Vietnam - Measures to boost cocoa output

Cocoa is considered as a kind of potential tree with a good price in Vietnam so the State has released measures to support farmers to increase the cocoa plantation area, according to Vietnam News Agency.

Presently, the selling price of raw cocoa is higher three times than coffee price. The countries with advantages of cocoa faced a lot of hardships or had to chop cocoa plants.

The global cocoa output through years has not increased much due to traditional cocoa producers met problems. Ivory Coast saw a reduction of 38% in output due to internal war, Ghana -19%, Indonesia as Asia’s largest cocoa producer -20%, Malaysia that removed 200,000 hectares of cocoa to grow fan-palm. Because of these, the world’s cocoa price has gone up.

Currently, the cocoa demand of USA, Japan and Europe that account for over 76% of the global cocoa consumption remains high whilst that of Brazil, Russia, Ukraine, and Middle East is growing rapidly, leading to the insufficient supply. In such a context, some companies in Netherlands, Japan, USA, Malaysia, who are specialized in purchasing, grinding, processing, are very interested in Vietnam’s cocoa.

Being grown in Vietnam for a long time, US is encouraging Vietnam to raise the plantation area of this kind of tree because the world’s output still is small while US people consume over 1 million tons of cocoa a year, a half of the global consumption volume.

With good techniques, cocoa may generate an annual income of $9,000 a hectare. Initial investment as well as caring load for cocoa garden is equal to 50% of spending on coffee tree. In 2-3 years, cocoa will come into harvesting session along with efficiency rate of higher 2-3 times than coffee and 1.3 times than pepper.

Previously farmers had worrisome in seeking buyers but now they have option to choose selling destination. At this time, a lot of domestic and foreign enterprises purchase Vietnam’s cocoa, namely local firms of Pham Minh, Thanh Hưng Thinh, Phu Binh, Thao Li, Thanh Dat, Nguyen Loc, Trong Duc, Cao Nguyen Xanh, Cacao A1... or foreign companies such as Cargill, Armazaro, Olam, Touton, Grand Place...

Cargill Vietnam currently purchased up to 80% of Vietnam’s cocoa output, mainly for processing to export.

Vietnamese cocoa is exported under two forms of raw and finished products. In which, the export of products is generating higher profits. Selling preliminarily processed cocoa may gain profit of 15% only while the products from cocoa (like candy, powder) may bring in profit of up to 40%. Therefore, some firms like Grand Place and Vinacacao have boosted the production line investment in Vietnam.

In 2007, Vinacacao invested a $40 million plant in the southern province of Ben Tre to produce 15 types of products for the domestic market. However, the firm has to import nearly 70% of production material from Malaysia at a price higher 10% than the domestic price.

To gain the last cocoa product, Vinacacao had to bring raw materials to Malaysia for primary processing to cocoa powder and then take them back to Vietnam for processing products. Mr Tran Van Lieng, General Director of Vinacacao said that investment cost for a primary processing factory was not high but the raw cocoa output remains small. On average, a machine with capacity of 25,000 tons a day is priced at $14 million while the cost for transporting raw materials to Malaysia is much lower.

He added: “Processing cocoa materials in Malaysia is seen the best choice because we only need to spend 5-6 million dong transporting the materials for processing in Malaysia for each one-billion dong volume. Meanwhile, to be able to export cocoa products to Europe and America, the investment in a processing technology system must be higher 2-3 times”.

Vietnam’s cocoa market remains at high potential. Vinacacao’s domestic revenue keeps growing 47-48%/year. In the coming time, the firm will enter Thailand, Singapore and Malaysia by some kinds of chocolate and powder cocoa products.

VietBiz 24

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