Asian chocoholics spur demand for local beans
SINGAPORE: Asia’s cocoa industry is scouring for ways to boost local bean supplies as the region’s chocoholics munch through more candy than ever.
The solution is to increase production in Indonesia, the top supplier and processor in the region, according to the Cocoa Association of Asia.
But this is going to be a tough assignment because it means reversing a relentless decline in the country’s output due to ageing trees, crop disease and more profitable alternatives, which has spurred record bean imports, with supplies coming from growers outside Asia, such as in Africa or Latin America.
Asia’s processing of cocoa beans, used as an indicator of demand, jumped by about 30 per cent in the three years to the end of last year, and continued to rise in the first half of this year, as growing affluence and changing lifestyles boost consumption of cocoa products.
The processors, also known as grinders, turn the beans into butter and powder, which is used to make chocolate bars, drinks, ice cream and biscuits.
Asia was a hotbed for cocoa demand and Indonesia was well placed to take advantage of that trend by increasing output and selling more cocoa products, said Marc Donaldson, newly appointed executive director of the Singapore-based Cocoa Association of Asia, in an interview this week.
“That wouldn’t oversupply the world” as local demand would soak it up, he said.
The association, whose members include the world’s top grinders, is working with the government, local groups and farmers to promote planting, and develop seedlings and intercropping.
Olam International Ltd, the world’s third-largest processor, bought Indonesia’s top grinder in February, and the country has al so attracted the likes of Barry Callebaut AG and Cargill Inc.
While processing has expanded, bean output has shrunk by half in the past decade, turning the country into a net importer.
The Cocoa Association of Asia, which reports quarterly grindings from Malaysia, Singapore and Indonesia, said the amount of beans processed in the second quarter jumped 16 per cent from a year ago, hitting a record.
Malaysian cocoa processor Guan Chong Bhd is one beneficiary from the surge in demand. Its shares have almost tripled since April last year, trading at RM3.92 in Kuala Lumpur yesterday.