How BRICS Membership Affect Indonesian Cocoa Trade: Strategic Opportunities in a Shifting Global Landscape

Indonesia’s accession to BRICS in 2024 represents a pivotal moment in its economic diplomacy, with potentially major implications for its cacao trade. As the world’s third-largest cocoa producer, Indonesia aims to leverage BRICS membership to elevate its position in the global cocoa value chain. In this article you will analyzes how BRICS membership affect Indonesian cocoa trade, identifies potential benefits for its domestic market, and evaluates the strategic implications of African cocoa producers remaining outside the bloc.

Indonesia’s Cocoa Industry: Current Status and Global Positioning

• Production and Export Dynamics

Indonesia produces approximately 450,000 metric tons of cocoa annually, with 250,000 metric tons processed domestically into intermediate or finished products such as cocoa butter, powder, and chocolate. The nation’s cocoa exports reached $1.12 billion in 2022, driven by semi-processed goods like cocoa paste and cocoa cake, which account for 9.17% of global demand. However, the Indonesia chocolate market, valued at USD 850 million, is fueled by rising consumer demand, increasing disposable incomes, and urbanization.

• Challenges in Value Addition

Despite its production capacity, Indonesia faces hurdles in advancing up the value chain. Domestic processing companies—numbering 11 as of 2023—struggle with limited technological adoption and reliance on raw cocoa exports. This mirrors challenges faced by African producers like Côte d’Ivoire and Ghana, which dominate raw cocoa exports but capture only 5% of global chocolate revenues.

BRICS Membership: Catalyzing Indonesia’s Cocoa Trade

• Market Access and Trade Diversification

BRICS membership opens access to bloc nations representing 28% of global GDP and 24% of global trade. For Indonesia, this translates to reduced reliance on traditional markets like the EU, which has imposed non-tariff barriers such as the EU Deforestation Regulation (EUDR) on cocoa and palm oil. By diversifying exports to BRICS countries—notably China and India—Indonesia can mitigate risks from Western protectionism. In 2024, Indonesia’s trade with BRICS reached $150 billion, with cocoa likely to benefit from preferential trade terms and reduced tariffs.

• Financing for Infrastructure and Processing

The New Development Bank (NDB), BRICS’ financial arm, offers low-cost loans for infrastructure projects critical to cocoa processing. Indonesia’s access to NDB fund will undoubtedly aids the Ministry of Industry’s priority in expanding processing capacity, aiming to transform the nation into a global cocoa hub. NDB funding could support initiatives like the construction of the new capital, Nusantara, which includes plans for agro-industrial zones focused on cocoa value addition. Enhanced infrastructure would enable Indonesia to increase its annual chocolate production capacity—currently 462,000 tons—and boost exports of finished products1.

• Technological Collaboration and Value Chain Integration

How BRICS membership affect Indonesian cocoa trade in the context of technology? BRICS fosters partnerships in renewable energy, digitalization, and sustainable agriculture. Indonesia could adopt blockchain technology from BRICS partners like China to improve traceability in cocoa supply chains—a key requirement under EUDR. Collaboration with India in food processing technology could also help Indonesian companies produce higher-quality chocolates tailored to BRICS consumer preferences.

Strategic Advantages of BRICS Membership for Indonesian Cocoa Trade

• Can Indonesia Monopolize BRICS Cocoa Trade?

No major African cocoa producers—Côte d’Ivoire, Ghana, Nigeria, or Cameroon—are BRICS members, despite contributing 73% of global cocoa output. Although Indonesia is the only major global cocoa supplier within BRICS, it does not mean Indonesia can directly monopolizes BRICS cocoa trade. The reason is because BRICS lacks a unified preferential tariff system. Hence, by cost alone, joining BRICS does not make Indonesian cacao more attractive to BRICS importers. Nevertheless, by joining BRICS, Indonesia may benefit its cacao trade through value addition.

• Addressing the “Cocoa Curse” Through Value Addition

African nations’ such as Nigeria, reliance on raw cocoa exports—earning just $10 billion annually from a $200 billion industry—highlights the pitfalls of commodity dependency. Indonesia can avoid this “curse” by leveraging BRICS partnerships to build domestic processing capacity. But how BRICS membership affect Indonesian cocoa trade?

Indonesia’s BRICS membership will likely open up access to funding from the alliance’s New Development Bank. NDB offers some advantages compared to IMF or World Bank in terms of policy flexibility and infrastructure investment. Eventually, advantageous funding and proper execution may strengthen Indonesia’s cocoa production line, aligning with BRICS’ emphasis on high-value industries, enabling Indonesia to export premium products to affluent consumers13, be it BRICS or non-BRICS nations.

Compared to African producers like Ghana, which rely on higher-interest loans (8–12%) from institutions like the African Development Bank (AFDB), Indonesian cocoa producers will likely gain more benefit from NDB’s relatively lower interest rates.

• Shaping Global Cocoa Governance

Indonesia’s BRICS membership allows it to advocate for fairer trade frameworks alongside Brazil, Russia, India, China, and South Africa. Joint initiatives could challenge EU-centric sustainability standards, such as replacing EUDR with BRICS-aligned certifications that recognize Indonesia’s efforts in sustainable cocoa farming, This would reduce compliance costs for Indonesian exporters and strengthen their competitiveness in non-EU markets.

How BRICS Membership Affect Indonesian Cocoa Trade: Other Potential Advantages

Below here, you will explore about how BRICS membership affect Indonesian cocoa trade.

• Local Currency Settlements

BRICS promotes bilateral trade in local currencies, enabling Indonesian exporters to:

• Avoid 3–5% USD conversion fees in transactions with China (rupiah-yuan swaps) and India (rupiah-rupee mechanisms).
• Stabilize pricing for long-term contracts with BRICS confectioners, mitigating exchange rate volatility.

African exporters face dollar liquidity shortages, adding 6–8% to BRICS buyers’ costs.

• Regulatory Harmonization Initiatives

BRICS working groups are standardizing food safety certifications, benefiting Indonesian cocoa:

• Mutual recognition of SPS protocols: Indonesia’s aflatoxin limits (≤10 ppb) now align with China’s GB 2761-2024 standards, reducing inspection delays.
• Blockchain traceability systems: Adapted from Chinese tech partners, these cut compliance costs by 20% compared to EUDR requirements.

African producers adhere to EU-centric certifications (e.g., ISO 34101), incurring 15–25% higher costs.

ASEAN-Driven Tariff Benefits vs. BRICS Neutrality

• Pre-BRICS ASEAN FTAs Maintain Advantage

Indonesia’s existing ASEAN agreements with BRICS members China and India grant 0% tariffs on semi-processed cocoa products, unrelated to BRICS:

• Cocoa butter (HS 180400): 0% duty in China and India.
• Cocoa powder (HS 180500): 0% duty in India vs. 30% MFN rates for African competitors.

BRICS membership does not alter these terms but amplifies Indonesia’s capacity to meet rising BRICS demand through NDB-funded upgrades.

Risks and Strategic Considerations

Discussing about how BRICS membership affect Indonesian cocoa trade, can not be separated from the discussion about risk and strategic.

• Dependency on BRICS Markets

Overreliance on BRICS could expose Indonesia to bloc-specific risks, such as economic downturns in member states or geopolitical tensions. Diversifying within BRICS—e.g., targeting India’s growing chocolate market alongside China’s demand for cocoa butter—will be crucial to mitigating these risks. Indonesia cocoa makers could also consider partnering with Japanese and South Korean firms for co-investments in cocoa tech.

• Future African BRICS Expansion

Should African cocoa producers join BRICS in the future, Indonesia’s comparative benefit within the bloc’s cocoa trade could diminish. Proactive measures, such as investing in product differentiation and securing long-term trade agreements, will be essential to maintaining competitiveness.

Conclusion: BRICS as an Enabler, Not a Tariff Shield

Indonesia’s BRICS membership enhances cocoa competitiveness through financial and strategic channels, not tariffs. By leveraging NDB funds for infrastructure, local currency mechanisms, and regulatory alignment, Indonesia could achieve a significant cost advantage over African producers in producing cocoa products.

While pre-existing ASEAN FTAs maintain tariff benefits, BRICS amplifies Indonesia’s capacity to dominate value-added cocoa trade—a critical differentiator as African competitors remain locked in raw bean exports. This reconfigured advantage underscores BRICS’ role as a facilitator of industrial transformation rather than a traditional trade bloc.