Cocoa

Product name: Theobroma cacao

Theobroma cacao is commonly characterized by three main cacao cultivars:Criollo,ForasteroandTrinitario. It is one of the world’s most valuable crops, cultivatedworldwide on 8.2 million hectares, grown in 58 countries, and worth over US$4 billion annually. Cacao is a well-adapted agro-forestry plantation crop grown in hot, rainy climates with cultivation concentrated in a band between 0 to 20 degrees north and south of the Equator, sometimes called the “Cacao Belt”.

Economic cacao cultivars are grown for the production of dried beans, which are the source of cocoa liquor, cocoa butter, cocoa cake and cocoa powder. Cacao is a fast-growing tropical forest plant, capable of being cultivated in association with other trees, and providing additional goods like timber and firewood, fruits, construction materials, honey, resin, medicine and materials for ritual ceremonies.

The cultivation of cacao started in Mesoamerica, where cultural elaboration and use of cacao can be traced back more than 3000 years. Cacao depictions in Mayan artifacts provide supporting evidence for the deliberate planting by early people in Costa Rica, Belize, El Salvador, Guatemala, Honduras, Mexico, and Nicaragua.

The cacao/cocoa tree (Theobroma Cocoa) grows in tropical areas between 15 and 20 degrees latitude north and south of the equator in Africa, Asia and Latin America, sometimes called the "Cocoa Belt".The tree is often grown in the shades of other trees. It can be as tall as 40 feet (12 meters), and has fruits (pods) which are more than on foot (30 cm) long. The fruits may be brownish-yellow to purple, and contain 20-40 seeds or cacao beans in a pink, sweet-sour pulp.After extraction from the pod, cocoa seeds are fermented and sundried. A cocoa producing tree can deliver on average 0.5 to 2 kgof dried seeds per year.

Coca arrived in Europe through the former colonial powers Portugal and Spain, and was later to be found in Africa. Today, cocoa is cultivated in all of the humid, tropical countries.

 In Uganda cocoa was introduced by the British colonial rulers 1901comercial exports started 1917. However, growing of the crop was abandoned in 1924 due to drastic international price fluctuation. Cocoa was reintroduced in 1958 to diversify exports earnings from coffee. Cocoawas first established in the districts of Mukono,Bundibugyo and Hoima. Due to political and economical instabilities in the late 1970s and early 1980s fields were abandoned only to be renewed in early 1990s due to liberalizations.

Varieties

Internationally there are three traded varieties of cocoa beans:

Common grade: Forasterococoaor upper Amazonwas originally grown in the high Amazon region and is now the predominant cocoavariety cultivated mainly in Africa, accounting for approximately 80% of the global cocoaproduction. The beans have a flatter flavour than the fruitier and more citric Criollo andTrinitario beans.

High grade: Criollo cocoa (original cocoa tree) was originally grown in Venezuela, Central America and Mexico, but is now also grown inEcuador, Colombia, Peru, Bolivia, Nicaragua, Honduras, Guatemala and Sri Lanka.Criollomakes up 5 to 10% of the global cocoa production. The beans have a bitter, aromatic flavourandare easily processed.

High grade: Trinitario cocoa, the beans are a hybrid of the Criollo and Forastero trees.The Trinitario cocoa was originally grown in Trinidad, but is now also grown in Venezuela, Ecuador,Honduras, Nicaragua, El Salvador, Costa Rica, Cameroon, Samoa, Sri Lanka, Indonesia, Papua New Guinea and Uganda. This varietyrepresents between 10 and 15% of the global cocoa production.

Harmonised System (HS) codes are used to classify products and to calculate international tradestatistics, such as imports and exports. The focus of this study is on cocoa beans under HarmonisedSystem code 1801.

Note; Varieties are not defined by color

Cocoa beans

Production requirements & conditions:

Cacao is a well-adapted agro-forestry plantation crop grown in hot, rainy climates with cultivation concentrated in a band between 0 to 20 degrees north and south of the Equator, sometimes called the “Cacao Belt”. Cocoa can be grown up to 300 m above mean sea level. It requires a minimum of 90-100 mm rainfall per month with an annual rainfall of 1500-2000 mm. The plants need equitable climate with well distributed rainfall. If dry periods are prolonged, irrigation scheduling is necessary.

Cacao is a fast-growing tropical forest plant, capable of being cultivated in association with other trees and tall plants that provide shade. This allows for a diversified production including like timber and firewood, fruits, construction materials, honey, medicine, food (bananas Uganda) and materials for ritual ceremonies.

The main harvest usually begins at the end of the wet season and may extend for 3 months. The crop is mainly grown by smallholders located around central market units for uniform and standard industrial handling after harvesting.

Production in Uganda – seasons, areas, volumes,value chain etc

There are two seasons in Uganda the major one being September to February and the second season March to August.  Cocoa in Uganda grows in more than 20 districts the leading producer being Bundibugyo with more that 70%. The other areas include Hoima, Mukono, Buikwe,Jinja, Mubende,Mayuge, Mpigi, Luweero, Masak and Kasese among others. Uganda’s production volumes over the years are follows …

Table 1: values and volumes exported for the last ten years.

2.   Market Overview

Domestic market – domestic supply chain, buyer requirements

Table 3 local buy requirements:

International market – current and forecas

Export market entry (phytosanitary, quality, health & safety)

Legal requirements:

Traceability and hygiene are the most important themes. Special attention should be given to specific sources of contamination. Pesticides, mycotoxins (ochratoxin A is of special relevance for cocoa), polycyclic-aromatic hydrocarbons (PAHs) and microbiological contamination such as Salmonella (although cocoa is considered low-risk) are the most common for cocoa beans.

The European Union has set maximum residue levels (MRLs) on the amount of pesticides allowed in food products, including cocoa. The use of pesticides is permitted but should be strictly controlled. This is especially relevant for cocoa farmers using pesticides to fight insect infestation such as mired bugs and the cocoa pod borer.

It is also important to consider the contamination from heavy metals during production and handling, particularly cadmium. The presence of cadmium is a particular problem for cacao from some Latin American countries due to factors such as volcanic activity and forest fires.

Table 1 Maximum permitted levels of cadmium in cocoa and derived products

Quality criteria: If you want to access the international market for cocoa beans, you will have to meet international quality standards. They are particularly high within the specialty segment for fine-flavour cocoa beans.

Cocoa of Excellence mentions the following factors defining the quality of cocoa:

Good trees (genetics)

 Well cared for and grown in a suitable environment

 Pods correctly harvested

 Good practices to keep the trees healthy and free of pests and diseases

Optimum fermentation and drying protocols specific to the type of beans

Know-how for processing cocoa beans and for chocolate making.

High-grade (fine flavour) cocoa beans are generally of higher quality than common grade cocoa beans, as their distinctive flavour is popular among manufacturers of high-quality chocolate. Fine flavour beans are usually produced from trees that contain the genetics of Criollo and/or Trinitario cocoa-tree varieties. Common grade (bulk) cocoa beans for mass production are genetically derived from Forastero trees.

Harvesting and processing techniques are also important in harnessing the “fine” qualities of fine flavour cocoa beans. During harvesting you should make sure you only take the ripe fruits. During processing you should ensure all cocoa beans are fermented and dried homogenously. Cocoa beans should be shipped shortly after harvest because extended storage (> 6 months) may result in losses due to the relatively high humidity in tropical environments.

To moderate the initially bitter cocoa flavour and to develop the typical cocoa flavour, the beans are fermented. Cocoa grading differs across producing and consuming countries. Standard practices have been set by the international cocoa trade associations. The grading of cocoa depends on the fermentation process:

Well fermented cocoa beans: less than 5% mould, less than 5% slate and less than 1.5% foreign matter.

Fairly fermented cocoa beans: less than 10% mould, less than 10% slate and less than 1.5% foreign matter.

Buyer requirements (private standards, size, color, shape, post-harvest handling for exportetc)

Sustainability certification

Sustainability has social, environmental and economic aspects. Many European companies have formulated minimum sustainability requirements for their suppliers that address key issues such as child labour, healthy and safe working conditions, deforestation and pesticide use. However,

European companies, especially those in Northern and Western European countries, increasingly also adhere to sustainability certification schemes. This trend is largely driven by the commitment of major confectioners such as Mars, Ferrero and Hershey’s.

There are several sustainability certification schemes that focus on different aspects of ustainability, and whose popularity may vary from one country or segment to another.Rainforest Allianceisthe most commonly used mainstream certification scheme for cocoa. In 2017, Rainforest Alliance and UTZ announced a merger into a single organisation and certification namedRainforest Alliance.This organisation will utilise the respective strengths of the current SustainableAgriculture Network (SAN) and UTZ standards, while creating a single auditing process for certificate holders.

Global import and export trends

Global price trends

Uganda’s key export markets – analysis (past, present and future)

Top five export markets of Ugandan cocoa for the last ten years.

The top five market destinations for Ugandan Cocoa have been growing and a great growth has been demonstrated by Indonesia which grew by 90% from (1,447 to 16,075) m USD within 3 (2015-2017) years. The passed market was dominated by EU markets but there has been a shift from EU to Asian countries dominance.  

Competition analysis

3.    Key players and value chain actors

The crop is dominated by small scale farmers who come together to form producer groups, primary cooperatives and union cooperatives. There are new commercial farmers coming up with estates ranging from 50 to 100 acres.

Value chain

Producers -middlemen – traders –Exporters –Government – logistics – buyer.

                  -Cooperative -

Top Cocoa Producing Countries in the World