Chocolates to become dear as cocoa prices soar

KOCHI: Chocolate companies are under pressure to raise the product costs with cocoa bean prices showing no signs of letup. The prices of dry cocoa beans are ruling in the range of Rs 130-135 per kg in Kerala, a major cocoa producing state in the country.
A year ago the prices hovered between Rs 110 and 115 per kg. Prolonged dry spell with scanty rains during summer has led to a sharp fall in the crop during peak harvest period (June-August). The crop is said to be down by 20 to 30 %, while some buyers say it could be much higher.

The upswing in prices has put the chocolate companies, depending entirely on domestic supply, in a tight spot. Madusudan Rao, MD of Mangalore-based Campco told ET that the co-operative has raised the prices of intermediary products like cocoa powder, butter, etc to compensate the high prices of raw materials.

���There is a severe scarcity of beans and as a result the prices have gone up to even Rs 150 per kg or more,��� he said. The prices are likely to remain at high level in the short term given the expectation of low output for the next peak season during October-November period. The heavy rains in July have caused some damage to the crop in the flowering period.

The monthly consumption of cocoa by Campco comes to around 250 tonnes.

Chocoloate majors like Cadbury India has not made any recent changes in the product prices but may be forced to do if the current price trend persists. Cadbury, the largest buyer of cocoa from the domestic market, is meeting a large part of its requirement through imports from West African countries. But bullish trend in international cocoa prices coupled with import duty of 30% has made cocoa imports to India a costly affair.

Companies like Nestle, which are not procuring directly from farmers, could also be hit as the processing companies it is depending on are facing acute shortage of cocoa beans. The prices could witness further jump as some of the middle men buying from growers are resorting to hoarding, according to market sources.

The prices are likely to remain at high level in the short term given the expectation of low output for the next peak season during October-November period. The heavy rains in July have caused some damage to the crop in the flowering period. Consequently, the growers have predicted a lower crop for the season.

The annual cocoa production in the country is between 11,000 and 12,000 tonnes, of which Kerala accounts for over 6,000 tonnes. Karnataka and Andhra Pradesh are the other major producers. Tamil Nadu is fast catching up in production with increasing acreage under cocoa cultivation.