in India have declined 30-40 per cent due to a drop in international rates and a slowdown in demand from domestic chocolate manufacturers.
According to farmers, high imports following the government's decision to reduce customs duty on cocoa powder is also a reason for price drop. The prices in the domestic market have declined from Rs 200-210 to Rs 130-160 per kg, depending on variety, they caim.
Another major reason for the price drop a bumper crop
last season, thanks to a benign weather in West Africa. Ivory Coast and Ghana, the world's top producers of cocoa beans, account for more than two-thirds of the global supply.
Suresh Bhandary M, managing director of Central Arecanut and Cocoa Marketing and Processing Co-operative (Campco), agrees that prices have dropped for all of these reasons. He adds that the crop yield within India has also been good.
While Bhandary is not able to put a number to the increase in production, the industry estimates a rise of at least 10-15 per cent in India's crop yield.
Normally, the main crop starts by the end of May. But this season it started in March itself. Market sources also say that lowering of customs duty on cocoa powder from 30 per cent to 10 per cent also had an impact.
L Nitin Chordia, India’s only certified cocoa and chocolate taster, says international dry cocoa prices
have steadily dropped to $2,000 a tonne from $3,100 a tonne at the London cocoa exchange in the past nine months, thanks to various political factors.
Using this opportunity, private chocolate firms are negotiating their purchases in India.
"No other crop has seen such a fall like cocoa. In the 1970s, exactly the same thing had happened. It is coming back now,” says Chordia, who also advises farmers and collaborates with the government on various projects in cocoa farming.
Currently, Chordia is advising farmers on how to improve their produce and make their own value-added chocolate. He also helps them find a market both in India and overseas.
"We have helped farmers and chocolate makers find international markets
for their produce and this should be seen as an opportunity to value add and take advantage of lower raw material costs," adds Chordia.
He says that private firms are importing cocoa from the Ivory Coast and Ghana, where the prices have kept up with global trends and fallen drastically. "Lower base price means lower quantum of import duty paid which further brings down raw material prices per kg," he says.
"Under normal circumstances, demand and supply determine price but we have an interesting situation where prices have dropped in spite of increased demand and the harvest not being the best this year," explains Chordia.
"Consumption of chocolates have only been increasing and hence this situation can be treated as an opportunity to increase bottom lines," he adds.
For instance, Bhandary added, during the season, in the past 45 days alone, 15,000 quintal of cocoa arrived in the market per week, while normally 2,000 quintal will come.
"We (Campco) are the only one to buy since we only encourage the farmers to cultivate cocoa. We don't want them to be in trouble, so we bought everything," Bhandary says.
An email sent to chocolate manufacturers, including Mondelez and Nestle, did not elicit a response. Campco, which normally holds stock for three months, now holds stock for eight months.
In India, around 50 per cent of the cocoa is grown primarily as an intercrop in Andhra Pradesh, Tamil Nadu, Karnataka, and Kerala. In 2015-16, India harvested 17,200 metric tonnes (Mt) of cocoa beans.
Directorate of Cashew nut and Cocoa Development data show production rose to 18,920 Mt in 2016-17 from 17,200 Mt a year ago. Productivity rose to 580 kg per hectare (ha) from 550 kg per ha.
Reports say that in 2015-16, India's total consumption of cocoa beans was around 30,000 Mt, 57 per cent of which was imported.
Directorate figures, which are available till 2014-15, showed import quantity rose to 65,311 Mt from 51,627 Mt a year ago. In value terms, the figure was Rs 1,551.09 crore as against Rs 1,071.549 crore.