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Evolution and InnovationSave Biodiversity...Rise

COCOA.....Future Potential

By Virgil S. VillanuevaBWorld OnlineCarmencita A. Carillo and Carmelito Q. FranciscoCorrespondents

Cacao’s simmering potential

COCOA, the raw material for chocolate, is enjoying a turn in the commodities spotlight, with global prices driven to their highest levels since 2011 by strong demand and concern over the impact of ebola on the major producing countries of West Africa. Partly as a result of the boom, output is expected to grow in the leading Philippine cocoa region of Davao, as well as Mindanao in general. But for the growth to be sustained, Filipino planters will need to overcome years of neglect and chronic underdevelopment before they can raise their position in world markets. - 

(Click to view larger image)
 -- Illustration By Samantha Gonzales

Commodities traders are betting on economic disruptions in the ebola-hit West African region, even though none of the major producing countries is among those hit by the disease except Nigeria which has only had 20 cases -- a fraction of the thousands reported by Sierra Leone or Liberia, the epicenters of the disease. Cote d’Ivoire is the world’s coco leader and Ghana, Nigeria and Cameroon also account for significant quantities.

The actual supply numbers do not yet provide evidence of a shortage. The International Cocoa Organization, while noting that demand is strong due to improving economic conditions in much of the world, forecasts Cote d’Ivoire to break its 2010/2011 record of 1.511 million tons during the current growing season, while noting favorable weather in Ghana. Overall world production is estimated at 4.35 million tons, up 10% from the previous year’s growing season.

Global price movements may of course be based on perceptions of the fragility of Africa rather than reality, but closer to home, governments, NGOs, growers and investors have caught wind of the industry’s potential and are looking at the issue from the point of view of development as well as commercial gain. Their successes and failures in the next few years may determine whether Filipino planters can harness the boom and build an industry worthy of theobroma cacao -- the so-called “food of the gods.” 

The world is running out of chocolate and even bumper cocoa crops cannot keep up with soaring demand from Asia, the biggest international confectionery manufacturer has warned.

The Switzerland-based Barry Callebaut Group has joined a host of industry experts in expressing concerns about “a potential cocoa shortage by 2020”, which has contributed to cocoa prices rising a staggering 25 per cent in the past year.

world’s largest chocolate manufacturer adds voice to warnings of 'potential cocoa shortage by 2020'

Barry Callebaut revealed that it sold more than 1.7 million tonnes of chocolate in 2013/14 – a year-on-year increase of more than 11.8 per cent – and said in its annual report that it “expects to continue to outperform the global chocolate market”.

But it also reiterated fears raised by Mars Inc of a global shortage of cocoa and the impact that could have on the individual consumer.

Fiona Dawson, the then-UK president of Mars chocolate, warned in 2012 that the global cocoa sector “may suffer a 1 million tonne shortage by 2020 because of the increasing economic and environmental pressures on cocoa farms”, adding: “It’s just not sustainable.”

Last year, Kennedy’s Confection magazine editor Angus Kennedy said the future of chocolate could be threatened altogether by that date – and added that the “chocolate bar of the future” would be made with so little cocoa it will be “nothing like the chocolate we know and love”.

Barry Callebaut said cocoa prices rose in 2013/14 from around £1,600 per tonne to more than £2,000 per tonne – despite “strong” crops from major regions including Cote d’Ivoire and Ghana. This price rise, the company said, “has been fuelled by fears related to the Ebola outbreak in some West-African countries… el Nino forecasts… as well as financial speculation”.

The shortage warnings, the increase in demand for chocolate was almost seven times greater in Asia compared to that of traditional European markets, the manufacturer said.

In South America, the market for chocolate expanded by a massive 7 per cent. Brazil, once one of the world’s great cocoa manufacturers, has in recent years become a net importer. Efforts are being made to address the problems faced by the cocoa industry – in June, Barry Callebaut organised the second annual “Chocovision” conference to “foster collaboration” across manufacturing businesses.

But there are concerns that repeated warnings in previous years have simply not been listened to. In 2010, John Mason of the Ghana-based Nature Conservation Research Council, predicted that “in 20 years, chocolate will be like caviar”. He said: “It will become so rare and expensive that the average Joe just won’t be able to afford it.”

Potential & time for COCOA Cultivation in country and specificly in western Ghats will change the long term scale of Agro economics in these terrains.   




Cocoa production and processing shift focus on Asia

There is a shift in cocoa production and processing, progressively focusing more and more on the Asian region.

In terms of consumption, the region still consumes very little chocolate, but the appetite is increasingly growing and as the region has huge potential - producers like Cargill and Olam have announced plans to produce and process cocoa in the region, primarily in Indonesia - world's third largest cocoa grower.

While Cargill is building a $100 million cocoa facility in Gresik, Indonesia, Olam International is investing $61 million in a cocoa-processing plant in the country.

Vietnam is another country in the region that is boosting its cocoa production. Cargill has already invested in cocoa production in the country way back in 2004. The company is helping coffee farmers to grow cocoa as a second crop, as the latter is more suitable for the soil. Cargill has partnered with the Dutch government and Mars Inc. in Vietnam for cocoa production.

Industry experts predict cocoa prices to soar through 2014 due to a continuing deficit in global cocoa supply. International Cocoa Organization expects supplies to fall short of demand in the 2014-15 season beginning Oct. 1.

More on cocoa production and processing will be discussed at the upcoming Cocoa Revolution (Emerging Markets, Processing Trends, Yield & Quality Improvement) summit on 04-05 March, 2015 in Singapore.


"Availability of Cocoa Beans to Meet Growing Demand for Chocolate"

"Capitalising on Expanding Demand & Improving Quality - New Capacity Expansions in Asia"


Key Highlights :

Global cocoa markets outlook and pricing trends – will supply deficit last ?

Perspective from Emerging markets – China, India, Indonesia

Can Indonesia's cocoa bean quality compete ?

Consumption trends and new formulations including using cocoa butter equivalents and stevia etc

Exploiting cocoa waste into value-added products

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