| Subject: |
Rising cocoa prices hurt profitability; smaller processing companies in a fix |
|
KOCHI: As cocoa prices continue to rule high with demand outstripping supply and imports becoming costly, the profitability of small processing companies has been hit as they are unable to pass these on to consumers in the competitive market. Though cocoa production in the country is forecast to go up by 6% in the coming season, consumption has been increasing at a much higher rate, with new capacities coming up. The first phase of Cadbury India's new facility, claimed to be its largest in the Asia-Pacific region, with an investment of Rs 1,000 crore, is expected to be operational in 2015.
Dry cocoa bean prices are hovering at Rs 210 to 220 per kg, up 20% from the year earlier. "Our margins have been affected because of the raw material price increase. We have retail products and we also supply cocoa powder and butter to big companies like ITC, Lotte, Nestle etc," said Suresh Bhandary, managing director of Central Arecanut and Cocoa Marketing & Processing Co-operative (Campco) based at Mangaluru.
Most Campco chocolates are priced at Rs 5 to Rs 20, a category where price increases aren't considered feasible. Instead, it is plan ning to introduce a Rs 25 bar in the market. "The trend has changed and there is more demand for chocolate products than traditional sweets," Bhandary said.
The total requirement of cocoa and cocoa-based products in the country is estimated at around 35,000 tonne. In 2013-14, domestic production touched 15,133 tonne according to the Directorate of Cashewnut and Cocoa Development. It has projected a production of 16,050 tonne in the current year.
The import of cocoa and cocoabased products, which touched 16,229 tonne last year, has risen about 20% in the six months to September in the current fiscal. The price of imports, mostly from West Africa, has gone up following the Ebola scare. The International Cocoa Organisation rate is $3,005 per tonne.
"The demand is growing fast with rising incomes with newer capacities coming up in the cocoa compound manufacturing sector.The higher price of cocoa has led to a 10% increase in the prices of the products of many companies during the year," said Renny Jacob, managing director of Cacobean Chocolatein, which collects cocoa from Kerala for Cadbury India and which is also a private label manufacturer. But according to him, farmers have benefitted from the higher price, which may lead to increased cultivation of the crop. "Any price over Rs 200 is good for the growers,'' he said. The southern states are the main producers of cocoa with Andhra Pradesh in the lead.
Source : economictimes.indiatimes.com
|