Cocoa Prices Pushed up in Asia as Demand Soars
16 Jul 2014 --- A rapid rise in the volume of chocolate consumed in Asia is pushing up the price of cocoa beans to the highest level in three years, according to reports. And experts are predicting prices to increase by as much as 10% by the end of this year.
The Asian market, which currently has the lowest demand (per person) for chocolate in the world, is expected to grow at almost twice the global rate over the next four years, according to research.
And this rising consumption in emerging markets such as China and India could lead to shortages of cocoa beans, according to London-based research firm, Hardman & Co.
Bulk chocolate producer Barry Callebaut has doubled capacity in Asia since 2009, while others, such as Cargill, have recently added bean-processing plants in Indonesia. Cargill’s 70,000-tonne plant - its first in Asia - will start production later this year. And agri-business Olam is also starting a facility in Asia, in 2016.
Cocoa production is a long-term concern which many producers have been trying to address over the last few years. While demand has increased, production has gone down – due to a host of reasons but most notably because cocoa farmers have been unable to make a sustainable living and therefore it isn’t an appealing career for younger generations.
Added to this are problems with deforestation, old and neglected cocoa plantations and a general move by farmers over to other cash crops such as rubber and palm oil.
“Malaysia is a good example of what happens if no-one intervenes to save cocoa production – they are moving massively into palm oil,” Taco Terheijden, Cargill’s sustainability manager for cocoa & chocolate, told FoodIngredientsFirst. “Malaysia was one of the promising countries 20 years ago but today it is clearly not. It didn’t live up to expectations in terms of production.”
Currently Indonesia, along with Ivory Coast and Ghana, are the leading cocoa growing nations. And there are emerging regions for cocoa production, according to Terheijden. “Vietnam wasn’t a cocoa producing country at all before and today it is a very small producer of cocoa, but Cargill is working with farmers there. Coffee has been successful and often that means it is the right climate and the right environment for cocoa.”
The good news is that the demand is there, so for companies such as Cargill, helping farmers now should make this a more desirable career in the long-term.
“There is a greater growth of chocolate consumption in emerging markets, which is positive,” he says. “The real acceleration of demand comes from emerging markets such as Asia. It is GDP linked. There is an increase in middle-income people, which is linked to chocolate consumption and the purchase of luxury goods.”
But there is concern that the current shortage of cocoa beans, which may get worse, is set to push prices up on a regular basis. Experts expect prices to be pushed up by at least 10% by the end of this year.
by Sonya Hook
