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Chocolate industry may feel the pinch as global cocoa prices rise

India imports large quantity of cocoa beans and powder to bridge the gap between supply and demand in the domestic market. As per the data of International Cocoa Organisation, the cocoa prices stood at $2,687.24 per tonne on Thursday, around 20% increase year-on-year.

, ET Bureau|
Last Updated: Jan 25, 2020, 11.45 AM IST
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Higher than expected second cocoa crop in the country has kept the local cocoa beans prices in check.
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KOCHI: Indian chocolate industry is likely to feel the pinch of the rise in global cocoa prices because of a supply crunch.

India imports large quantity of cocoa beans and powder to bridge the gap between supply and demand in the domestic market. As per the data of International Cocoa Organisation, the cocoa prices stood at $2,687.24 per tonne on Thursday, around 20% increase year-on-year.

“The impact of the current price rally may be reflected in the Indian market in another three months as the importers usually book orders in advance,” said Durga Prasad, managing partner, DP Cocoa Products, a major cocoa processing company.

Adverse weather and production cap by West African countries, the largest producers of cocoa, have limited the global supply.

Advance estimates by the Directorate of Cashew nut and Cocoa Development shows Indian production at 25,783 tonne for 2019-20, up by 7.5% from the previous year. Andhra Pradesh and Kerala are the main producers. The requirement is nearly three times higher with a lot of chocolate factories coming up in the country. India imported 52,739 tonnes of cocoa beans in 2018-19, up 57% year-on-year.

Another major concern of the chocolate industry is the increase in the prices of vegetable fat which is widely used as the substitute for costlier cocoa fat, though it can be imported without duty from the Asean countries. “It has gone up by 30%. Moreover, the milk powder prices too have doubled making it harder for the chocolate makers,” Prasad said.
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Higher than expected second cocoa crop in the country has kept the local cocoa beans prices in check. “The dry bean prices have recently moved up slightly from ?170 to ?180 per kg. It was hovering around Rs 200 per kg a year ago,” said M Suresh Bhandary, managing director of Mangaluru-based Campco, a cocoa processor and chocolate maker.

A poor second harvest towards the end of 2018 after the rain and floods in Kerala saw the import going up in FY19. However, a good crop during the main harvest in April-May 2019 saw the chocolate industry heaving a sigh of relief.
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