Global Crisis Brewing for Cocoa Growers

Crop disease, aging trees and resulting lower yields will prevent significant cocoa production growth in the biggest producing countries Ivory Coast, Ghana and Indonesia, experts said Saturday.

Cocoa yields have fallen in Indonesia's top growing region Sulawesi due to the disease cocoa pod borer and aging trees, said Peter Petersen of the Olam Group, speaking on a panel at the Cocoa Merchants' Association of America International Cocoa Conference.

Lower household income has also forced farmers to redirect funds to their basic needs instead of improving crop production, Petersen said on the gathering's last day.

Production in Sulawesi fell 45 percent in the 2007/08 crop year, from 2005/06, and has shown no sign of recovery in 2008/09, he said.

On the other hand, cocoa production in Indonesia's Sumatra, the second biggest cocoa producer in the region, has doubled in the last four years amid low pest pressure. But Petersen did not see the area growing enough to make up for Sulawesi's fall.

The world's biggest producer Ivory Coast faces a flood of problems ranging from aging trees to poor farming that could hinder production, said Frederic Wenger of Noble Resources.

Wenger sees the Ivorian 2008/09 crop at 1.28 million tonnes, on a botanical crop basis that does not look at bean arrival figures. An adjusted trend suggests a 68 percent chance that the 2009/10 crop will stand between 1.115 million tonnes and 1.343 million tonnes, he said.

Many farmers are also growing "turn-key" rubber farms, growing rubber trees amid their other crop to either harvest both crops or switch to rubber production when the trees mature.

Managing director for London-based Primary Commodity Research Robert Fish projected the world's second biggest producer Ghana will harvest 730,000 tonnes in 2008/09, up from 717,000 tonnes the year before.

It will be difficult to sustain growth, he said, partly because the expansion in the western region appeared to be slowing.