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New business model for T&T’s cocoa
T&T’s cocoa industry has been through good and bad times for almost 100 years.
From the heyday of production in the 1920s to recent drastic declines, the industry has seen it all.
Today, it is a $100 billion industry worldwide which T&T can tap into. To finally turn the T&T industry into a successful 21st century business, the International Fine Cocoa Innovation Centre is being set up at Valsayn.
Path Umaharan, director of the Cocoa Research Centre at the University of the West Indies, St Augustine, said the effort involves exporTT working and a variety of private and state entities.
“If you do not have a set up that brings these players together in a cohesive way, ultimately, the stakeholder does not benefit,” he said.
“The overall objective of that centre is to bring players together in a focused manner to build a cocoa value chain. If people can learn from our model here, T&T can export this model and sell it anywhere in the world.”
The centre is located on a 12-acre piece of land allocated by UWI and includes a model cocoa farm showcasing innovations and best practices and a model processing facility.
A chocolate factory is also being built on the site to showcase best practices in manufacturing.
“We have purchased the equipment already, and have applied to the government to support the building. We are still waiting for the resources to be released. We want the whole value chain showcased at that centre,” he said.
The cocoa industry has declined from the “Golden Age” in the 1920s and 1930s when T&T used to produce 40,000 tonnes per annum, to a mere 400 tonnes annually.
“The decline was precipitated by a disease that entered into Trinidad during that era called the Witches’ Broom Disease. That actually was the reason why this research centre was established because the global cocoa industry was heavily reliant on the production from T&T at that time,” Umaharan said.
Other factors also contributed to the decline of the industry. With the growth of the energy sector, many workers began to migrate away from the labour intensive cocoa industry to the higher paying oil industry.
In addition, the establishment of the West African cocoa industry in the 1940s provided an alternative to T&T’s industry. Today that region in Africa produces 75 per cent of the world’s cocoa.
Local farmers were only capturing five per cent of the value chain and it did not make business sense for many people to continue working in the sector.
Umaharan explained: “Many of them abandoned their estates because of a lack of labour and a lack of profitability. In the early 2000s, there was change in the market place. The chocolate industry started to morph into a bean-to-bar chocolate industry. Some call it an ultra-niche industry providing consumers with very high quality chocolates at high prices particularly in the metropolis.
“It started in Europe and has spread to other metropolitan cities of the world where people wanted to taste the delicate flavours.”
He said a lot of the big brand chocolates actually have a lower percentage of cocoa in them. The remainder is milk and sugar.
“The international niche marketplace offered consumers chocolates with a wider range of new flavours that people never knew existed in cocoa.
“These dark chocolates also gave a better health benefit as cocoa itself is said to have nutraceuticals that are good for cardiovascular and other benefits. These demand characteristics in the market created a new segment which can be referred to as boutique industries,” he said
According to Umaharan, from having four to five big chocolate companies producing all the chocolates for the world, there are now thousands of small boutiques cropping everywhere producing bean-to-bar chocolates. This created a new business model where instead of going through middlemen, bean-to-bar chocolatiers bought directly from farmers which increased their profit margin.
“That has given an impetus to cocoa producers in T&T. Those that had once abandoned estates now see the benefit of rehabilitating it to sell beans to the boutique market internationally,” he said.
Umaharan estimates that there are about 1,300 small cocoa farmers and ten large farmers in the country. He said there is now a “resurgence of interest” in the industry.
“Farmers used to get about US$2,800 a tonne. Now there are farmers who are directly selling are getting US$7,500 per tonne. That is a value increase that is now allowing them to invest back into the cocoa industry and get better yields,” he said.
However, there is much more farmers need to do to harness the value chain.
“If they can make chocolates then there is an opportunity to get even higher percentages of the value being retained in T&T. We have trained more than 200 people in chocolate making.
“There are over 60 value added entrepreneurs in T&T. Most of them are into chocolates and chocolate products but some are making soaps, cocoa nibs and other things. They need to be made into viable businesses who can export into the 30 million tourist market which is on T&T’s door steps.”
Ashmeer Mohamed, chairman of exporTT, said there are a few bigger chocolate makers who are doing well. He listed T&T Fine Cocoa Company and Montserrat Hills Cocoa which have their products in Europe.
Mohamed said local chocolate producers must look beyond Caricom.
He said Montserrat Hills Cocoa represents 27 farmers who grow and process the beans and export them as a co-operative and they have done well.
“They are producing seven types of bars and each bar is named after one of the towns and areas. Each one of the chocolates carries the story of a town. One of the things that foreign buyers are looking for is that if there is a story that goes with it, they are very happy to see that.
“They are the only local company association to get a geographic indicator (GI) for their fine cocoa. This GI gives it a protection similar to champagne in France,” he said.
Mohamed said that Montserrat Hills applied for and was granted a direct assistance grant from the Ministry of Trade which will be used to purchase equipment.
Umaharan—noting that T&T is home to the world famous Trinitario cocoa and the world’s largest gene bank for cocoa— said what failed in the past was a wrong business model.
“We were not able to exploit what we had was because the business model was wrong as we were trying to compete in the bulk market instead of the ultra-niche market. I think we can create a new cocoa industry which is profitable to all the people along the value chain which includes farmers, chocolatiers and marketeers.”
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