Oversupply in market also a function of rising imports from Asian countries

Cocoa prices in India are down 15-20% year on year as procurement by chocolate manufacturers fails to keep pace with supply. Greater imports of cocoa beans, powder and butter from Asian countries is the major reason for the pressure on domestic cocoa, officials of Kochi-based Directorate of Cashew and Cocoa Development (DACCD) said. India imports more than half of its cocoa requirements every year, with demand increasing at a healthy rate of 8% per annum. Estimated at about R1,500 crore, the Indian chocolate market is seen as one with great potential for Western chocolate manufacturers, mainly because it?s still nascent.

?Cocoa in the form of beans, butter and powder is coming in without duty via countries such as Malaysia and Bangladesh. Bangladesh does not produce cocoa. We believe that it is routed through these countries from Africa to enjoy the lower or nil duty,? Venkatesh N Hubbali, director, DACCD told FE. ?Cocoa beans are priced around R130 per kg in the domestic market as against R160-170 per kg a year ago. Farmers in Kerala are protesting the lower returns on the crop,? he added.

Indian farmers had a disappointing start with cocoa in the 80s. However, DACCD officials said that this time cocoa is being promoted more as an inter-crop to coconut and arecanut to spread the risk. According to reports, India?s cocoa requirement is growing at around 15 % annually and is expected to touch 30,000 tonne in the next five years.

?Our production during the coming crop season (2013-14) will touch 16,000 tonne as against 14,600 tonne in 2012-13.Most of the increase will come from Andhra Pradesh. It is estimated that Andhra Pradesh will overtake Kerala as the largest producer,? Venkatesh said. Currently, 68,000 hectare are under the commodity in India, with 16,000 ha in the state of Andhra Pradesh, followed by Kerala with 11,000 ha. DACCD has plans to bring another 75,000 hectare under cocoa cultivation in the next five years.

Globally, cocoa is witnessing a renewed interest as the confectionery and chocolate industry grows briskly. People?s preference for dark chocolate relative to milk chocolate, due to its health advantages, adds to the demand.