The Hindu Business Line : Cocoa prices perk up on global demand

Kottayam, Jan 8 Though the major season for cocoa is almost over in Kerala, there are indications of improved prices due to a vibrant international market.

Wet beans are now priced Rs 35 a kg against Rs 30-32 during the season earlier. Dried beans prices have surged up to Rs 125-150.

Lean arrivals

The global scene also augurs well for cocoa.

Arrivals from African countries would be lean during the current year.

There is likely to be a shortage of 45,000 tonnes in the international market.

Heavy crop loss due to disease in Ivory Coast, a major cocoa producer, has suddenly pushed up the prices.

The inaction of manufacturers and cocoa processing units following the financial crisis in the US and the global recession has further contributed to the spurt.

But the days ahead are good for farmers who stock processed cocoa. The domestic chocolate confectionary sector needs 50,000 tonnes of cocoa a year. India produces only 32,000 tonnes.

The rest is imported, mainly from African markets. Surging prices of commodities in foreign markets and the declining exchange rates of Indian rupee have enhanced the import expenditure.

Therefore the chocolate confectionary sector is eager to procure as much cocoa as possible from the domestic market.

Swiss demand

At the same time, there is increased demand for Indian cocoa in foreign markets.

Swiss companies are showing interest in cocoa produced without chemical fertilisers in Kerala.

Unlike in other States, the butter content of Kerala cocoa is high. Cadburys, which procures cocoa from Kerala, had no competitors earlier.

But now Nestle, Amul, Campco and others are active in the Kerala market.

Following greater demand, cocoa prices increased 31 per cent in the international market in 2008. The prices shot up by 24 per cent in 2007.

Yet another price rise is imminent in January 2009 following hectic transactions in the international market.

Global demand for cocoa has exceeded production for three consecutive years now.

The likelihood of corrections is also high, especially due to the economic recession. However, the current year offers much relief to cocoa growers in the country.