The group is headed up by Dennis Melka, co-founder of Malaysian palm oil producer Asian Plantations, which was acquired by Felda Global Ventures back in October 2014. The hope is that as United Cacao starts delivering good returns, it too might be snapped up by a bigger player at a premium. The rationale behind the venture is this: cacao bean production is dominated by West African producers (73 per cent of global production), 95 per cent of whom are smallholders. As the graphs show, supply growth has trailed demand growth: the grindings ratio of cocoa beans has been shrinking, leading to higher prices, while chocolate consumption is rising in line with GDP growth. The concern is that African smallholders will struggle to keep up with growing demand, as they lack investment capital to innovate and land available for cultivation is restricted. This could lead to a supply deficit by the end of the decade. United Cacao hopes to plug this deficit by applying the palm oil model to cacao, to show that the stuff can be economically and reliably produced on an industrial scale, but at much lower cost, in South America.
Source: Hardman & Co, IMF, ICCO
Source: Hardman & Co, IMF, ICCO
