Cocoa output likely to grow 20% on increase in acreage

Rise in acreage and firm demand from confectionery and chocolate drink makers are likely to raise India's cocoa output by over 20 per cent in CY07 from a year ago, industry officials said.

In 2006, India produced 8,600 tonnes of cocoa and around 27,500 hectares (ha) were brought under cultivation, according to data from Kochi-based Directorate of Cashew and Cocoa Development (DCCD). Cocoa, which is largely an inter crop with coconut, is mostly grown in the southern states and in few districts of Maharashtra and Goa.

Cocoa beans are the primary raw material for confectioneries, beverages, chocolates, and other food products.

"We are in the process of development. New areas are being developed in Andhra Pradesh, Karnataka, and Tamil Nadu. For the last three years, around 6,000 ha have been bought under cocoa," Venkatesh N. Hubballi, DCCD director-in-charge, said.

According to Hubballi, the rise in area is largely attributed to high cocoa prices in both domestic and overseas markets coupled with good procurement from the local confectionery makers.

"The dry beans are fetching good prices as demand is good," A Shanmugavel, owner of a cocoa farm in Pollachi, Tamil Nadu, said.

Cocoa cultivation in the country was going through a bearish phase during early 1980s and 1990s due to lower procurement from domestic health drink manufacturers and weak marketing strategies, the official said.

Also, remunerative returns from arecanut or beetle nut also induced farmers to shift from cocoa.

"But now with overseas prices ruling strong, farmers want to cash on the opportunity," he said.

In the domestic markets, average price for dry cocoa beans are quoted around Rs 90-110 a kilo, up 20 per cent from last year, Shanmugavel said. "Since consumption of chocolates, health drinks, and confectioneries are rising, demand for cocoa beans are also buoyant," Hubballi said.

Most of the local confectionery makers undertake procurement of 8,000-10,000 tonnes of cocoa, while their actual requirement is around 15,000 tonnes, Hubbali said.

"The rest is imported from other origins like the Ivory Coast, and thus, all we need to do is to bridge the gap by raising the production levels," he said. Some of the key confectionery makers who are actively procuring are the Cadburys, Nestle, and Karnataka-based Campco.

Another factor that has aided the revival of the industry, apart from good demand is the additional returns the farmer gets by growing cocoa, which he uses to offset losses in coconut and its derivative products. Since cocoa is hardly grown as a mono crop, it is normally cultivated with coconut and any fluctuation in coconut and its derivatives prices could be offset by selling cocoa, he said.

There are lot of fluctuations in the coconut prices across the main cash markets in India.

In Kerala, prices have stagnated due to steady demand, while in Tamil Nadu demand is high due to cheap rates, higher productivity, and low cost of production.

In Kerala, spot coconut oil prices are hovering around Rs 47.50 a kilo, while in Tamil Nadu it is around Rs 46.

"By growing cocoa along with coconut a farmer can cash in profit of around Rs 40,000-45,000 if he grows 100 coconut trees and 500 plantations of cocoa in 1 hectare," another grower in Kerala said.

Also, cocoa's property to increase the soil nutrients is also seen as another incentive by the farmers, industry officials said.