World cocoa bean production for the 1997/98 season (October/September) is forecast at 2.76 million metric tons, up nearly 2 percent from last year's revised outturn of 2.71 million, but 6 percent below the record 2.93-million-ton outturn in 1995/96. The 1997/98 increase over the previous season is based upon projections of larger harvests in Cote D'Ivoire, Ghana, Brazil, and Indonesia.
In Cote d'Ivoire, the world's largest cocoa bean producer, the 1997/98 forecast of 1.18 million tons is up 4 percent from last year, but down 3 percent from the 1995/96 record outturn of 1.22 million. The projected increase is due to good rains during the flowering and growing period and rising production from hybrid varieties despite drought conditions from July into September. The drought conditions since the latter part of July have had little adverse effects on the crop development due to cloudy and cooler than normal weather. The favorable and well-distributed rainfall from May through June contributed to increased pod formation and development. Field observations indicated there are significantly more pods and flowers on trees this year than the previous year. Unlike previous seasons, a greater number of pods on trees remain unripe. Most farmers are on their first harvest while at this time last year they were on their second or third harvest. In 1997, insecticide use for capsid treatment remained limited due to the high cost of inputs and the absence of group efforts in spraying. Farmers say they cannot afford the cost of treatment due to falling income from cocoa sales. Normally the first treatment is given from July to September, but field visits gave little indication of any treatment.
The projected harvested area and bearing trees in 1997/98 are expected to each increase by 1 percent, respectively. Area expansion is expected to moderate in 1997 because of the restrictions imposed on illegal plantations in gazetted forest areas. (A "gazetted" forest is a government classified forest where forest exploitation activities are prohibited.) Farmers prefer to cultivate inside the gazetted forest because of the fertile soil and shades provided by trees. Although the government has stopped destroying plantations in gazetted forest areas, it has asked farmers to stop further expansion and intends to destroy new farms created in these protected areas. Available cultivable land outside the gazetted forest is limited and subject to competition from other crops such as coffee, rubber, and oil palm.
The government of Cote d'Ivoire announced the opening of the 1997/98 cocoa marketing season as October 2, 1997. In addition, the government increased the minimum indicative producer price of cocoa to 415 CFA F/kg. for the 1997/98 marketing year, up from 315 CFA F/kg. in 1996/97. According to sources, the new indicative producer price represents about 38 percent of the world market price. However, this price is still lower than that of neighboring Ghana and may lead to "informal" exports.
Exports of cocoa beans during 1996/97 are preliminarily estimated at 1.01 million tons, about unchanged from the 1995/96 level of 1.02 million tons. Exports of cocoa beans during October-June 1996/97 were 934,357 tons, down from the 962,864 tons exported for the same period of 1995/96. Exports are down in 1996/97 because of the reduced supply of cocoa beans. Exports during 1997/98 are forecast at 1.05 million tons, up about 4 percent from the 1996/97 estimate. Exports of cocoa cake, cocoa paste, cocoa butter, chocolate, and cocoa powder are forecast to continue to increase in 1997/98 with the expansion of cocoa processing capacity. Exports of cocoa beans and cocoa products during 1997/98 are forecast at 1.2 million tons, up over 4 percent from 1996/97.
Cote d'Ivoire's domestic cocoa processing capacity during 1996/97 was an estimated 185,000 tons per year. During 1997/98, this total is expected to increase to 250,000 tons with the completion of the CEMOI factory in October 1997, and the Unicao expansion program. The CEMOI factory will have a processing capacity of 60,000 tons and will produce cocoa butter, powder, and cake. Unicao's expansion plan is to increase its current capacity of 20,000 tons to 86,000 tons in 1998. Other expansion plans in Cote d'Ivoire are estimated to bring processing capacity to 351,000 tons by the end of 1998, and to 500,000 tons by the end of 2000. One such plan is for a vegetable oil factory, Oleatech, to process cocoa beans into cocoa butter. Estimates of processing by Oleatech for 1997/98 total 25,000 tons.
According to news sources, Cote d'Ivoire has officially approached the European Union (EU) about the EU's proposed directive to allow the use of up to 5 percent non-cocoa vegetable fat in chocolate products. The paper presented to the EU by the Cote d'Ivoire argued that the directive is unnecessary because the disposition to replace cocoa butter with vegetable fats already exists in EU legislation, that the testing methods used allow for a substantial margin of error, and that the directive violates several international agreements previously signed by the EU. Sources state that the EU proposal could cut EU consumption by 200,000 tons of cocoa beans.
In Ghana, the 350,000-ton-crop forecast for 1997/98 is up 8 percent from last season's revised estimate of 324,000 tons, but 13 percent less than the 1995/96 crop of 403,000 tons, Ghana's largest cocoa crop in thirty years. The expected increase in outturn over last season is due to the cyclical recovery of cocoa trees. Further, the rainfall pattern has had a positive influence on the 1997/98 crop. This pattern of intermittent rain, broken with ample sunshine in the forest zones, is expected to reduce Black Pod disease during the upcoming season. The government of Ghana (GOG) announced a 50-percent increase in the producer price for cocoa in the 1997/98 season. This price hike has acted as an incentive for cocoa farmers to increase production. Farmers who were planning to give up cocoa farming have returned to weeding and replanting their cocoa tree areas. As a result of the substantial increases in the producer price of cocoa during the last two seasons, the enthusiasm and interest of cocoa farmers to expand production have been greatly enhanced. The main crop harvest, which begins in October, is forecast at 320,000 tons. The 1997/98 mid-crop, due to be harvested from May through June 1998, is forecast at 30,000 tons.
The current cocoa tree population is continuing its upward trend and harvested cocoa area has also been increasing gradually over the past few years. These two factors have been the leading reasons for the upward trend in cocoa production for Ghana. The western region of Ghana continues to lead the country in cocoa production, accounting for more than 45 percent of the total output. The overall policy of the Ghana Cocoa Board (Cocobod) is to increase Ghana's cocoa production to 500,000 tons by the year 2010. For this to be achieved, it will require significant reclamation and rehabilitation of abandoned cocoa plantations in the face of the depletion and dwindling of forest lands suitable for cocoa production.
The cocoa industry continues to be the backbone of Ghana's economy, employing about 25 percent of the total labor force. The GOG policies for the cocoa industry have made cocoa production one of the most prestigious and profitable activities in the country. With the GOG's steady, yearly increase in the producer price, more abandoned farms are gradually being reclaimed, and are being replanted with early maturing, high-yielding cocoa varieties. This is in addition to the establishment of new cocoa plantations in the western region of Ghana. Cocoa farming in Ghana has shifted from the traditional areas of the Eastern region to Ashanti, Central, and Brong Ahafo regions. This movement became necessary following the exhaustion of the forest lands in the previously cultivated areas.
Cocobod announced on October 15, 1997, that the 1997/98 main crop cocoa season would begin October 17, 1997. In addition, it announced that the producer price to be paid at all buying centers would be 1.8 million cedis ($807) a ton, a 50-percent increase.
Ghana's exports of cocoa beans and cocoa products in 1997/98 are forecast at 360,000 tons, bean-equivalent weight, an increase of 4 percent above the preliminary 1996/97 level. Of that total, cocoa bean exports in 1997/98 are forecast at 310,000 tons. During 1996, Ghana exported nearly 70 percent of its total exports to the United Kingdom, Germany, and the Netherlands.
The planned expansion of cocoa processing in Ghana did not occur. Ghana's total installed cocoa processing capacity remains at 80,000 tons. The breakdown is: PORTEM, Tema (20,000 tons); WAMCO I, Takoradi (20,000 tons); and WAMCO II, Takoradi (40,000 tons). A new company, Caridem Company Limited, has been licenced to process cocoa in Ghana. However, the company is yet to become operational.
In Brazil, the 1997/98 production forecast of 152,000 tons is up 5 percent from the revised 1996/97 estimate of 145,000 tons, the smallest cocoa crop on record. Bahia's 1996/97 mid-year crop was revised to a record low of 54,000 tons, down 47 percent from the previous crop. This reduction is attributed to the effects of a mixed weather pattern affecting Bahia's cocoa region. This included a prolonged dry spell from November 1996 until February 1997 which adversely affected crop flowering and development. This was followed by heavy rains at the end of February and into early March 1997. The 1997/98 Bahia mid-year crop is forecast at 72,000 tons, up 33 percent from the poor 1996/97 harvest. Although the rains contributed to improved soil moisture levels after two years of prolonged drought, it helped spread the witches broom fungus. The impact of these rains is expected to result in a 16-percent decrease in the upcoming 1997/98 main crop to 60,000 tons.
The government, through the Cocoa Research and Extension Commission (CEPLAC), has been very slow in offering initiatives to help cocoa growers to increase production. CEPLAC announced a long-term solution to resolve the problem of witches broom through the introduction of "clones", cocoa strains resistant to the witches broom fungus. In addition, the government made available to cocoa growers a total of U.S. $340 million in funds to control this disease, but thus far it has not had any positive impact on the recovery of cocoa production. Recently, the cocoa industry and the state of Bahia announced a joint program to control the disease and raise cocoa production in Bahia with U.S. $500 million invested during the next three years. The program has 3 primary projects: a) a short-term project aimed at establishing an efficient and economically feasible pest management system for witches broom; b) a medium-term project by which CEPLAC and some large crushers will distribute cocoa strains from different world origins that are resistant to witches broom; and c) a long-term project by which potentially tolerant trees will replace old ones.
|Brazil: Cocoa Bean Production by State|
|Bahia Main Crop (October-April)||99,079||71,307||60,000|
|Bahia Mid-Year Crop (May-September)||101,475||54,000||72,000|
Brazil's exports of cocoa and cocoa products are forecast to continue to decrease. During October-September 1996/97, exports of cocoa and cocoa products are estimated at 49,005 tons (bean equivalent), a drop of 48 percent from the 1995/96 level. During 1997/98, Brazil's exports are forecast to increase nearly 18 percent, mainly in response to the higher crop.
Brazil's consumption of chocolate continues to grow. According to the International Cocoa Organization (ICCO), Brazil's consumption of cocoa and cocoa products from 1988/89 to 1995/96 rose 89 percent, from 62,700 tons to 118,500 tons. As a percentage of cocoa production, domestic consumption of cocoa and cocoa products rose from an average of 35 percent of cocoa production in the late 1980's, to more than 80 percent of the 1996/97 production. Brazil's domestic consumption of cocoa and cocoa products is expected to continue to grow at an estimated 6 percent per year.
The four big processors of cocoa in Brazil--Cargill, Joanes (ADM), Nestle, and Chadler--have an estimated crushing capacity of more than 260,000 60-kilogram bags per month. However, processors have idle capacity because of the shortage in domestic production of cocoa. During 1996/97, processors joined efforts and imported 15,000 tons of cocoa beans from Indonesia to help meet their crushing needs. During 1997/98, imports of cocoa beans are forecast at 24,000 tons, an increase of 60 percent over the previous year.
The 1997/98 forecast for Indonesia cocoa bean production of a record 325,000 tons is up 1 percent from the 1996/97 outturn of 322,000 tons, the previous record year. Despite the current dry conditions in the country, more mature trees and better management, including the handling of cocoa pod borers during the last few years, have contributed to the projected increase in cocoa production. The forecast of cocoa area harvested in 1997/98 at 330,000 hectares is up 6 percent from the previous season. The number of bearing trees is also up 6 percent from last year.
The government of Indonesia (GOI) and the Indonesian Cocoa Association consistently aim toward increasing cocoa production and also improving bean quality. Their efforts include providing extension services to farmers on proper planting, pruning, fertilizer and pesticide application, harvesting, and fermentation. The GOI released new cocoa varieties on July 21, 1997, called "GC 7" and "DRC 16". These varieties produce higher yields, lower percentage of inner skins, and higher fat content than former varieties cultivated. These new varieties are resistant to pests, Phytophthora Palmivora. In order to increase cocoa production, the local government of Badung, Bali provided farmers with 37,000 free cocoa seedlings in 1996 and 24,000 in 1997. The GOI along with other members of the cocoa industry and the American Cocoa Research Institute coordinated technical assistance on the management of cocoa pod borers in South Sulawesi in October 1996. The project demonstrates techniques to keep the negative impact on cocoa pod borer attacks to as low as 15 percent compared to 80 percent without control.
Indonesia's exports in 1997/98 of total cocoa beans and cocoa products are forecast at 290,000 tons, up less than 1 percent from 1996/97. Cocoa bean exports are forecast at 231,000 tons, or nearly 80 percent of the total. In order to encourage better quality cocoa bean exports, cocoa bean exporters are not subject to the value added tax.
Domestic consumption of cocoa and cocoa products in Indonesia is forecast to increase 3 percent in 1997/98 to 37,000 tons. According to sources, domestic consumption will continue to increase but at a slower pace. Cocoa butter substitutes, such as palm oil, have been introduced in the food industries. These cocoa butter substitutes are cheaper. Total installed cocoa processing capacity is estimated at 50,000 tons per year.
Exports of cocoa beans in 1997/98 are forecast at 110,000 tons, down 14 percent from 1996/97, mainly as a result of reduced supply. Most of the remaining supply will be processed into cocoa butter, cake liquor, and powder. Most of the processed products are exported. Domestic consumption of cocoa products in Nigeria is small and limited to beverage production and pharmaceuticals.
Total cocoa bean processing capacity in Nigeria is estimated at 120,000 tons, from 13 factories, that are processing or will start to process in 1997/98. However, actual cocoa bean processing in Nigeria is estimated at only 30,000 tons in 1997/98, up from 25,000 tons in 1996/97. Sources indicate that this low processing utilization is because of the inability to stockpile cocoa beans during the main season and exporters competing for the cocoa beans. Processor margins are often minimal because they are forced to buy cocoa beans at close to the world market price.
The 1997/98 cocoa bean forecast of 115,000 tons is down 4 percent from last season and less than half the record harvest of 240,000 tons set in 1989/90. The decline in area cultivated with cocoa and the adverse weather conditions at the end of 1996 had negative effects on cocoa bean output. The slide in cocoa production is expected to continue in 1997. Some cocoa trees are in the process of being removed once the new inter-crops such as oil palms start bearing fruit. Conversion of cocoa area to oil palm cultivation has decelerated. Although cocoa prices are experiencing an upward trend, palm oil prices are even more attractive. For the near term, plantation houses are likely to concentrate on oil palm production.
Malaysia's total cocoa processing capacity is estimated at 140,000 tons. Total processing during 1996/97 is estimated at 115-120,000 tons. As production continues to decline, Malaysia's imports of cocoa beans have been increasing to supply cocoa beans to the processing facilities. Also in response to the reduced supply, cocoa bean exports have declined as well. Cocoa bean exports during 1996/97 are estimated at 35,000 tons, a drop of nearly 25 percent from 1995/96. During 1997/98, cocoa bean exports are forecast to decrease further, albeit at a slower rate of decline. China and Singapore are the top two markets for Malaysia's cocoa bean exports. Exports of processed products have fared better than cocoa beans. During 1997/98 exports of cocoa liquor and paste, cocoa butter, and cocoa powder, cake, and chocolate are all forecast to increase from the 1996/97 levels.
European Union--On October 8, 1997, the EU Environment Committee passed a compromise directive concerning the use on non-cocoa fats in chocolate products. The directive would allow EU-member states to use up to 5 percent of non-cocoa fats in chocolate. The compromise was adding an amendment calling for stricter labeling. However, the non-cocoa fat label would not have to be prominently displayed beside the product name. The amendment requires manufacturers to place a label next to the list of ingredients when non-cocoa fats are included. The directive, if finally adopted by parliament would then go before EU ministers.
United Kingdom--According to the Biscuit, Cake, Chocolate and Confectionery Alliance (BCCCA), U.K. third-quarter 1997 cocoa grind was reported at 41,180 tons, down nearly 16 percent from the third quarter of 1996, and down nearly 4 percent from the second quarter of 1997. According to sources, the U.K. grind was below expectations.
Germany--Germany's third-quarter 1997 cocoa grind was down only slightly, less than 1 percent, from last year's third-quarter grind. Third-quarter 1997 grind was reported by the German Confectionery Industry Association at 65,233 tons, up nearly 14 percent from the second quarter of 1997. Sources said that the cocoa grind was in line with expectations.
Netherlands--According to the Dutch Cocoa Association (NCV), the Netherlands posted a 2-percent gain in its third-quarter 1997 cocoa grind. Third-quarter 1997 cocoa grind was 101,817 tons, compared with 99,549 tons in the third quarter of 1997.
France--Grind numbers are not reported from France. However, imports of cocoa beans during January-July were reported at 72,896 tons. This represents a drop from 76,737 tons imported during the same period of 1996. The majority of cocoa beans are imported from Cote d'Ivoire, representing nearly 72 percent of the January-July 1997 total.
Following are estimates of cocoa stored in Europe:
|September/early October||Month Ago||Change from month ago|
|U.K. (all ports)||47,000||50,275||3,275|
Russia--U.K. confectioner Cadbury Schweppes officially opened a chocolate plant in July in Russia. The plant is in the town of Chudovo, near St. Petersburg. Cadbury Schweppes said that the plant processes 40,000 tons per year. This plant will supply the Russian market as well as export confectionery to other former USSR countries.
In addition, Germany's Stollwerck opened a 20,000-ton plant near Moscow. Russian demand for Western confectionery products has increased significantly since 1991, when economic reforms began. Both companies have built plants close to areas of demand as consumption is forecast to continue to increase.
Ukraine--According to industry representatives, Ukraine's imports of cocoa beans and cocoa products have more than doubled. In the first 8 months of 1997, Ukraine imports of cocoa beans and products were 9,000 tons, versus 4,000 tons in the same period of 1996. This has resulted in a doubling of chocolate production in 1997. Most of the imports are from Cote d'Ivoire and Ghana.
U.S. third-quarter 1997 cocoa grind climbed to 105,984 tons, an increase of nearly 13 percent from the same period in 1996. This is on top of a nearly 18-percent gain in the second quarter of 1997. January-September 1997 cumulative U.S. cocoa grind is 298,642 tons, an increase of nearly 17 percent over January-September 1996. The Chocolate Manufacturers Association also reported the quantity of liquor melted during the third quarter at 1,823 tons, down 17 percent from the third quarter of 1996. In addition, butter melted was reported at 15,992 tons for the third quarter of 1997, compared with 16,982 tons for the same period last year, a decline of nearly 6 percent. According to trade sources, the increase in cocoa grind was somewhat larger than anticipated.
U.S. exports of cocoa and cocoa products are forecast at a record $440 million in October-September 1996/97. If realized, this represents an increase of 5 percent from the previous high of $419.4 million in 1993/94, and an increase of 15 percent over 1995/96. U.S. exports during October-August 1996/97 are reported at $395.4 million, an increase of 15 percent from the 1995/96 level. Most of the increase is attributed to higher exports to Canada. In October-August 1996/97, U.S. exports of cocoa and cocoa products to Canada are reported at $185.7 million, up 25 percent from the same period in 1995/96. Most of the increase in U.S. exports to Canada, year-to-year, is attributed to larger U.S. exports of cocoa paste, not defatted, and confectionery for retail sale. In comparison, U.S. imports of cocoa beans and products during October-August 1996/97 were $1.3 billion, compared with $1.2 billion during the comparable period a year ago. If this pace continues, U.S. imports of cocoa beans and cocoa products will total $1.4 billion in October-September 1996/97.
|U.S. Exports of Cocoa and Cocoa Products by Country|
International Cocoa Organization (ICCO)
At its meeting in September, the ICCO resolved the dispute concerning its Reserve Fund. The creation of this fund is necessary to provide the ICCO with operating funds. Previously, the members of the ICCO agreed to sell its cocoa buffer stocks. The proceeds from the sales have provided about 50 percent of the ICCO's annual budget. The buffer stocks are to be fully sold by March 1998, and another source of revenue was needed. The members of the ICCO agreed to fund the Special Reserve Fund at 2.5 million stg, of which 1 million stg will come from buffer stocks sales proceeds. Each country will contribute proportionately to make up the rest of the 1.5 million stg for the fund.
The Association of Coffee Producing Countries (ACPC) announced an agreement to maintain its current coffee export restriction program at 52.75 million bags in 1997/98 (July-June). Individual country export targets for 1997/98 were the same as the 1996/97 levels. Members of the ACPC also agreed to limit exports in 1998/99 to the same level as 1997/98. According to sources, however, Indonesia will decide to join the 1998/99 program at a later date. The ACPC members are Brazil, Colombia, Indonesia, Uganda, Cote d'Ivoire, El Salvador, Angola, Costa Rica, Ecuador, Kenya, Tanzania, Togo, Venezuela and Zaire. These 14 countries represent about 75 percent of world coffee exports. The breakdown of export targets for 1997/98 follow in millions of 60-kilogram bags.
|Country/||First Semester||Second Semester|
Also according to the ACPC, member exports during 1996/97 (July-June) exceeded the ACPC's target of 52.75 million bags by 3.776 million bags, or 7.2 percent. According to the ACPC, Brazil was over by 10.7 percent; African producers were over by 16.1 percent; Central American producers were over by 3.2 percent; and Indonesia was over by 2.4 percent. Colombia was under their target level by 0.8 percent; and Venezuela was under by 27.3 percent. Following is a complete breakdown in million of 60-kilogram bags:
According to the Banco do Brasil, the government of Brazil will auction 70,000 60-kilogram bags of coffee from its stocks especially for the soluble industry. The auction will take place on October 28, 1997. The coffee is from the crops from 1981/82 to 1987/88. Other auctions by the government of Brazil follow:
|Brazil: Auction of Government-Owned Coffee Stocks|
|Date of Auction||Quantity Offered||Quantity Sold||Price Range|
|April 2 (all segments)||300,273||102,745||135.58-152.52|
|April 2 (domestic||25,915||25,915||62.49-74.14|
On October 6, 1997, Colombia cut its premium demanded for its export-quality excelso coffee. The price differential, or premium demanded, was dropped from $0.30 per pound to $0.16 in order to boost Colombia's competitiveness in world markets, according to the Finance Minister. The Finance Minister also announced changes in the formula used to calculate the internal coffee price.
According to the National Confederation of Rural Coffee Plantation Owners (CNPC) Pauline's deadly winds leveled plantations in the southwestern state of Oaxaca which produces approximately 14 percent of the national coffee crop. Oaxaca producers estimated the hurricane destroyed several thousand hectares of coffee plantations in the state. Losses are not yet quantified since poor road surface conditions hamper a more accurate assessment of the overall damage.
Folgers announced that it will decrease the list price of its 13-ounce can of ground regular and decaffeinated coffee by 30 cents, effective November 3, 1997. This takes the price down to $2.76 for regular, and down to $3.46 for decaffeinated.
U.S. coffee stocks at the end of September totaled 2.294 million bags, down 289,000 bags from the August 31, 1997, level. Details follow:
|Location||August 31||September 30||Difference|
India--India is expected to remain a leader in spice exports, according to trade sources. India's share of world trade of spices is forecast to increase to 25 percent by the year 2000. Growing demand for spices, especially pepper, should provide incentive to India to increase its production and exports. India produces about 50 varieties of spices and is the world's largest producer and exporter, accounting for about 20 percent of world consumption. Following are statistics on India's area, production, and exports for 1993/94 and 1994/95 for major spices.
India: Area, Production, and Exports of Major Spices
|1,000 hectares||1,000 tons||1,000 tons||1,000 hectares||1,000 tons||1,000 tons|
Source: Indian Spices.
Following is information concerning the production of pepper, as reported by the International Pepper Community.
|Pepper Production in Producing Countries|
Source: International Pepper Community.