Chocolate: Africa’s tragedy, India’s opportunity?

It is cacao plantation time in Kerala. The rains have knocked at the door and almost 1,500 farmers have added over one lakh saplings to the landscape in and around Kottayam district alone. The other regions of the country are expected to follow suit.

Indian farmers can now see a long-term association with cacao, the key ingredient for chocolates. Its prices have stabilised after hitting a record price hike. Indian farmers may have been growing cacao for over six decades, but recognition in the global market was achieved very recently. Asia’s presence on the top 20 cacao-producing nations list is represented only by Indonesia and India. Indonesia ramped up production during the 1980s and is now among the top three producers in the world.

If one’s tragedy could be another’s opportunity, the West African harvest catastrophe gives time for countries such as India to consolidate their supply side. Climate change, pests, diseases, and an absence of rehabilitation of farms, will make it harder for West Africa, which accounts for over 70% of the world’s cacao supply, to produce the crop. As per reports, while Ghana might lose 5,90,000 hectares of its plantations to swollen shoot virus, the world’s largest producer Ivory Coast’s best cacao areas could shrink by half by 2050s.

Numbers shared by the Directorate of Cashewnut and Cocoa Development (DCCD) exclusively with Fortune India show that India has steadily increased its production in the last five years. From 25,783 metric tons (MT) in 2019-20, it has gone up to 29,792MT in 2023-24, with the productivity at 825 kg per hectare now, compared to 669kg/ha in 2019-20. Also, India has added 11,723 hectares under cacao in this period. The country now grows cacao on 1,09,826 hectares (2023-24).

“Presently, there is a very attractive market price for cocoa beans (processed version of Cacao). So, farmers are interested in taking up cocoa cultivation. We are now focussing on exploring the northeastern states, like Arunachal Pradesh, Nagaland and Assam, for cocoa expansion, as well as Telangana and Goa,” director, DCCD, Dr. Femina, says. “The feasibility of climatic conditions and growing cocoa in various existing plantations are being tested as we have seen so far that it is a crop that cannot be cultivated in the open.

”India currently imports around 70% of its cocoa. Its chocolate consumption is predicted to exceed 1,56,000 tons by 2026. As per International Market Analysis Research and Consulting Group (IMARC), India’s chocolate market is expected to reach $5.3 billion by 2032, from $2.6 billion in 2023, at a compound annual growth rate (CAGR) of 7.7%.

Rubber stamp

Kochumuriyil Joseph Varghese has been growing cacao since the 1980s – the time when a few international companies “encouraged farmers to grow cacao and later termed the beans low quality”. “That was all a tactic to control the prices,” says Varghese, who is also the founder and president of Cocoa Producer’s Co-Operative Society, Manimala, Kerala. The 1990s saw farmers give up cacao for the more fruitful rubber. “Then again by 2000s, the price of rubber went down. And, people started thinking about multi-cropping,” Varghese adds. “Then the price of cacao went up, and for the last 10 years it is on the rise.”

From ₹120/kg a decade back, ₹180/kg some five years back, to starting 2024 around ₹250-300/kg and going all the way up to ₹1,000/kg around April, Varghese says the price of cacao beans is steadying around ₹500 a kg now and is not expected to come down.

Boyapati Venkateswara Rao’s farm is in the country’s highest cacao-producing area – Andhra Pradesh’s West Godavari region. As per the DCCD 2023-24 data, Andhra Pradesh leads among the four cacao-growing states, which include Karnataka, Kerala, and Tamil Nadu. Andhra has the largest area under cacao – 43,904 hectares, with a production of 12,135MT and a 1,200 kg/hectare yield. 

Rao has been growing cacao for 15 years on his 12 acres and has gone fully organic in the last 10 years. “In the two districts of West and East Godavari, where cacao can grow, under oil palm or coconut, it is already being cultivated in 95% of the place. The remaining 5% may also be covered this season,” says Rao. He is now not only selling all his produce to Distinct Origins Cacao Fermentery in Tadikalapudi but is involved in every step of the growing, harvesting, and fermenting process to see the fruit of his labour reach optimum flavour. 

The farmers of the region, however, are giving more attention to cacao. “The yield of cacao is lesser when grown under oil palm, owing to its thick canopy, as compared to cacao grown under coconut. Now, the farmers here are reducing the density of their primary crop – oil palm, to increase the yield of their secondary crop – cacao,” Rao adds. He was also able to add another 100kg to his average yield of 200kg of dried beans per acre this season and increase his income three times.

Growth ahead

“A big reason was the price hike,” points out Chaitanya Muppala, CEO, Distinct Origins and Founder, Manam Chocolate. Course correction he calls it. “The Indian farmer benefited because unlike in West Africa, where the GDP is dependent on this crop and the prices are regulated by the governments, here it is a cash crop.

”So, when global commodity markets crossed $10,000 per metric ton, farmers in Ivory Coast and Ghana could only get $2,400/MT even after a 50-60% price correction by their governments. “Our farmers sell directly. They get up in the morning and check the markets,” adds Muppala. “The farmers had been disadvantaged for decades. It is only since a short while that they have been getting fair prices.”

This might even spur Tamil Nadu to move up the production table. An hour and a half away from Coimbatore, the nondescript town of Pollachi has been putting Indian cacao on the world map for quite a few years. Karthikeyan Palanisamy and his brother-in-law, Harish Manoj Kumar, grow cacao on almost 200 acres and use it to produce artisanal chocolates.

“There is ample scope to increase the acreage,” Palanisamy says. As per the 2022-23 numbers by the Coconut Development Board, Tamil Nadu grows coconut on 4,72,710 hectares. Only 32,580 hectares (2022-24) are intercropped with cacao. “Even in and around Pollachi, only a small percentage of coconut farms grow cacao. There is a lot of scope. Given the suitable climate here, there are several thousand acres of coconut farms that can be intercropped with cacao. So, we'll have to wait and watch. If the prices stabilise at a higher level in the next few months, we will see more farmers planting cacao here too.

”And, to aid the farmers, research institutes like Central Plantation Crops Research Institute (CPCRI) and Kerala Agricultural University (KAU) have been working on a lot of scientific production technologies, management practices, and processing procedures. “They have even come up with varieties which can survive different climatic conditions,” Dr. Femina says.

KAU is also set to release six more clones to farmers, in addition to 15 already being used. The forastero-type clones are said to be best suited to tropical conditions and have the potential to yield five to seven kg cacao beans per tree. The current average yield is 1.5-2 kg; and the global average is 0.5kg.

Under Process

But the Indian cacao farmer might just be aiming higher. Processing is the next stop, says cacao consultant, chocolate expert, educator, and maker, Nitin Chordia. “Not just cacao, but every food processing industry in India is on a growth trajectory right now,” says Chordia, who along with wife Poonam, founded Cocoashala, a bean-to-bar incubation centre and training institute.

He adds, “It is the post-harvesting processes, spruced up with the help of technology, scientific monitoring of pH, moisture, sugar levels, and automation, that helped Indian cacao get global recognition in the last few years. And, we will see that in the next five years, a lot of farmers will aim to move into processing cacao as it is a more advantageous proposition.

”With Indian cacao quantity being minuscule in the global equation, such financially viable ideas are the only way to a sustained growth. As Palanisamy rightly points out, “It would be in India’s best interest to develop our own craft-profit market. Growing just commodity-grade cacao leaves all very susceptible to large fluctuations in price.” The high-quality flavoursome beans for the craft chocolate markets have traditionally fetched anywhere between three to 10 times the price of commodity beans.

Muppala agrees. “It is essential that the farmers keep making more profit. For that, we need to stay at the premium end of the spectrum. India already has that absorption capacity. And, our problem in that market is not the price, but the supply,” he says.

And, unlike West Africa, which has also been struggling with sustainability and ethical labour practices, India’s fair practices could just play their part in global conscience helping it gain a further foothold.