Imports of cocoa beans by Brazil are expected to reach around 80 thousand tons this year, compared to 11 thousand tons last year, increasing the sector's costs after a significant crop failure due to drought in Bahia, said the executive director of the National Association of Cocoa Processing Industries (AIPC), Eduardo Bastos.
“This import is a lot, for us it’s bad because it’s always better to get supplies from domestic crops, (to import) you have to make purchases six months in advance…”, Bastos said in an interview with Reuters, highlighting that Brazil has already imported almost 50 thousand tons so far this year.
The country's harvest was estimated by AIPC at 150 thousand tons in the 2016/17 season, a drop of almost 30 percent compared to the previous season, with significant losses in the main producing state in Brazil, one of the largest global consumers of chocolate in volumes.
The drought was so severe in Bahia that it caused the death of crops, which will have an impact on production in the coming years and will consequently keep imports higher than the approximately 10 thousand tons recorded in recent years.
“The volume to be imported (in the coming years) will depend greatly on the next harvests, but we expect a reduction of at least half (of imported this year)”, said Bastos, from AIPC, which has among its members large multinational companies such as Olam, Cargill and Barry Callebaut.
This would mean imports of approximately 40 thousand tons per year until the crop can recover from the severe drought.
COSTA DO MARFIM
Given this scenario, the association is pressuring the federal government to reverse a phytosanitary ban on the import of the product from Côte d'Ivoire, the main global producer and exporter, which could provide another option and alleviate costs for the industry, which currently only brings cocoa from Ghana.
“As people know that Brazil is only importing from Ghana, the price is very high,” he stated, without giving details.
The price on the domestic market is also high, with the crop failure. The cocoa premium from Ilhéus (BA) in relation to the price on the New York Stock Exchange reached an average of 268 dollars per ton in July compared to a discount of 623 dollars/t in the same month of the previous year, according to consultancy INTL FCStone.
Bastos believes that by the end of the year the industry will obtain authorizations to import from Ivory Coast.
Imports will play an important role for the Brazilian market, according to the association's leader, even though with the economic crisis consumption fell by 8 percent last year, to 220 thousand tons, with a projection of stability in 2016.
Especially because the national industry is expected to export 69 thousand tons (in almond equivalent) of derivatives, such as cocoa butter and cocoa powder – such exports take place under a “drawback” regime, with tax benefits.
For the next few years, Brazil hopes to strongly reduce its imports, as there is a plan for the country to return to producing at least 300 thousand tons in five years and thus become self-sufficient.
Source: Reuters
