from 50,000 tonnes in 2014.

Global cocoa bean output is down 200,000 tonnes at 3.5 million tonnes in 2014/2015, added Sikumbang.

($1 = 12,690.0000 rupiah) (Reporting by Michael Taylor; Editing by Joseph Radford)