Uganda Farmers Benefit from Rising Cocoa prices
Wednesday January 5, 2011
THE political crisis that has gripped Ivory Coast since November’s disputed presidential election has created a spike in international cocoa and chocolate prices.
Cocoa prices increased to £2,000 a tonne, up from £1,700 in early November. This development has also boosted local farm gate prices. A kilogramme of cocoa is now sh5,200, up from sh4,500.
Chocolate prices in major supermarkets around Kampala have shot up by over 25%.
The industry, which has been severely affected by escalating prices of the raw material, has started exploring substitutes such as palm oil and reducing product sizes to hold up margins.
Muwanga Musisi, the executive director of the Cocoa Development Project, attributed the rising prices to speculation about the situation in Ivory Coast.
“Grinding data does not indicate any shortage of cocoa beans. Industry players are just being cautious because we are in the middle of the major harvest season.
The country, which is engrossed in a political crisis accounts for over 40% of global cocoa production,” Muwanga explained.
According to ICCO projections, global output for cocoa beans is predicted to increase by 6%, in volumes, over the 2010/2011 season. The global grindings are forecast to rise by 2.5% in 2010/11 to 3.6m tonnes.
Cocoa grinding data is an indicator of industry demand, with the product being used by manufacturers to create what are known as semi-finished cocoa products, like cocoa butter, cocoa powder and cocoa liquor.
According to sources, if the prices stay at the current levels, Uganda will earn about $70.9m from the projected 17,000 tonnes this year, up from $46m from 15,000 tonnes last year.
Although analysts say there will be no interruptions in the exports, further escalation will send the prices through the roof.
According to press reports, the price of cocoa rose in New York and London as some companies evacuated workers from Ivory Coast.
Chocolate bar lovers now have to pay more for their treats as a consequence of poor harvests and financial speculation driving up the price of cocoa.
By Macrines Nyapendi