Chapters 8.25

8.25-Value Addition of Cocoa

Edith Rowan Lalonde, University of Guelph, Canada

Suggested citation for this chapter.

Lalonde,RE. (2022) Value Addition of Cocoa,In Farmpedia, The Encyclopedia for Small Scale Farmers. Editor, M.N. Raizada, University of Guelph, Canada. http://www.farmpedia.org

Introduction

Poverty and hunger are issues that affect a significant proportion of the world’s current population, perhaps more specifically the developing world’s farmers (Roser & Oritz-Ospina, 2017). According to World Bank statistics (2013), of the people living in extreme poverty globally 80% live in rural areas, and furthermore 65% of these adults are working in agriculture (Roser & Oritz-Ospina, 2017). With that in mind, much of the future work in development and poverty alleviation must be geared toward the rural developing world and towards helping those working in agriculture. This chapter will be focusing on post-harvest value additions for cocoa. The majority of the cocoa produced around the world is grown on smallholding farms (World Cocoa Foundation, 2014). Cocoa trees are most successfully grown within 15-20 degrees latitude from the equator. Cocoa originated in South America in the Andes, but today Ghana and Indonesia are now prominent producers (World Cocoa Foundation, 2014). An estimated 300-500 kilograms of cocoa beans are produced on one hectare of land (World Cocoa Foundation, 2014). According to the World Cocoa Foundation (2014), the cocoa tree cultivation process is as follows: it takes approximately five years for a cocoa tree to grow to maturity and achieve peak production of its pods, and this level continues for ten years. These pods typically grow and become ripe during two harvest seasons per year. During each harvest, the farmer removes the pod using a long steel tool and then breaks open the pod using a machete or long blade, revealing the beans. One pod typically contains anywhere between 20 to 50 beans. The next step in production is fermentation and drying, wherein the farmer boxes up or simply piles the beans and then covers them in banana leaves or heavy mats. This process heats the beans resulting in the pulp around them to heat and serve as a natural fermentation. The fermented beans are then dried in the sun. This process leaves a farmer with cocoa beans that are ready for a variety of different continued paths of production (World Cocoa Foundation, 2014). The established issue remains however, that producing cocoa to this stage provides little income or food supply to the farming families, and hence subsequent value addition should be promoted

Value addition idea: Cocoa Butter Soaps and Cosmetics

Production

Cocoa butter is a vegetable fat which is removed from the cocoa bean; when separated it has a pale-yellow colouring (Britannica, 2018). The process of obtaining cocoa butter begins with the same initial refining steps as most continued production paths (ICO, 2013). This process involves taking the whole beans and roasting them, with a particular temperature, moisture and amount of time varied by the required product. The process continues with the winnowing of the beans to remove the shell and expose the nib. The nibs then undergo alkalization usually using potassium carbonate in order to mature the colour and flavor. Then, the nibs are milled and pressed in order to separate the cocoa butter and leave the cocoa presscake which is used in other chains of production (ICO, 2013). The smallholder is now left with cocoa butter. This butter can then be used to manufacture a variety of different cosmetics and soaps, or directly sold as a wholesale good to cosmetic companies (World Cocoa Foundation, 2014). The raw butter holds naturally occurring antioxidants and moisturizing properties (ICO, 2013). The simplest opportunity would be to divide the cocoa butter, as is done in the usual cocoa refining process, and bottle it in that state for wholesale. Many cosmetic companies would buy it raw, but also as the health oriented naturopathic stores continue to rise in the West, a market demand opens up within the general public as well.

Another opportunity is body butter. The cocoa butter is melted down in a double boiler, olive oil is added. Alternatives to olive oil can be used such as shea butter or even mango butter, which may be accessible in Africa and South Asia, respectively. The mixture is then cooled, and finally it must be whipped at high speed until the creamy whipped texture occurs (HumbleBee, 2018). This can then be bottled and sold as a final good for export or sold locally. The last opportunity that will be presented in cosmetics is a simple soap. The process is simply to heat the cocoa butter and then add desired herbs, flowers, or even berries, cool in a refrigeration system and let set into moulds and tins (HumbleBee, 2018). Vitamin E can be added for increased health value; however the health properties of cocoa butter alone are so high that this is an unnecessary expenditure (HumbleBee, 2018). There are many more cosmetics and soaps that can be manufactured using cocoa butter, however these simple options present a low-cost method to access these markets and establish a business.

Market and value

In the market, cocoa butter can be in either in liquid or solid form, however the solid form is the higher growing industry and has the higher value (Transparency, 2017). The major increase in market value and growth is due to the health benefits and the rise of health-conscious consumers (Transparency, 2017). Cocoa butter has been shown to alleviate dry skin, fights signs of aging, sooth burns, and even aid in improving heart health and immune system strength (Transparency, 2017). The market has been increasing in developed countries, but the potential is greater for developing countries due to the local community growing the product they produce and how that appeals to conscious consumers. The products produced could either be sold wholesale to cosmetic companies, simply as the jarred cocoa butter. The producer could go further however to sell final goods at the local and global scale, either of body butter, soaps, scrubs, etc. With the major producers of cocoa being in Ghana and Indonesia this opens up the market potential of local resorts/spas and the tourist industry as well as in neighbouring countries (World Cocoa Foundation, 2014). A partnership with an NGO may also be formed in order to use the NGO’s voice to market products until the trade or export of the goods can be established on a larger scale.

Capital Required

- Winnowing machine: 50-110$ (AliBaba.com)

- Milling and pressing machine: 500-800$ (AliBaba.com)

- Refrigeration system: 500-10,000$ solar powered, price depending on size (AliBaba.com)

- Tins for final products: 0.20$ each (AliBaba.com)

- Marketing and labels: Custom labels at 0.10$ each (Alibaba.com)

Product Barriers

There are concerns with the temperature sensitivity of the product, pertaining especially to the low melting point (Encyclopedia Britannica, 2018). Cocoa butter begins to soften and melt just below body temperature, making it an extremely sensitive product during transport and storage. Refrigeration is necessary in most cocoa post-harvest production processes (World Cocoa Foundation, 2014). The lack of access to power for smallholders in many regions of producer countries is an unfortunate reality of extreme poverty (Roser and Oritz-Ospina, 2017). This lack of power makes refrigeration an even larger obstacle then simply a lack of funds. Nevertheless, many companies manufacturing agricultural machinery have developed low cost solar powered refrigerators, using old shipping containers as repurposed refrigeration systems (AliBaba.com).

Value addition idea: Cocoa Mulch

Production

In the agricultural industry, there is often a large amount of waste, this being inedible by-product that is discarded and can lead to environmental pollution (Balentić et al, 2018). Thus, there must be a shift in the way industry uses and re-uses their by-products or waste from the production process (Balentić et al, 2018). Within the cocoa industry, this approach is quite simple and can even be valuable to smallholder farmer livelihoods. As already noted, in the production process, when the cocoa beans are winnowed in order to reveal the valuable cocoa nib, the resulting shells are often discarded, yet these shells possess nutrients which can be very beneficial to farmers (Balentić et al, 2018). These cocoa shells can be made into mulch, a top cover for agricultural soil. It is spread over the soil in a layer creating a cover over the otherwise exposed soil below; this serves as a valuable technique to increase soil nutrients and protect from pests and weeds (Patterson, 2018). Cocoa shell mulch contains phosphate, nitrogen, and potash as well as having a pH level of 5.8, which is optimal for agriculture (Patterson, 2018). Using this recycled by-product not only protects the environment by reducing waste but also eliminates the need to use harmful herbicides and decreases erosion (Patterson, 2018).

Market and value

Despite being environmentally friendly and providing valuable nutrient rich top cover to the consumers, this product has very small commercial value. However, the alternative being the shells sitting as waste, it seems nevertheless a sustainable use of the products. The market would likely be restricted to locals as the global market for mulch, fertilizer, or herbicide is a competitive one (Balentić et al, 2018). Locals sales of cocoa mulch have the potential of being successful, when presented as a low-cost alternative to expensive herbicides for smallholder farmers (Balentić et al, 2018). A bag of cocoa mulch measuring around 10 kilograms; on websites currently offering the product in Canada, the sale price is around 20.00 to 29.99 CAD dollars per bag (AliBaba.com).

Capital required

The capital required for this value added product is very minimal, largely due to the simple fact that it uses pre-existing by-products but also because the only necessary step in turning it into a mulch is a light grinding of the shells in order to break them down slightly and help release the valuable nutrients to enrich the soil (Patterson, 2018). The mulch does not need to be sterilized, because the roasting process of the beans prior to winnowing eliminates any weed spores or fungus that may have been present (Patterson, 2018) which reduces the input cost of production:

- Moisture proof woven sacks: 10 Kg volume 0.20$ each (AliBaba.com)

- Marketing and labels: Custom labels 0.10$ each (AliBaba.com)

Value addition idea: Chocolate products

Production

In modern markets, as mentioned in previous sections, consumers have been seeking health and environmentally conscious products (Afoakwa, 2010). However, in addition to those consumer desires, in recent years they often also want a sense of sophistication. In the cocoa market, that translates into a desire for products sourced from regions such as Ghana, Indonesia, and Venezuela (Afoakwa, 2010). This presents a valuable production opportunity for smallholders in these regions. Once the cocoa nibs have been exposed, as was described above, they must be milled to create the cocoa liquor, which is a combination of cocoa particles balanced with cocoa butter (ICO, 2013). The next step in production is to add the desired combination of sugar, milk, and additional cocoa butter. These additives can vary and utilize local speciality goods depending on the region, as well as the desired type of chocolate. This mixture is then refined, whereby it is run through a series of rollers, in order to achieve the desired texture. Following this step, the mixture then goes through conching or is emulsified using either an egg beater like tool or a kneading tool. The mixture is then heated, then cooled, and then reheated in order to avoid crystalline formations resulting from the cocoa butter and to avoid any discolouration. Finally, the mixture is poured into moulds and cooled, ready for packaging and sale (ICO, 2013).

Market and Value

The chocolate market globally is enormous and continues to grow, with the highest market yields in Europe and North America (Afoakwa, 2010). Much of that continued growth is due to the new-found interest in the market due to the rise of the health benefits associated with many chocolate products as well as the rise of Fairtrade and small-scale production. Despite the cost necessary for the wholesale production of chocolate by smallholders, the potential value addition and income in the long run outweighs these opportunity costs. Gaining traction in international markets may be difficult, however smallholding famers in many regions where cocoa is produced have the advantage of an expanding tourist industry which can provide valuable channels for sales (Afoakwa, 2010). z

Marketing

In such a competitive industry, smallholders may have trouble gaining traction with their products. However, the ‘conscious consumer’ provides a potential advantage to these producers, especially if products are geared towards these desires (Tiffen, 2010). Farmers can use locally sourced fruits and spices in order to add a distinctive and select quality to their products. This create a sense of tangible difference between the producers who use cocoa from developing regions, and the chocolate produced by smallholders who are developing themselves (Tiffen, 2010). Smallholders may also benefit from being certified as Fairtrade and furthermore as environmentally friendly. These label distinctions have become a huge part of consumer culture in much of the western world. Marketing the chocolate using the family name or region may create an exotic quality and recognizable branding.

Capital Required

Despite the high capital cost required for chocolate production, smallholders may have the opportunity to not only lower the cost but also lower the labour requirement, by involving the community, and using cooperatives. These are locally established groups of farmers who work together towards a common goal and common livelihood (Tiffen, 2010). These cooperatives create a pool of resources from which all the farmers benefit equally. This option will be more widely discussed in a subsequent section.

- Milling machine: 500-800$ (AliBaba.com)

- Refining machine: 2,800 – 20,000$, price depending on sizes (AliBaba.com)

- Emulsifying machine: 3,500 – 35, 000, price depending on size (AliBaba.com)

- Refrigeration system: 500-10,000$ solar powered, price depending on size (AliBaba.com)

- Marketing and labels: Custom labels 0.10$ each (AliBaba.com)

Product Barriers

Despite the potential of this opportunity for smallholders. there are of course barriers in production, the first being the difficulty to keep the chocolate cool, particularly during transport (Afoakwa, 2010). With the cocoa farms in developing countries being located in nations such as Ghana and Indonesia, the climate makes it difficult to maintain chocolate products without high capital costs and improved access to electricity (Afoakwa, 2010). The solar powered option presented above may solve this issue however the cost concerns remain present. With the financial situation of many small holding farmers being near or within extreme poverty, access to funding is difficult (Roser and Oritz-Ospina, 2017). The institutions that can provide loans in such situations are also often inaccessible or the farmers themselves do not have any type of collateral to present in return for the loan. Another barrier is the massive competitive market in chocolate that currently exists (Afoakwa, 2010). The high-level industrialization of many of these companies creates a manufacturing advantage and financial advantage that make it very difficult for smallholders to gain market traction with their own products (Tiffen, 2017). This obstacle is one that will likely not be able to be addressed without the cooperation of many farmers, or with the possible aid of a Non-Government Organizations (NGO) (Tiffen, 2010).

Helpful hints to get started – Cooperatives

The key recommendation from the value-addition products presented is the importance of smallholders forming a collective, or cooperative (Tiffen, 2010). These groups have often been discouraged and obstructed by government or corporate officials, yet since liberalization in many areas, such as Ghana, these cooperatives can quickly become a farmer’s most valuable tool. Some cooperatives, once established, form relationships with NGO’s and Fairtrade organization in order to expand their market potential and gain support in establishing the groundwork for their business. Ultimately, these groups of farmers are granted the benefits of shared labour, shared financial backing, a greater sense of community, and finally an increased chance a pulling themselves out of subsistence and into a successful livelihood -- all without the exploitation and corruption associated with monopolistic state marketing boards (Tiffen, 2010).

References

1. Afoakwa, Emmanuel. Chocolate Science and Technology. UK: Wiley-Blackwell, 2010. https://books-scholarsportal-info.subzero.lib.uoguelph.ca/en/read?id=/ebooks/ebooks2/pda/2011-12-01/1/15197.9781444319897.

2. Balentić, Jelena, Durdica Ačkar, Stela Jović, Antun Jozinović, Jurislav Babić, Borislav Miličević, Drago

3. Šubarić, and Nika Pavlović. "Cocoa Shell: A By-Product with Great Potential for Wide Application." Molecules. 23(6), 1404 (2018). https://www.mdpi.com/1420-3049/23/6/1404/htm.

4. "Cocoa Butter." Encyclopedia Britannica. 2018. https://www.britannica.com/topic/cocoa-butter.

5. "Cocoa Butter Market: Global Industry Analysis, Size, Growth, Trends, and Forecast 2017 – 2025” Transparency, Market Research. https://www.transparencymarketresearch.com/cocoa-butter-market.html.

6. "Cocoa Market Update." World Cocoa Foundation. April 2014. http://www.worldcocoafoundation.org/wp-content/uploads/Cocoa-Market-Update-as-of-4-1-2014.pdf.

7. Lee, C. H. "Innovation in the Use of Cocoa Products and By-Products." Malaysia Cocoa Board, November 2012. file:///Users/rowanlalonde/Downloads/Panel%206-5%20Dr%20Lee%20(3).pdf

8. Patterson, Susan. "Cocoa Shell Mulch: Tips For Using Cocoa Hulls In The Garden." Gardening Know How. https://www.gardeningknowhow.com/garden-how-to/mulch/using-cocoa-hull-mulch.htm.

9. "Processing Cocoa." International Cocoa Organization (ICO). June 2013. https://www.icco.org/about-us/about-the-icco.html.

10. Roser, Max, and Esteban Oritz-Ospina. "Global Extreme Poverty." Our World in Data. March 2017. https://ourworldindata.org/extreme-poverty

11. "Smallholder Market Support." World Food Programme. 2018. http://www1.wfp.org/smallholder-market-support.

12. Tiffen, Pauline. “A Chocolate-Coated Case for Alternative International Business Models.” Development in Practice. 12, no. 3-4(2002). 383-397. https://www-tandfonline-com.subzero.lib.uoguelph.ca/doi/pdf/10.1080/0961450220149744?needAccess=true