KL cocoa's fate in smallholders' hands
KL cocoa's fate in smallholders' hands
KUALA LUMPUR (Reuter): The fate of Malaysia's cocoa industry
is falling into the hands of small farmers as bigger plantations
scramble to get out of the crop which they claim is facing its
worst times.
Last month's announcement by Golden Hope Bhd, the country's
largest cocoa grower, that it will convert all its cocoa trees to
oil palm by mid-1999 was the clearest sign of the gloomy outlook
in the industry, growers said yesterday.
The Malaysian Cocoa Board, the government body responsible for
the industry, said major estates and corporations were sounding
the death knell on cocoa because they are inefficient and are
operating with high costs.
"Smallholders are getting more out of cocoa than big farms and
companies with all the money and technological back-up," said a
senior official at the board, who declined to be named.
"It looks like the future of cocoa is with the smallholders.
They already control about 50 percent of the crop," he added.
Malaysia's cocoa crop extends over 250,000 hectares.
Growers from medium and large plantations told Reuters that
1996 was developing into the worst year ever for cocoa in
Malaysia, following a disastrous mid-year crop, and the situation
showed few signs of improving by the year-end harvest.
They estimated Malaysian cocoa bean production at around
100,000 tons this year compared with a cocoa board forecast of
122,000 tons and an output of 131,000 tons achieved in 1995.
The growers, mostly located in Tawau, Malaysia's largest
cocoa-growing area in eastern Sabah state, blamed poor yields on
floods that ravaged the crop between December and February.
The floods destroyed the first crop between April and June and
also affected the July-September harvest. They added that recent
continuous heavy rain was also threatening the final annual crop
between October and December.
The average 3,000-3,200 ringgit (US$1,200-$1,280) currently
fetched for a ton of Malaysian cocoa beans is too little to be
profitable, said the growers, who have been switching to oil palm
enmasse.
"It doesn't make any economic sense to stay with cocoa," said
Anthony Tsen, a cocoa grower who earned a total of 367 ringgit
from the crop in August -- lower than the 400 ringgit paid to
each farm worker.
Tsen said most medium and large farms had chopped down the
majority of their cocoa trees to replant with oil palm and that
his estate, Landquest Sdn Bhd, was doing the same.
Recovery
While the board believes new higher yielding strains of cocoa
trees could result in a recovery in Malaysian production, the
growers are more skeptical noting the high cost of inputs needed
to ensure the plants produce at their full potential.
The cocoa board official told Reuters that although the
average cocoa yield per hectare in Malaysia was 600 to 800 kg,
cocoa farms could achieve as high as 2.0 to 3.0 tons a hectare by
ensuring regular application of fertilizers to the crop and
careful pest control.
"Smallholders are doing it and they can net up to 1,800
ringgit a hectare," said the official.
"Maybe this isn't enough for corporations which have to pay
executive salaries and contend with destructive diseases and
insects such as the cocoa pod borer. Oil palm is so much easier
to plant and profitable too."
Malaysia's 12 cocoa grinders have a total capacity to grind
about 120,000 tons of beans annually to produce cocoa butter and
powder for the chocolate industry.
But they only process about 60,000 to 80,000 tons of beans as
the balance is exported to places such as Singapore, China and
India, said a spokesman for Teck Guan Perdana, an integrated
cocoa grower and grinder in Sabah.
"We can't say there's no future for Malaysian cocoa as our
traders export some 20,000 to 40,000 tons annually and they can't
do that unless there's good price and demand," he said striking a
bullish note in a largely gloomy industry.