The government of Indonesia imposed export tax on cocoa beans since April 2010. This policy has objectives to guarantee the availability of domestic cocoa beans as raw materials for domestic processing companies at an affordable price. The aim of this paper is to analyse the relation of cocoa prices between international price and farmers’ price after export tax implementation. The method utilized in the analysis is Vector Autoregression or Vector Error Correction depending on the characteristic of the data. The results show that, in the short-run relation and the long-run relation, international price has a significant effect to domestic price. There is strong correlation between the export taxes to farmer’s price as the international price is well transmitted to the domestic price. Farmers has the highest risk. Farmer encounter the uncertainty and it cause on decreasing cocoa beans production. Lack of cocoa beans supply impacts to cocoa processing industry
Keywords: Cocoa, Export Tax, Farmers, Price, Relation
