Focus on raw cocoa beans defeats value-addition agenda

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Fairtrade cocoa programme delivers strong results in W/A- Study

Stakeholders in the Ghanaian chocolate industry have said the euphoria surrounding a new production record of 1.03 million metric tonnes (MT) of cocoa beans by COCOBOD for the 2020/2021 crop season, would further overshadow campaigns for value addition to the commodity.

The absence of a clearer approach and roadmap to add and increase value to Ghana’s cocoa beans has created a multibillion profit gap between local processors and international chocolate manufacturers.

Indeed, as players in the cocoa industry are elated of a brighter future for Ghana’s cocoa sector in relation to increased output, conversations on intense value addition, which has not received the needed priority, would further be blighted by the latest record production bliss.

Though, the record for the 2020/2021 crop season has broken a 10-year production score of 1,024000 MT recorded in the 2010/2011 crop season, data from COCOBOD has indicated that the processing of the commodity from its raw form into other value added products has only increased from 23 to 34 percent.

For long, Ghana’s cocoa output continues to mismatch processing capacities as global processors continuously make billions of dollars from value addition.

Approximately US$33 million was accumulated from the export of chocolate products from Ghana in 2019, according to statista. But the global chocolate market is expected to grow from US$138.5 billion in 2020 and reach US$200.4 billion by 2028, a leading market intelligence company, Fior Markets has reported.

Global chocolate firms cashing in through value addition

Indeed, the ten largest chocolate manufacturing firms in the world, generated a revenue of US$82.5 billion in 2019 according to the International Cocoa Organisation (ICCO).

The breakdown in 2019 revenue for the ten companies include; Mars Wrigley Confectionery – USA (US$18b), Ferrero Group – Luxembourg/Italy (US$13b), Mondelez – USA (US$11.8b), Meiji Co Ltd – Japan (US$9.7b), Hershey Co – USA (US$8b), Nestle SA – Switzerland (US$7.9b), Lindt & Sprungli AG – Switzerland (US$4.6b), Pladis – UK (US$4.5b), Ezaki Glico Ltd – Japan (US$3.2b) and Orion Corp – Korea (US$1.8b).

Meanwhile, as the trade in the commodity’s raw beans rakes in about US$2 billion annually in exports, contributing about 2.2 percent to Ghana’s GDP, the above mentioned countries which are making huge revenues from processing, have on the contrary, never produced a kilo of cocoa, but yet, are controlling the global cocoa market.

Last year 2020, the least company in relations to revenue generation, Orion Corporation, a Korean chocolate manufacturer, raked in a revenue of US$2 billion from its chocolate sales, an amount equivalent to Ghana’s entire raw cocoa trade each year.

Ghana controls 20 percent of global cocoa production, whiles Ivory Coast cultivates 40 percent of the commodity.

Local production by the Cocoa Processing Company

The Cocoa Processing Company (CPC) currently produces only 3000 MT confectionery capacity out of an overall 64,500MT processing capacity.

Even with plans to raise the confectionery processing capacity to 15,000MT, it still, would be inadequate to compete with global processors.

Owing about US$108 million in legacy debts, the CPC has resolved to source a US$70 million Afrexim Bank loan facility, to invest in the confectionary factory and improve the effectiveness and efficiency of its operations and particularly to minimize losses arising out of shortages and discrepancies.

CPC’s current challenges could also hinder its quest to expand into the West Africa sub region, to establish processing plants in Nigeria and other countries.

Indeed, most of the global chocolate producers, have diversified their product lines and sells more overseas than in home markets.

For instance, Orion, has manufacturing facilities in cities in China, Russia, Vietnam, India and the United States.

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