Can cocoa regain its shine?

  • SMEBiz
  • Monday, 09 Sep 2019

Shrinking plantations: Cacao output in Malaysia has shrunk by half in the past decade as farmers turn to more lucrative crops. — Reuters

MALAYSIA once had a thriving cacao plantation sector. But over the years, other crops have taken over its place as a main source of agricultural products including rubber, oil palm and, now, durian.

There is a long history of cacao in Malaysia. The first cultivated cacao plant is said to be planted as early as in the 1770s, or about 250 years ago. The plantings propagated and contributed significantly to the country’s economic growth.

At its peak in 1989, the cacao growing area had expanded to 415,000ha, placing Malaysia among the world’s biggest cocoa producers. Industry practitioners even noted that Malaysia used to be the third largest cocoa exporter in the world.

However, cocoa production in Malaysia has since declined steadily.

Cacao bean output in Malaysia has shrunk by half in the past decade as farmers, tired of battling crop diseases and aging trees, switch to more profitable crops.

According to the Malaysian Cocoa Board, the cacao growing area has shrunk to an estimated 15,000ha in 2018, producing only 800 tonnes of cocoa beans. In comparison, production of cocoa beans hovered around 250,000 tonnes in the early 1990s.

In the region, Indonesia is the largest cocoa bean producer. According to the United Nations Food and Agriculture Organization, Indonesia grew 777,500 tonnes of cocoa beans in 2013, making it the world’s third largest producer.

According to Benns Chocolate & Candy Manufacturer Sdn Bhd executive director Wilfred Ng, the decline in Malaysia’s cacao farming industry is a great loss as the country has some of the best soil for farming.

“One good example is the durian. While the fruit is native to South-East Asia, the best durian varieties can only be produced here. Same with cacao, we can have some of the best cacao here to produce high quality products such as bean-to-bar chocolates, ” says Ng.

The primary areas for cacao farming in Malaysia include Ranau in Sabah, Kota Samarahan in Sarawak as well as Jerantut and Kuala Lipis in Pahang.

Ng believes that by promoting artisanal chocolate and expanding more into downstream segments with different usages for cocoa-based products, local farmers and plantation owners will be able to fetch higher prices for good quality cacao beans. This could encourage farmers to give cacao crops another look.

The Board notes that cocoa prices have trended downwards in the last three months.

Given the revitalised popularity of specialty chocolates and shrinking cocoa production here, demand has naturally exceeded production of cocoa beans.

But while Malaysia lags in cocoa bean production, we are still a well-known manufacturing hub for chocolate products. Industry producers note that most chocolate products sold in the region by global brands are made in Malaysia.

Interestingly, although the production of cocoa beans has dropped significantly, Malaysia’s export of cocoa beans and cocoa products have been growing steadily over the past 20 years.

The Malaysian Cocoa Board recorded exports for last year at RM5.5bil, with cocoa beans and cocoa butter making up the biggest portions of exported cocoa products. But note that the cocoa beans were mainly re-exported products.

This development could encourage more cacao plantations locally as manufacturers may opt to source for raw materials closer to their operations. There may be hope yet for this crop to regain some ground.

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