REPORT OF THE 8 TH MEETING ON THE NATIONAL FOCAL POINT FOR ASEAN COCOA CLUB (ACC) ON ASEAN COOPERATION AND

JOINT APPROACHES IN AGRICULTURE AND FOREST PRODUCTS SCHEME 21 22 June 2005 Inna Kuta Beach Hotel, Cottage and Spa, Denpasar, Bali, Indonesia

INTRODUCTION 1 The 8 th Meeting of the ASEAN Cocoa Club on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme was held on June 21-22, 2005 at Inna Kuta Beach Hotel, Cottage and Spa, Denpasar, Bali, Indonesia. The meeting was attended by 53 delegates from the government and private sectors as well as observers from Indonesia, Malaysia and Singapore. The list of the delegates is presented as ANNEX 1.

AGENDA ITEM 1: OPENING SESSION Welcoming Remarks by Chairman of ASEAN Cocoa Club 3 The Chairman of the ACC Dato' Dr. Azhar Ismail welcomed all delegates to the meeting and thanked the Indonesia government especially the Ministry of Agriculture Indonesia for hosting this 8 th ASEAN Cocoa Club Meeting He highlighted the situation of the ASEAN cocoa economy and issues to be addressed were on market access, marketing and quality improvement, which affected the cocoa industry both on the upstream and downstream activities.

The Chairman also recapitulated that ACC was formed to enhance collaborative efforts among ASEAN member countries in strengthening and enhancing the Intra-ASEAN and international trade on cocoa and cocoa products as well as to collectively overcome tariff and non-tariff barriers (NTBs) and unfair trade practices imposed by importing countries. The role of ACC is to expedite the development of the cocoa industry in various ASEAN member countries. He highlighted that a number of activities have been implemented since the seventh meeting of the ACC in Kuala Lumpur, Malaysia including the formulation of new ACC Workplan 2005-2010 for the next five years. Opening Address from the Director General of Processing and Marketing of Agricultural Products, Ministry of Agriculture Indonesia

Dr. Ir. Har Adi Basri, Msc. the Director of Processing and Marketing of Estate Crop Products delivered the opening speech on behalf of the Director General of Processing and Marketing of Agricultural Products, Ministry of Agriculture, Indonesia. He welcomed all participants to Denpasar, the provincial capital of Bali and hope that the 8 th meeting would be able to promote stronger ties and better cooperation among the ASEAN member countries, especially in relation to cocoa trade arrangements in the world market. He highlighted the situation of the cocoa industry in Indonesia which comprised of 75% smallholders out of the total cocoa plantations in Indonesia. He also highlighted that the sustainability of the cocoa industry is largely dependent on the continuous provision of planting and processing technologies. As such, continuous efforts should be undertaken to address various issues affecting the cocoa industry in this region such as the cocoa pod borer, quality improvement and market access at the national, regional and international levels through the use of existing organization on the basis of efficient, effective and transparent principles of networking and sharing. AGENDA ITEM 2: ELECTION OF CHAIRMAN AND VICE-CHAIRMAN

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The meeting unanimously elected Dato' Dr. Azhar Ismail, Director General of the Malaysian Cocoa Board and Chairman of the ACC as Chairman of the 8 th ACC Meeting and Dr. Ir. Har Adi Basri, MSc, Director of Processing and Marketing of Estate Crops Products, Directorate General of Processing and Marketing of Agricultural Products, Ministry of Agriculture, Indonesia as the Vice-Chairman AGENDA ITEM 3: ADOPTION OF AGENDA

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The meeting adopted the Agenda as in ANNEX 2. AGENDA ITEM 4: BUSINESS ARRANGEMENTS

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The meeting was held in plenary . AGENDA ITEM 5: MATTERS ARISING FROM THE 26 TH SOM-AMAF, 4-5 OCTOBER 2004; 4 TH SOM-AMAF + 3 MEETING, 6 OCTOBER 2004; 26 TH AMAF, 7 OCTOBER 2004 AND 4 TH AMAF + 3 MEETING, 8 OCTOBER 2004, YANGON, MYANMAR

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In the absence of the representative from ASEAN Secretariat, the meeting took note of the report presented by the representative from the Cocoa, Tobacco and Pepper Division of the Ministry of Plantation Industries and Commodities, Malaysia on matters arising from the above-mentioned meetings in relation to ACC as in ANNEX 3.

The meeting was highlighted that the Memorandum of Understanding (MoU) on ASEAN Cooperation in Agriculture and Forest Products Promotion Scheme (1999-2004), which expired in October 2004, was extended for another five years starting from 28 October 2004 to 27 October, 2009. The 26 th SOM-AMAF meeting expressed their support on the extension of MoU since the MoU remained relevant and would continue to serve as the basis to pursue cooperation with the private sector, as well as to coordinate joint positions on issues related to trade in ASEAN agriculture and forest products. The detail of the MoU appears in ANNEX 4.

Matters Arising from the 11 th Meeting of the Joint Committee on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme, 30 th June 2 nd July 2004, Yangon, Myanmar 14 The meeting took note of the matters arising in the 11 th Meeting of the Joint Committee on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme held in Yangon, Myanmar from 30 th June 2 nd July 2004 as in ANNEX 5 .

The meeting highlighted on the Strategic Plan of Action (SPA) in Agriculture and Forest Products Promotion Scheme (2005-2010) that was adopted by the 11 th Meeting of the Joint Committee on ASEAN Cooperation in Agriculture and Forest Products Promotion Scheme held on 30 June 2 July 2004 in Yangon. The five Action Programmes of the SPA agreed upon were (1) enhancement of intra- and extra-ASEAN trade and long-term competitiveness of ASEAN's food and agricultural products/commodities, (2) strengthening ASEAN's cooperation and joint approaches in addressing issues and problems affecting trade in the region's food and agricultural products/commodities, (3) strengthening joint positions in addressing non-trade issues at international fora to

protect the interest of ASEAN Member Countries, (4) strengthening programmes in agricultural and forestry technology transfer, training and extension to increase productivity of food, agriculture and forestry, and (5) continuous consultation with the private sector at all meetings of working groups. The new SPA appears in ANNEX 6. 15 The National Focal Points Working Groups/Clubs were requested to submit their respective Strategic Plan of Actions (20052010) to the ASEAN Secretariat for consolidation immediately after the conclusion of their meeting. The programmes/ projects/activities for inclusion in the new SPA should consist of five criteria namely: workable and fully implementable, pragmatic and realistic, well defined milestones, adequately supported by financial resources and future oriented. The 12 th Meeting of the Joint Committee is to be held on 58 July 2005 in the Philippines. Vientiane Action Programme 2005-2010 16 The meeting was informed that the Vientiane Action Programme (2005-2010) was signed by the Heads of State and Government of ASEAN during the 10 th ASEAN Summit on 29-30 November 2004 in Vientiane, Lao PDR. The VAP is the successor of the first in a series of action plans or programmes, the Hanoi Plan of Action (HPA) that ended in 2004, leading to the end-goal of ASEAN Vision 2020. The relevant cooperation framework statements on food, agriculture and forestry sectors had been included in the ASEAN Economic Integration and the ASEAN Social Cultural Community components of the Vientiane Action Programme (VAP) for implementation during the 2005-2010 period. In the former, cooperation activities would be focused on enhancing competitiveness of food, agriculture and forest products; while under the latter component focus would be on research and development activities for sustainable management of resources. The detailed information on the VAP as appears in ANNEX 7. The meeting took note of the parts of the VAP that were of relevance to the ASEAN Cooperation in Food, Agriculture and Forestry as reflected on pages 15, 42, 43, 46, 51 and 52 appears in ANNEX 8. AGENDA ITEM 6: ENHANCEMENT COMPETITIVENESS OF ASEAN FOOD PRODUCTS/COMMODITIES Formulation of ASEAN Cocoa Contract 19 Indonesia being the project leader in the formulation of ASEAN Cocoa Contract informed the meeting that the drafting of the contract is progressing with the cooperation of the Cocoa Association of Asia (CAA). OF AND INTERNATIONAL AGRICULTURAL

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The CAA informed the meeting that there is some progress made in the formulation of quality standards for Indonesian cocoa beans. This committee is yet to hold a meeting with the Indonesia to further discuss on this matter. The meeting expressed concern that the formulation of the ASEAN Cocoa Contract is taking too long. In view of this, the meeting agreed on the appointment of the Working Group on ASEAN Cocoa Contract committee members comprised of government and private sectors to be lead by CAA as follows: 1. Mr. Yeong Chye Cocoa Association of Asia (CAA) 2. Dr. Ir Har Adi Basri, Msc Directorate of Processing and Marketing of Estate Crop Products, Ministry of Agriculture Indonesia 3. Tuan Hj. Omar Hj. Tompang Malaysian Cocoa Board 4. Representative from other Indonesian government to be nominated by the Indonesian delegates 5. Ir. Zulhefi Sikumbang Indonesia Cocoa Association (INCA) 6. Mr. Peter Andow Indonesian Cocoa and Chocolate Manufacturer Association/APIKCI

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The meeting agreed that the draft of the ASEAN Cocoa Contract to be finalised and presented at the next ACC meeting. Tariff and Non-Tariff Barriers on Cocoa Beans and Cocoa Products

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The ACC Secretariat informed the meeting that the applied import tariff for cocoa and cocoa products for ASEAN member countries was the Common Effective Preferential Tariffs (CEPT) Scheme. Under this CEPT Scheme, the tariff on cocoa and cocoa products needs to be reduced to 0-5% by the year 2003 for certain ASEAN member countries. However, there was a different in the implementation period for Cambodia, Myanmar, Lao PDR and Vietnam (CMLV), which were allowed to have longer period of tariff reduction up to 2008. The rest of the member countries had to comply on the tariff reduction scheduled by 2003. The matrix CEPT reduction schedule, general import tariff on cocoa and cocoa products of ASEAN countries, as well as China, India, Korea, Japan, New Zealand, Australia, EU and USA MFN import tariffs on cocoa and cocoa products appears in ANNEX 9 . The meeting also took note on the Malaysias intention to liberalize further, barring any unforeseen development or circumstances, the import tariff on cocoa and cocoa products under the ASEAN Free Trade Area-Common Effective Preferential Tariffs (CEPT) to zero. Indonesia would refer this matter to its relevant ministry before any decision could be made. The meeting agreed that the ACC Secretariat would prepare a working paper on further tariff liberalization to be forwarded to their respective countries. AGENDA ITEM 7: ENHANCEMENT OF ASEAN COOPERATION AND JOINT APPROACHES IN INTERNATIONAL AND REGIONAL ISSUES

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Codex Committee on Cocoa Products and Chocolate 25 The meeting was informed that the Joint FAO/WHO Food Standards Programme CODEX Alimentarius Commission during its Twenty-Sixth Session held at FAO Headquarters in Rome from 30 June 7 July 2003 had adopted the Draft Standard for chocolate and chocolate products at Step 8 with the understanding that the translation into the Spanish language of various parts of the standard would be revised before the publication. It also agreed that Section 6.1 related to the methods on the Determination of Centre and Coating of Filled Chocolate and endorsed by the Codex Committee on the Methods of Analysis and Sampling provided analytical traceability in relation to the basic chemical principles. The Commission noted that carnauba wax had been proposed as a food additive at the level of 500 mg/kg instead of GMP, and decided to refer this proposal to the Codex Committee on Food Additives and Contaminants for consideration. The meeting was also informed that the Codex Committee on Food Labelling held its 33 rd Session at Kota Kinabalu, Malaysia from 9-13 May 2005. Among the issues raised at the session were on the labelling of products with genetically modified ingredients, the proposed draft amendment to the general standard for the labeling of prepacked foods: Quantitative Declaration of Ingredients (QUID), country of origin and advertising. The detailed information appears in ANNEX 10. AGENDA ITEM 8: DEVELOPMENT, ACCELERATION OF TRANSFER AND ADOPTION OF NEW TECHNOLOGIES Project on Cocoa Pod Borer (CPB) Management Using Biological Control Agents and Plant Resistant Material 27 The meeting was informed that this project was undertaken by Indonesia and Malaysia and was conducted in the capacity on each individual country. This was due to the fact that management of CPB is currently one of the main research programmes in both countries. The progress report on this project was presented by both Indonesia and Malaysia. The trial on the development of plants resistant materials that was conducted in two endemic areas, in Southeast Sulawesi and North Sumatra managed to identify two promising resistant clones from tested genotypes. The release of these clones to the growers could only be made after the Minister has issued the permit. As such, further trial to determine the characteristics of clonal adaptability in the various agro climate conditions as the main pre-requisite, is being carried out towards getting the permit. For the trial conducted on the development of biological control agents in Indonesia, a number of entomopathogenic organisms had been isolated from CPB endemic areas of North Maluku and North Sulawesi. The details

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information on CPB management using biological control agents and plant resistant materials carried out by Indonesia appears in ANNEX 11. 30 As for Malaysia, research on biological control agents included the use of cocoa black ants (CBA) Trichgrommatiodea bactrae fumata, antagonist (bacteria and fungi) and Beuvaria bassiana. The results showed that the use of CBA is effective in CPB management provided that they were suitable agroclimatic and field conditions. Trichgrommatoidea spp. at appropriate egg density provided a good control of CPB. Under experimental stage, microbial antagonist is not only effective against cocoa black pod disease but also CPB. On the other hand, research in finding the suitable formulation of microbial antagonist for CPB management is being undertaken. For research on host plant resistance, the focus was on the screening of resistant clones, semiochemical and inter-specific crossing between the Theobroma spp. Screening for resistant clones included the morphological traits, insect mortality and natural chemical derived from the pods or semiochemical. Preliminary interspecific hybridization program between the Theobroma spp. had been initiated with an intention to utilize the desirable traits of T. grandiflorum such as hard pod husk, hairy surface and other desirable agronomic traits. Proposed Trials on Selected Cocoa Progenies in Selected ASEAN Regions 32 The meeting was informed that Malaysia (Malaysian Cocoa Board - MCB) and Indonesia (Indonesian Coffee and Cocoa Research Institute - ICCRI) had agreed on the exchange of hand-pollinated of selected hybrids. Each party had exchanged 10 potential hybrids that are high-yielding and tolerant to vascular streak die-back disease and black pod disease. MCB had dispatched hybrid seeds in batches to Indonesia beginning April 2005 and ICCRI will dispatch their seed to Malaysia in August 2005. On the Indonesia part, the meeting was informed that this activity had started early this year. There were progenies transferred from Malaysia (MCB) to Indonesia (ICCRI) and ICCRI is currently conducting the crossing of the progenies to be sent to MCB by the middle of this year. It was scheduled till end of this year that the number of required seedlings will be fulfilled and can be transferred to the field. The detailed information on proposed trials on selected cocoa progeny carried out by Indonesia appears in ANNEX 12. AGENDA ITEM 9: ENHANCEMENT OF PRIVATE SECTOR INVOLVEMENT Cocoa Association of Asia (CAA) 34 The Chairman of the CAA informed the meeting that the CAA had been officially being registered as a society in Singapore in December 2003.

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Membership comprises of the growers, grinders and traders within the region. The association also had co-opted two Indonesian members (ASKINDO and Indonesian processors/grinders) into the Council, however, the membership allocated for representative from the Indonesian processors or grinders was still vacant. Indonesia was requested to forward the name to the Council in the near future. 35 The meeting was informed that the purpose of formation of CAA is to support and serve as a channel of communication between the industry and government agencies, trade bodies and international trade for a affecting the cocoa industry. The role of CAA would not be in conflict with the ACC as the ACC had a specific roles and perspectives. However, both bodies could work together to gain mutual benefits concerning the cocoa trade and industry in the ASEAN region. The meeting was also informed that in an effort to standardize the quality specification for the ASEAN Cocoa Contract, CAA had a meeting last March in Jakarta. The standardize specification will be presented at the Sub-committee meeting in Kuala Lumpur on the 20 th July 2005, to be coordinated by the ACC Secretariat. AGENDA ITEM 10: FORMATION OF WORKING GROUP UNDER ACC TO INCREASE THE EFFECTIVENESS IN THE IMPLEMENTATION OF ACC ACTION PLAN Food Safety Working Group 37 The Chairman of the Working Group on Food Safety informed the meeting that the Committee received a request from the European Union (EU) to look into the PolyHydroCarbon (PAH) issue. The European Cocoa Association (ECA) found that cocoa butter especially from South East Asia contained very high level of PAH and especially Benzo-a-Pyrene. The EU permissible limit is 2 ppb. The ECA has requested this issue to be highlighted with the relevant government agencies in the respective origin countries and also the cocoa industry in general so that remedial measures can be adopted to overcome this food safety problem. The meeting was informed that a report on the PAH content in the Malaysian cocoa butter had been submitted to the International Cocoa Organisation (ICCO) at it last meeting. As Indonesia is not a member of ICCO, the report on this issue could be submitted to the ACC Secretariat to be forwarded to the relevant international bodies. The meeting was also informed that there will be a paper presented on the PAH during the Malaysian International Cocoa Conference to be held from 18-19 July 2005 in Kuala Lumpur, Malaysia. As such, member countries are invited and encouraged to attend the conference.

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The meeting was informed on the list of agro-chemicals residue as advised by Japanese authority that could be found in the cocoa beans originated from the South East Asia. Therefore, Japan is in the process to implement a positive lists system to monitor cocoa beans and products containing high residue of pesticides. As a precautionary step, member countries were requested to provide a list of pesticides used in the cocoa plantations, processing and warehouses and take necessary action. The list to be forwarded to the ACC Secretariat by the end of July 2005. The meeting agreed that the working group should continue to gather more information on the limits of pesticides residue set by importing country so that pro-active actions could be taken. ASEAN Cocoa Club Sub-Committee on Bean Quality

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In the absence of the Chairman of the ASEAN Cocoa Club Sub-Committee on Bean Quality, the meeting agreed that the working group should circulate the report on the bean quality study and member countries will forward their responses on this matter to the ACC Secretariat. The meeting agreed that quality standard among the ASEAN member countries is a very crucial matter in an effort to further improve the quality of the cocoa beans from this region. However, individual country has first to prepare their own quality standard. Malaysia informed the meeting that a Standard Malaysian Cocoa (SMC) for cocoa beans has been implemented. CAA informed the meeting that a specification for Indonesian cocoa beans had been drafted and forwarded to ASKINDO pending further discussion and approval by the relevant Indonesian government. AGENDA ITEM 11: MOU ON ASEAN COOPERATION AND JOINT APPROACHES IN AGRICULTURE AND FOREST PRODUCTS PROMOTION SCHEME-ASEAN COCOA CLUB Progress Report on the ASEAN Cocoa Club (ACC) Workplan 2005-2010

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The meeting took note on the progress report of the Workplan 2005-2010 for the National Focal Points for ACC on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme presented by the ACC Secretariat as in ANNEX 13. The meeting was also informed that the new formulated Workplan 2005-2010 for the National Focal Points for ACC on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme was in line with the Vientiane Action Programme (2005-2010) signed by the Heads of State and Government of ASEAN during the 10 th ASEAN Summit on 29-30 November 2004 in Vientiane, Lao PDR. The detailed information on the new

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formulated ACC Workplan 2005-2010 appears in ANNEX 14. 47 The ACC Secretariat also highlighted that the establishment of ACC Cocoa Database remained incomplete as member countries had not provided the necessary information requested by the Secretariat. The homepage could be accessed through the Malaysian Cocoa Board homepage http://www.koko.gov.my/acc. Member countries were requested to furnish their certified information to the ACC Secretariat for inclusion in the database. Under Strategic Thrust 3: Activity 1.3.1 Status on the Issue of Market Access for Cocoa Beans and Products to the EU and USA, the meeting took note of the Indonesia proposal to organize the international workshop on the issue of market access for cocoa beans and cocoa products to EU and USA in 2006. Speakers would be invited from a pool of experts from relevant areas. Under Strategic Thrust 4: Activities 1.1.4 Organize seminar/workshop to share advances made in upstream and downstream activities, Indonesia proposed that Malaysia to organizes a training in the cocoa upstream and downstream processing so that members countries could learn more from Malaysian experiences. Malaysia informed the meeting that there are courses being organized by Malaysian Cocoa Board on cocoa grading as well as chocolate making. Members who are interested are advised to visit the MCB website at http://koko.gov.my to get further information. AGENDA ITEM 11: OTHER MATTERS 51 Indonesia proposed the following activities:1. Exchange experiences with Malaysia to form a cocoa board. 2. Exchange of information by presenting a country report on the status of the cocoa industry by each member countries at every ACC meeting comprising of current position of the cocoa industry and development of policies and strategies. 52 The meeting agreed that the existence of the ACC has significant role to play in promoting cocoa in this region. However, the meeting expressed disappointment on the lack of attendance from other member countries. The ACC Secretariat is requested to prepare a working paper on this matter to be forwarded to the Joint Committee on ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme. The meeting took note to invite the Cocoa Association of Asia as an official delegate in the ACC future meetings. The meeting took note of the request by Malaysia to inform the meeting

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regarding the status of proposal by the government of Indonesia to impose export taxes on cocoa beans. The Indonesia will inform any development on this matter after consultation with their relevant ministries. 55 Malaysia informed the meeting on the organization of the Malaysian International Cocoa Fair 2005 (MICF2005) by the Malaysian Cocoa Board to be held from 15-19 July 2005. The cocoa fair would comprise of three events: conference, exhibition and dinner. Member countries were invited to participate in the events of this cocoa fair. DATE AND VENUE OF THE NEXT MEETING 56 The meeting agreed that the 9 th Meeting of the ACC on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme to be held in Singapore pending the approval from the relevant Ministry in Singapore. The hosting country will propose the date of the meeting but not later than June 2006. ADOPTION OF THE REPORT 57 The meeting unanimously adopted the report of the 8 th Meeting of the ACC on the ASEAN Cooperation and Joint Approaches in Agriculture and Forest Products Promotion Scheme held in Denpasar, Bali, Indonesia on 21-22 June 2005. ACKNOWLEDGEMENT 58 The Chairman of the ACC expressed his gratitude and thanks to all delegates for their active participation in the meeting. The delegation of Malaysia and Singapore expressed their sincere appreciation to the government of Indonesia in particular the Ministry of Agriculture 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.

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