Cocoa is one of Vanuatu’s main exports, with more than 1,500 tons exported annually.
It is an important cash crop: 25% of rural households in Vanuatu are involved in cocoa production.
Most cocoa is produced by smallholder farmers based in the northern islands of Vanuatu and then exported by three licensed exporters.
The annual export value is above VUV454 million (AUD5.5 million). Most of this cocoa is exported to the bulk grinding markets in Singapore and Malaysia, which deal in lower quality and lower prices.
Cocoa export figures have been growing over the past years, however, impacts from Cyclone Pam (2015) will likely see a decline in export figures over the coming years. With rising global demand, particularly in Asia, it is expected that international prices will continue to increase over the long term.
As consumer tastes change, there is also growing demand for high quality, single origin cocoa to make dark chocolate bars.
The vast majority of Vanuatu cocoa exports is in the form of dried beans. There is, however, a small chocolate factory owned by Alternative Communities Trade in Vanuatu (ACTIV), which is the only value-adding company producing chocolate in Vanuatu. Chocolate produced by ACTIV is sold domestically and within the tourist industry.
The main market access issue for Vanuatu cocoa is quality. Bean characteristics of flavour, fat content and freedom from taints (such as smoke or mould) are important, and countries with a reputation for poor quality have limited market options.
Unfortunately, this is the case for Vanuatu cocoa. Current quality control systems in Vanuatu are very weak, and contamination of beans with smoke from wood-fired driers is common.
This limits the ability of Vanuatu exporters to improve terms with buyers or access new markets based on quality. Currently, as mentioned above, a very high percentage of Vanuatu cocoa is exported to the bulk grinding markets in Asia.
These importers factor expected poor quality into their discounted pricing. In addition, the majority of Vanuatu beans are sold to a very limited number of middle-men, cocoa trading houses that provide no pricing incentives to improve quality.
A lack of trade finance facilities in Vanuatu means that exporters are often reliant on these trading houses for pre-financing purchases of cocoa beans, which locks them into unfavourable commercial arrangements and results in export prices being discounted against world prices.
Through trials, PHAMA is introducing improved solar drier technologies that are adapted to the Vanuatu context and have the potential to improve cocoa quality.
This will assist cocoa exporters and producers to receive premium prices by allowing them to tap into higher quality markets identified from the market survey. PHAMA will specifically target women farmers for involvement in the trials.
It is hoped that sharing lessons between Vanuatu, Solomon Islands and Papua New Guinea will result in capacity development and increased marketing opportunities for all.