Prospects in Cocoa

The Philippines is not one of the main cocoa producers in the world but we have families that derive income from cocoa farming and manufacturers that process the raw cocoa beans for use in other industries. Although cocoa in the past experienced a slowdown in the global market, the industry is starting to pick up again, as there is an increase in demand for cocoa. A revitalized cocoa industry would mean grabbing this opportunity. We maybe a small player in the global market for cocoa but we can optimize what our cocoa industry could offer. Cocoa in the Philippines is grown in less than three hectares of land by small holder farmers. Aside from a source of additional income for farmers as this cna be planted along with other crops, cocoa farming also provide employment in the rural areas. Cocoa beans, once fermented and dried , can be stored for several months. Thus, storage is not a problem.

Cocoa beans are processed into cocoa butter or cocoa liquor. These are used in the manufacture of chocolate products, cosmetics, pharmaceutical products and other industrial applications. The husks and skins, by-product during the grinding process, are used as soil enhancer and mulching material for gardening.
Despite the many uses of cocoa , the prospects in cocoa production are not as sweet unless we do something to improve it. As the whole cocoa industry in the country attest, it is not as promising as before. World prices for cocoa have plummedted from 4000 US dollar per metric ton in 1979 to just 880 metric ton in 2000 along with increase in prices and limited availability of production inputs. Furthermore, loan facilities and support structure for cocoa farmers and R&D efforts to address problems caused by pests and diseases are very few.
The unprecedented decrease in cocoa prices made cocoa farmers shift to other more profitable commodities. This resulted to less domestic supply of cocoa beans. Trade liberalization even exacerbated this problem through lower tariffs for imported cocoa powder. Under Executive order no 254 signed in JUNE 2000, Tariff was placed at 3 percent making imported cocoa powder cheaper than the local ones thus capturing a larger market share. We lose at least 14 million US dollars annually because of this. There is less cocoa grinding and manufacturing operations taking place. As if this is not enough, starting late in the 1990’s our export of cocoa butter decreased by 11 percent annually and we have exported only a small volume of cocoa beans from 1997 to 2000. This calls attention to our dire need for sound, consistent implementation of economic policies to uphold and protect our local industries and promote the production of our own raw materials .
But as famous adage would say, we should never lose hope. According to the International Cocoa and Chocolate Organization (ICCO), the global demand for chocolate has started to increase. In the world market, the daily average prices have increased by more than 50 percent between December 2000 and February 2001. ICCO had also projected a two-percent increase in consumption in the coming year. This offers a tremendous opportunity for our cocoa industry as ICCO had also projected a gap of 205,000 tons in terms of supply.
Presently, we have 13 cocoa and chocolate enterprises in the country. Three of them are large companies. Most of these enterprises are located in Manila with an aggregate capacity ranging from 20,000 to 36,000 metric tons of processed cocoa. With a comprehensive development program for the industry and assistance to cocoa farmers in accessing loans, we can bring the sweetness back in our local cocoa production.

Source:BAR TODAY July September 2001 issue, Maria Rowena Briones

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