Learnings from the Asia Choco Cocoa Congress 2015
Following the Asia Choco Cocoa Congress 2015 (AC3) concluded in Singapore recently, there is reason enough to believe that the future of the world’s cocoa is in safe hands. The AC3 had the best and most active minds from the world of cocoa assemble in Singapore to discuss the current issues and initiatives but more importantly, come on the same platform and share experiences which would go a long way in assisting farmers and the entire industry tackle and face the challenges more efficiently. Having said that, no one conference can aim to solve the problems but this is an important event and investment into going the right direction.
In the backdrop, of many reports concerning the availability of Cocoa and our favourite chocolates after 2020 and increased consumption in India and China, the AC3 was an interesting collection of discussions which opened our minds and paved way to better understand and agree that collaboration was the way forward and that the unthinkable may actually happen if we do not do our best to preserve the crop. Preserving cocoa for the future involves introspection of many aspects of the eco system. There were interesting debates about what will the industry have to do to ensure that the next generation of the cocoa farmers continue to grow cocoa and strive to achieve excellence by sustainable farming using Good Agricultural practices. Most important of all, it was discussed is that the price offered for the produce should be fair which helps them earn a livelihood for themselves and helps them educate their children. This cannot be achieved unless everyone in the eco system plays a role and ensures that the farmer gets a significantly more value for their produce.
Asia is an important market and has recorded the highest rate of growth for cocoa consumption (31%) from 2008-2013 (Source: ICCO). Developing countries like China and India are predicted to consume 6% of global retail chocolate confectionery by 2017. The extent of the Aisian growth story has such a huge impact that Hersheys has invested $250 Million into a plant in Malaysia and is the single largest investment in Asia in company history. India in specific is an interesting country since on one hand it grows cocoa and also is slated to be a large consumer of chocolates in the future. We have heard many cases of farmer suicides in India. Most of them grow the general mass produced crops and are unable to sustain and support their families. Lack of education, access to resources and finance can be summed up as some of the main reasons. This is saddening to hear. However, when it comes to Cocoa, there is a very large global interest in preserving the crop worldwide and at AC3, the best minds have taught me one thing – “Where there is a will, there is a way!”
The AC3 conference focussed on all aspects of the Cocoa value chain and it had eminent speakers, sharing their knowledge and learnings from their past years work/efforts globally. Starting from Temperature predictability, Environment conservation, Usage of fertilisers, Pre harvesting techniques, Post harvesting techniques, Finance/buyback of the Cocoa from farmers, Sustainable farming and Productivity improvements. The event focussed on assuring the participants that, while the media is shouting out loud that Cocoa will disappear by 2020, there are enough efforts being made to ensure that the whole eco system is being monitored and many forces and agencies are working rigorously and on an on-going basis to implement various programs to help preserve the crop and infact increase sustainable productivity.
Mr Han Loke Fong, from ICCO, discussed the risks of surplus production of Cocoa and the impact of it on price. He observed that the cycle results in surging prices of cocoa when supply is less, followed by increase in production worldwide resulting in decrease in global prices and subsequent decrease in production due to shift of farmers interests to other alternate crops for lack of ROI. While this can be managed for many other crops it is a great threat to the sustainability of the cocoa sector. Remunerative and sustainable/consistent prices that compensate farmers sufficiently to ensure a living income is a necessary condition for the sustainability of the cocoa sector.
MSc. Carlos Jimenez, General Director, Asia Choco Cocoa Congress AC3 noted that improved production techniques to ensure improved yield, simulate natural driving process, reduction in waste and ensuring upto 95% uniform fermentation were required to produce standard and predictable quality of output in all batches. He explained how their well designed automatic control system which controls, Humidity, Temperature and Co2 helps in increasing productivity.
Many speakers also observed how the manufacturer and seller of the final chocolate adds upto 65% of the price to the product with very little going to the farmer or other processors in the process. It was unanimously proposed and agreed that farmers should clearly get more of the total pie. Today they get as little as 3-4% of the total price of the final chocolate. In order for the farmer to see a future in growing Cocoa, this situation has to change. The most straightforward way is for the producers and resellers passing on some more benefit to the farmer and incentivise him to remain interested in the business and grow better quality cocoa and also to increase yield.
Bill Guyton, President of the World Cocoa Federation focussed his conversation on sustainability and spoke about Cocoa action, a strategy, unlike many other programs that assist farmers, can be a holistic solution to the issues that face us today. Mr Guyton explained the various challenges that have hit the Cocoa industry hard like the Witches Broom in Brazil in 2000, Child labor allegations in 2001, Export tax levied in Indonesia to protect the domestic crop and encourage the processing of cocoa within Indonesia to the more recent Côte d’Ivoire reforms. Cocoa action further aims at investing into applied research, Disease and pest management, mapping Cocoa Genome, exchange programs, Youth Education and African Cocoa Initiative.
I have always wondered why most of the international beans used in chocolates even in countries like india are from Ghana and the following will help you understand the reason better. Mr Hans G.P. Jansen, Sr. Agric Economist World Bank, Ghana Country Office detailed out the Ghana model for Cocoa and discussed possible lessons for Asia. He explained that Cocoa in Ghana is mainly grown on relatively small farms and purchased for export by COCOBOD through Licensed Buying Companies (LBCs). All cocoa farmers in Ghana (irrespective of location) receive the same price for their cocoa (as long as it meets minimum quality standards). Government controlled Quality Control Division (QCD) grades and seals cocoa into export sacks. Some very interesting facts were presented about Ghana and the way Cocoa farmers manage to get their fixed price for cocoa (prices are fixed by COCOBOD) and farmers have to sell their produce to the Licensed Buying Companies (LBCs) only. The way in which internal cocoa marketing is organized assures prompt payment to farmers. As a result of this, Ghana is known for its ability to deliver on forward contracts with little counterparty risk to buyers. However, Cocoa yields in Ghana are lower than other West African countries and below the achievable yield. While, the LBC’s compete to increase their share of sourcing from the farmers and this may sound like a very fair situation for the farmer, the farmers are not incentivised to improve on the quality of cocoa. The machinery today does not work efficiently to help farmers really benefit from better input materials etc. This has a very deep and long term impact on the countries future as a producer of good quality cocoa. Low yields and input access threaten the successful achievement of all three cocoa sector priorities which are: Sustainability, Farmer Livelihood and Competitiveness. Mr Jansen then presented his recommendations to handle the challenges which include abolishing the export taxes, improved operations efficiency in the system, privatisation of input delivery, increased efforts aimed at raising cocoa productivity among others. These are great lessons for Asian countries and a way to give direction to a countries growth in the cocoa sector.
Mr Soetanto Abdoellah, Chairman, Indonesia Cocoa Board, Indonesia discussed how the imports of beans have increased into Indonesia and how processing them seems like a growing trend. However, concerned about the decline in domestic production, they are embarking on a program to increase productivity from the current cropping area. They are further taking steps to make their produce more marketable and introducing standards of outputs including specifications for post harvesting methods like fermentation. He further evangelised the concept of “climate smart agriculture” since the average temperature and humidity in Indonesia has been on the rise for the last few decades. This entails intercropping, crop rotation, improved grazing and water management and better weather forecasting.
At the conference, even the finer aspects of maintaining the ideal conditions while storing and transporting cocoa were discussed. Controlling humidity was a very important aspect of preserving cocoa during transport. Mr Bester Pansegrouw from Stopak, bought to our attention the extent of damage that humidity caused to the Jute bags that were traditionally used to transport Cocoa. Damages have reduced considerably in the recent past, but even as early as 5 years ago, there were events of damage of upto 45% of a full container! He explained how the current methods were not very effective and that there is a lot of effort to be invested into ensuring that Cocoa is not damaged during transport and storage. Clearly there was a need to look into this aspect of damage since most of the Cocoa is grown in tropical climate with high humidity and transport happens on high seas which result in very high humidity.
Other organisations like Solidaridad, run programs like Cocoa Rehabilitation and intensification program (CORIP) in Ghana where they provide assistance across the value chain for cocoa farmers including Planting material, Agrochemical Inputs, Training of Farmers, Credit Facilities and buying of beans. In the past, the program has realised an increase of 20-30% in production, helped grow 414,000 tons of Sustainable Cocoa and assured 28% more income for the framers. This of course is possible because they provide assistance across the value chain and are privately funded.
In all, the clear message I get from the visit to theAsia Choco Cocoa Congress 2015 (AC3) conference, is that the farmer is at the centre of attention by all the agencies because almost all participants in this eco system agree that Cocoa needs to be grown sustainably for us to continue to enjoy our most favourite eating pleasure, the humble chocolate, beyond our generation. The challenges include, educating the framers with latest technology, making finance and planting materials more accessible, drawing the next generation of farmers to the farming profession, Increasing productivity and ensuring the farmer gets a higher price for his produce. There are many agencies, banks, organisations and associations across the globe who are keen, interested and eager to get the farmer his share and make Cocoa sustain the demands of the future. No where else i have seen this kind of intensity in all stakeholders to ensure that the larger interest of the global population is preserved AND it is important to remember that “Where there is a will, there is a way!” Long live Cocoa!
Link to the event: http://www.imapac.com/business_conference/asia-choco-congress-2015/
Disclaimer: Cocoatrait was the exclusive and official media partner for the Ac3 from India