To ease your site search, article categories are at bottom of page.

April 26, 2011

Indonesia, Ghana may fill cocoa void

by Neena Rai and Caroline Henshaw

The conflict in top cocoa producer Ivory Coast could prove a boon for Ghana and Indonesia as farmers in the second-tier producers step up to meet any shortfall in supply.

Dealers fear cocoa output from Ivory Coast may decline next year from a bumper 1.3 million metric tons this season as the fallout of a power struggle has hindered farmers' access to financing and displaced up to one million people.

But analysts say supportive government policies in other major producers such as Indonesia and Ghana may help to boost cocoa supplies and compensate for any reduction in Ivory Coast output.

"The Ivory Coast will need to take urgent steps to revitalize the longer-term supply prospects for its cocoa industry to meet growing global demand and, more crucially, to support a key aspect of its economy," said Sudakshina Unnikrishnan, a commodities analyst at Barclays Capital in London.

"Given structural weakness in the Ivory Coast's cocoa production outlook, a path is paved for countries such as Indonesia and Ghana, to fill the void," she said.

World cocoa markets are expected to post a surplus of 120,000 tons this year due to excellent growing conditions in West Africa, which supplies 70% of the world's cocoa, according to figures from the International Cocoa Organization.

A significant proportion of this is expected to come from Ghana, where farmers are on course to produce more than 850,000 tons of cocoa this year, according to Yaw Kuranchie, chairman of Ghana Cocoa Board, known as Cocobod. Cocobod is targeting annual production of more than one million tons in the next few years.

Indonesia, however, has had a poor crop year in 2010-11 due to heavy rainfall damaging output despite an increase in plantings. Dealers now estimate the country's output will be flat this year at 600,000 tons when the new crop hits markets in May.

Still, Jati Misnawi, senior researcher at the Indonesian Coffee and Cocoa Research Institute, said government policies are targeting production of more than one million tons a year over the next five to 10 years.

"The Indonesian government has launched two programs," Mr. Jati said. "The first, known as Gernas Kakao, is to increase the production and quality of cocoa. The second is to improve national grinding through export taxes."

Mr. Jati said the government's program to boost cocoa acreage by 150,000 hectares is already bearing fruit, with some of the fast-growing trees planted two years ago now producing beans. Indonesia has 1.5 million hectares of cocoa plantations, mostly in the eastern Sulawesi island, with an extra 10,000 to 20,000 hectares of additional production due this year.

"Government initiatives to replace ageing trees will see an increase in yields as well as planted area, allowing Indonesia to compete with Ghana, the world's second-largest producer," a report on Indonesian agribusiness from Research and Markets said.

The Ivory Coast conflict has driven world cocoa prices higher on worries about supplies, a situation that has already begun to reverse on news of the arrest of former president Laurent Gbagbo. But the decline in prices is unlikely to deter farmers.

"Should prices continue to hover around the $3,000/ton range, it's an extremely attractive level to encourage production outside of the Ivory Coast," Barclays Capital's Ms. Unnikrishnan said.

Barclays Capital projects the average annual benchmark price for ICE cocoa futures to hit $3,266 a ton in 2011. On April 7, the contract for May delivery on the IntercontinentalExchange settled up 0.8% at $2,999 a ton.

Wall Street Journal

Article Categories

AGRA agribusiness agrochemicals agroforestry aid Algeria aloe vera Angola aquaculture banana barley beans beef bees Benin biodiesel biodiversity biof biofuel biosafety biotechnology Botswana Brazil Burkina Faso Burundi CAADP Cameroon capacity building cashew cassava cattle Central African Republic cereals certification CGIAR Chad China CIMMYT climate change cocoa coffee COMESA commercial farming Congo Republic conservation agriculture cotton cow pea dairy desertification development disease diversification DRCongo drought ECOWAS Egypt Equatorial Guinea Ethiopia EU EUREPGAP events/meetings exports fa fair trade FAO fertilizer finance fisheries floods flowers food security fruit Gabon Gambia gender issues Ghana GM crops grain green revolution groundnuts Guinea Bissau Guinea Conakry HIV/AIDS honey hoodia horticulture ICIPE ICRAF ICRISAT IFAD IITA imports India infrastructure innovation inputs investment irrigation Ivory Coast jatropha kenaf keny Kenya khat land deals land management land reform Lesotho Liberia Libya livestock macadamia Madagascar maize Malawi Mali mango marijuana markets Mauritania Mauritius mechanization millet Morocco Mozambique mushroom Namibia NEPAD Niger Nigeria organic agriculture palm oil pastoralism pea pest control pesticides pineapple plantain policy issues potato poultry processing productivity Project pyrethrum rai rain reforestation research rice rivers rubber Rwanda SADC Sao Tome and Principe seed seeds Senegal sesame Seychelles shea butter Sierra Leone sisal soil erosion soil fertility Somalia sorghum South Africa South Sudan Southern Africa spices standards subsidies Sudan sugar sugar cane sustainable farming Swaziland sweet potato Tanzania tariffs tea tef tobacco Togo tomato trade training Tunisia Uganda UNCTAD urban farming value addition value-addition vanilla vegetables water management weeds West Africa wheat World Bank WTO yam Zambia Zanzibar zero tillage Zimbabwe

  © 2007 Africa News Network design by Ourblogtemplates.com

Back to TOP