Jan 27, 2020
Indian chocolate industry is likely to feel the tweak of the increase in global cocoa prices because of shortage in supply. India imports large quantity of cocoa beans and powder to bridge the gap between supply and demand in the domestic market. As per the data of International Cocoa Organisation, the cocoa prices stood at $2,687.24 per ton, around 20% increase year-on-year.
The effect of the current price rally may be echoed in the Indian market in another three months as the importers usually book orders in advance.
Adverse weather and production cap by West African countries, the largest producers of cocoa, have limited the global supply.
Advance estimates by the Directorate of Cashew nut and Cocoa Development shows Indian production at 25,783 tons for 2019-20, up by 7.5% from the previous year. Andhra Pradesh and Kerala are the main producers. The requirement is nearly three times higher with a lot of chocolate factories coming up in the country. India imported 52,739 tons of cocoa beans in 2018-19, up 57% year-on-year.
Another major concern of the chocolate industry is the increase in the prices of vegetable fat which is widely used as the substitute for costlier cocoa fat, though it can be imported without duty from the Asean countries.
Higher than expected second cocoa crop in the country has kept the local cocoa beans prices in check. The dry bean prices have recently moved up slightly from Rs.170 to Rs. 180 per kg. It was soaring around Rs. 200 per kg a year ago.
A poor second harvest towards the end of 2018 after the rain and floods in Kerala saw the import going up in FY19. However, a good crop during the main harvest in April-May 2019 saw the chocolate industry heaving a sigh of relief.