Masterfoods USA Chooses the Philippines For Its Cacao Production

30/06/06 US Confectionary giant, Masterfoods, one of the world's three biggest confectionery players, will have the Philippines as one of its primary sources of cacao beans.

Masterfoods is owned entirely by the Mars family and produces famous brands such as Milky Way, M&M's, Twix, and Snickers confectionery as well as pet foods such as the well-known Whiskas, Chappy, and Pedigree brands, human foods including Uncle Ben's and non-confectionary foods such as Combos. The company, together with Nestle, is one of several participants in a 10-year (2006-2016) cacao production roadmap program.

The program is created by the Department of Agriculture (DA) in collaboration with the Cocoa Foundation of the Philippines  (CFP). The United States Department of Agriculture (USDA) is bankrolling the project with a $2.6-million grant. The Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance. (ACDI VOCA) and the Sustainable Cocoa Enterprise Solutions for Smallholders (Success Alliance) are also part of the project.

"Masterfoods is an important global player in the chocolate and confectionery business and its growing requirements for its expansion requirements is pushing the company to look for new and non-traditional sources of cacao beans, the Philippines is definitely on its plans," said Nicholas Richards, a cocoa farming systems advisor of Success Alliance/ ACDI VOCA and the team leader for the Philippine cacao production program.

"Masterfoods wants continuity of supply and is constantly looking for competitive edge which it believes is achievable in the Philippines. The company has a huge portfolio all over the world and requires an average of about 300,000 metric tons (MT) of raw cacao beans for its various product applications. As long as the Philippines can conform with internationally-accepted cacao standards then it has an assured market in Masterfoods, and in other buyers," noted Richards.

Under the Cacao production roadmap, Success Alliance and ACDI VOCA, both non-profit organizations, will be assisting in both the technical and market development aspects of the program, according to Richards.

"With close coordination with the local government agencies, we will help train 17,000 farmers, 1.5 million plants will be distributed to farmers, 50 postharvest facilities will be put up and about 120 cacao nurseries will be established nationwide," Richards noted. He added that when there is enough production to merit going into full stream exports of cacao, Success Alliance which operates in 40 countries, will also facilitate market linkages between the smallholder cacao producers and major buyers and traders of cacao such as ED F Man, PT Olan, Cargill, and Armarjoro.

In four years, about five million seedlings would have been distributed to farmers nationwide and production should be at the level of at least 10,000 MT according to Josephine Ramos, CFP field operations manager.

With a current annual output average of 6,000 metric tons, the Philippines imports about 24,000 to 25,000 of cacao yearly worth $50 million while domestic requirement is about 35,000 metric tons. The country's cacao production should reach 337,000 metric tons of well-fermented and dried cacao beans from 35 million productive cacao trees in 60,000 hectares by 2016 according to Ramos. This same year, it is projected that the country's revenues from the export of processed cacao products such as cocoa butter will reach $185 million.

"Raising cacao production will translate into full-time-on-farm jobs of 787,500 and will also provide additional incomes for 60,000 farm-families," said Ramos. She added that there are various export opportunities for locally-produced cacao.

"We don't even have to go so far. The potential Asian market alone can absorb 100,000 metric tons which we can supply to Malaysia, China, Japan, and Singapore. The bigger potential markets would be the United States and the European nations," noted Ramos.

Unlike other crops, the price of cacao are not prone to sharp fluctuations in price (currently trading at an average of $1,550 per metric ton in the futures market). Farmers are encouraged to invest in large scale production of cacao because of this.