Anticipated decline in the cocoa output in the coming harvest season and rising prices of imported beans will hit the chocolate industry hard in the coming months.
The cocoa processors are expecting a slump in the production during the harvest season in the country beginning November because of damage from heavy rains in Kerala and Karnataka, two major producers of the bean after Andhra Pradesh.
“The growers say the production will fall by 50%. We definitely expect a 40% drop in the production,’’ said M Suresh Bhandary, MD of Mangalore-based Campco Ltd., a major processor and chocolate producer. In 2017-18, the domestic production had shown a marginal increase of 5% over the previous year at 19866 tonnes.
The cocoa prices are hovering around Rs 200 per kg, up from Rs 170 a few months ago. “This is the off-season price, but prices are not likely to come down even when the harvest begins because of shortfall,’’ said Bhandary.
Imports are also likely to be costlier as the global prices at $2200 per tonne are nearly 10% higher from a year earlier. The International Cocoa Organization has forecast a 2% decline in the world cocoa arrivals to 4.645 million tonnes for cocoa year 2017-18 (October to September) in its revised estimates. At the same time, the demand is up by about 4% in the year, indicating a higher price.
nce the local availability will be poor, we will have to depend more on imports. Our margins will be affected as we may not be able to immediately pass it on to the consumers,’’ said YVS Sivaprasad, manager at Lotus Chocolate Company.
Higher demand for chocolates has raised the cocoa processing capacity in the country necessitating import. The beans imported from Africa, which are superior in quality, carry 30% duty while there is no duty for shipments of beans or its products from south east Asian countries such as Indonesia, Malaysia and Singapore under the free trade agreement.
“So, most of the companies import cocoa products from these countries cheaply, which has affected the processing units here,’’ said Durga Prasad, managing partner of DP Cocoa Products Pvt. Ltd. He said a reduction in the import duty of beans from Africa will benefit the processing industry here. “It will definitely equip the processing industry to meet the entire demand from the country,’’ he said.