Systemic changes needed for sustainable cocoa production

MPIC works closely with relevant agencies to set up cooperatives to look after cocoa growers’ well-being and livelihood 


COCOA growers are switching to planting different crops due to subsidy cuts from the Malaysian Cocoa Board (MCB) and the increased price of fertilisers. 

Farm owner Simon Ting Shu Shin said because the government is no longer subsidising fertilisers (for cocoa growers), they had to reduce the amount of usage to reduce the cost (of planting), thus, cocoa output has declined. 

“In 2016, a bag of 50kg fertiliser was sold at RM110, but now the price has increased to RM245 for a bag of the same weight. There is nothing much we can do as MCB reduces its budget every year. Our hands are tied. 

“Previously my margin was at 15%, this year it might be negative. If I were not intercropping with coconut to cover the expenses, I would have chopped down my cocoa trees a long time ago,” he told The Malaysian Reserve (TMR). 

Moreover, the excessive rainy season reduced flowering and badly affected cocoa production. 

Fadillah encourages cocoa growers to participate in cooperative activities to increase income through product selling and reaping the dividends earned (pic: Bernama)

Plantation Industries and Commodities Minister Datuk Seri Fadillah Yusof said his agencies were aware and equally concerned about the issues and challenges that arise from the non-competitive prices that affect cocoa growers’ income. 

“The situation is compounded by the gradual reduction in subsidies over the years, and the escalation of pricing for agriculture inputs like fertilisers due to external factors, such as the Russia-Ukraine conflict. 

“The ministry — through MCB — is continuing the incentives for high-quality planting materials and agriculture input for new cocoa planting programmes across the country under the 12th Malaysia Plan. 

“In addition, MCB also provides extensive work and technology transfer to existing growers. It is committed to intensifying research and development (R&D) efforts by developing newly formulated fertilisers using waste materials from the cocoa ecosystem, such as pod husk (waste to wealth or circular economy), besides consistently providing training on the Good Agriculture Practice (GAP) to cocoa growers,” Fadillah said to TMR. 

The ministry is also working closely with relevant agencies to set up cooperatives to look after cocoa growers’ well-being and livelihood. 

“A workable mechanism is developed to assist cocoa growers through cooperative participation to sell their cocoa beans directly to the grinders, for semi-finished products such as cocoa liquor and cocoa butter, for better prices. 

“The income of cocoa growers is expected to increase via bonuses and dividends derived from income generation through cooperative activities, such as integrated agro-tourism programmes including homestay, in collaboration with the Tourism, Arts and Culture Ministry (Motac). 

“Another initiative is connecting cocoa growers directly with chocolatiers such as Godiva. We can ward off the middlemen when cocoa growers sell their unique flavoured cocoa beans directly to the chocolatiers, at higher prices, to produce premium chocolate or single-origin chocolates,” he added. 

Niche and Specialty Cocoa Beans

Back in the 1980s, Malaysia was among the world’s top cocoa producers but now, it is more than 98% dependent on cocoa imports for its consumption. 

University Malaysia Sabah lecturer and agricultural scientist Azwan Awang said the revitalising of Malaysian cocoa production can be found in specialty or designer chocolates. 

“To reap more profits from their farms, growers should increase the price of the beans and to do that, they must increase the quality of the beans. 

“There is a lot that goes into growing better cocoa beans. Farmers must have the cultivars (a plant variety that has been produced in cultivation by selective breeding), the clones of the trees, the right method of fermentation and the right environment,” Azwan said. 

Meanwhile, Fadillah said one of the policy thrusts under the MCB Strategic Plan 2025 is to spearhead the efforts for niche, specialty cocoa beans that command higher prices instead of competing on volumes. 

“Smallholders are encouraged to shift towards organic farming practices and venture into producing fine or flavour cocoa (FFC). 

“There is an increasing trend and consumer demand for such organic chocolates, triggered by concerns over the health effects of pesticides or chemical fertilisers. 

“FFC such as nutty, spicy, fruity or floral typically command premium prices on the London and New York cocoa futures The ministry and MCB have implemented the concept of “Farm to Table” through its Cocoa Farmer Cluster Cooperatives for each region in Malaysia to ensure that cocoa production is a sustainable means of livelihood for cocoa growers. 

Fadillah encouraged cocoa growers to participate in cooperative activities to increase income through product selling and reaping the dividends earned. 

“Cocoa growers are encouraged to practise intercropping cocoa with other economic crops such as durian, coconut, and oil palm. This will eventually enhance cocoa growers’ income in the long term. 

“Cocoa growers are encouraged and consistently guided to produce premium cocoa beans that command higher prices and shift towards organic farming practices to produce FFC, which is traceable,” he added. 

He said cocoa beans from Malaysia’s growers had won several international awards from the Cocoa of Excellence in Paris for their unique flavour.

“The winning cocoa beans have created opportunities to fetch premium prices by establishing a more significant market share,” Fadillah said. 

The ministry and MCB are also working to institute bean quality improvement under its sustainability policy thrust segment. 

The latter has developed a traceability system to ensure sustainability practices are applied across the supply chain, including the traceability of cocoa beans. 

“This could help the cocoa growers keep the quality of their beans and certify the origin of those beans as part of the requirement by importing countries that enable them to fetch premium prices. 

“Another critical element to increase the quality of cocoa beans is through R&D activities which focus on developing good quality cocoa planting materials and post-harvest process improvement. 

“The ministry will provide financial and non-financial assistance to boost the cocoa industry, given that it has an export earning potential of RM10 billion by 2025,” Fadillah said. 

Contract Farming 

The private sector’s involvement in contract farming in Malaysia is still low, Fadillah said. It is greatly encouraged — especially by the grinders and growers — through a mutual agreement to procure dry cocoa beans at higher prices from growers. 

“The ministry, through MCB, encourages active participation from grinders or interested parties to participate in operating the cocoa farm or estate either from privately owned or government-owned land, with MCB providing the required technical advice,” he said. 

A research report said the low private involvement in contract farming in Malaysia is due to the price risk, labour issues and cocoa management which is more intensive compared to palm oil and rubber. 

According to MCB, Malaysia’s cocoa production of 100,000 tonnes per year is insufficient to fulfil the cocoa industry’s demand of 350,000 tonnes per year, resulting in the country importing the commodity to fulfil domestic demand. 

  • This article first appeared in The Malaysian Reserve weekly print edition