Vietnam Plans `Major' Drive to Increase Cocoa Exports

By Van Nguyen

Sept. 15 (Bloomberg) -- Vietnam, the world's second-biggest shipper of coffee and rice, plans to expand output and exports of cocoa to take advantage of a global supply shortfall and rising prices, emulating the nation's success with other crops.

``Vietnam has a chance to emerge as a major supplier,'' Tong Khiem, head of the Cocoa Steering Committee, said today. Output may rise to 90,000 metric tons by 2015 from just 360 tons at present, according to a state plan and estimates from Khiem.

Increased supply from Vietnam may offset a shortfall from Indonesia, the world's third-largest producer, which forecast last week that output may plunge on disease. The global cocoa deficit may reach 88,000 metric tons in the season ending next month, the International Cocoa Organization said on Aug. 21.

``The crop is good for farmers to increase their income and Vietnam can also earn more from exports,'' Khiem, a government official, said in an interview. Prices of the chocolate ingredient ``have increased a lot in the last two decades as world demand is increasing and supply is running short.''

Cocoa futures on ICE Futures U.S., the former New York Board of Trade, reached $3,290 a ton in July, their highest in at least 20 years. The most-active contract gained 0.8 percent to close at $2,560 a ton on Sept. 12.

Coffee, Cashews

Vietnam, which imported rice until the late 1980s, is now the world's second-biggest shipper after economic reforms, including private ownership, encouraged output. The nation, the biggest grower of cashews and second-biggest coffee producer, may repeat the success with cocoa, said Khiem, whose committee coordinates cocoa development in the provinces.

The country's cocoa-development strategy, drawn up by the Ministry for Agriculture and Rural Development, forecasts a sixfold expansion of the area under cocoa to 60,000 hectares (24,700 acres) by 2015, yielding 90,000 tons. Of total production, about 52,000 tons may be exported.

By 2020, 140,000 tons may be produced on 80,000 hectares, with about 108,000 tons for export, the strategy says.

At present, the country has about 10,000 hectares under cocoa and exported 240 tons from total dry production of 360 tons, according to Khiem. ``Vietnam's cocoa exports are in a trial period,'' he said from Hanoi, the capital.

The development plan ``is ambitious, but they are dedicating the resources to make it happen,'' said Dinh Hai Lam, country representative for Vietnam for the Washington-based ACDI/VOCA. The private, nonprofit organization has been promoting cocoa production in Vietnam since 2003.

Central Highlands

``The ecology in the Central Highlands and the Mekong Delta is highly favorable for cocoa plantations,'' Khiem said. The delta in the south is Vietnam's main rice- and fruit-growing region and the highlands are the main center for coffee.

Increased cocoa exports may help Vietnam narrow a widening trade deficit, which more than doubled in the first seven months from the same period last year. Vietnam's government is also battling the highest inflation in more than 16 years, which has eroded incomes.

``Farmers are enthusiastic about cocoa as the trees can be planted together with other crops on the same plot,'' according to Pham S., deputy director of the Lam Dong provincial Department of Agriculture and Rural Development.

To contact the reporter on this story: Van Nguyen in Ho Chi Minh City at vnguyen23@bloomberg.net