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Agri -Sector Pol icy and Public Administ rat ion Reform Pro jectTrinidad Agricultural Sector Reform Program

Ministry of Agriculture, Land, and Marine ResourcesGovernment of the Republic of Trinidad and Tobago

Cocoa and Coffee Industry Board Needs Assessment

Mr. Daniel Duris, Consultant

Fred Woods, Project LeaderRonald D. Knutson, Principal Investigator

The Texas A&M UniversityInternational Trade and Development Series

ITDS-TASRP Assessment Report 00.99-6.16

Agricultural & Food Policy CenterTexas Agricultural Experiment Station

October 27, 2000

College Station, Texas 77843-2124Telephone: (979) 845-5913

http://trintex.tamu.edu


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The international trade and development seriesis designed to report the results of trade and development projects

undertaken by the Agricultural and Food Policy Center at Texas A&M University.The series may include a number of reports related to a particular project or country,

produced under the leadership of AFPC faculty. Alternatively, it may involveindividual reports or particular topics for which AFPC faculty are either doing research

or providing technical assistance. AFPC welcomes questions, comments, and discussionsof the material contained in these publications and their implications.

Address such comments to the author(s) at:

Agricultural and Food Policy CenterDepartment of Agricultural Economics

Texas A&M UniversityCollege Station, Texas 77843-2124

Or call (979) 845-5913


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Executive Summary: Cocoa and Coffee Industry Board Needs Assessment

Despite government efforts to rejuvenate, both the cocoa and coffee subsectors of

Trinidad and Tobago are in a state of decline and are in danger of disappearing. The objective of

this needs assessment was to evaluate these subsectors and their future, with a major emphasis on

the role of the operations and performance of the Cocoa and Coffee Industry Board (CCIB).

Recommendations

1. Liberalize coffee trade immediately. Coffee should be removed from CCIB, and its

trade should be liberalized. Direct sales from producers to industry buyers would

simplify the structure and increase efficiency. An interprofessional committee is

proposed to assist in the transition and in the longer run to promote coffee production

and play a political role in encouraging the maintenance of appropriate market-

oriented support services (research, extension, grades, standards, and market

information) by the Ministry of Agriculture, Land, and Marine Resources (MALMR).

2. Liberalize cocoa trade gradually. A stepwise program should be implemented to

liberalize trade in the cocoa subsector. As in the case of coffee, an interprofessional

committee with a majority of producer representation should be developed to aid in

the transition as well as to promote the industry in the longer run. During the phase-

out period of 3-5 years, private individuals should be permitted to purchase cocoa

from producers and export directly themselves. During the transition period, the role

of CCIB would gradually change to one of maintaining and certifying quality to serve

niche markets.

3. Price according to end-use quality. The practice of pricing according to grade

should be phased out in favor of a single base price for bulk cocoa meeting minimum


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standards for defects and moisture. A system of quality-based premiums and

discounts based on moisture and defects should be established to complete this new

system, which would be more appropriate for Trinidads cocoa beans.

4. Develop farmer associations. The development of producer associations on a

village basis should be encouraged for both cocoa and coffee. These local

associations should then be federated into a district/county and national structure.

5. Emphasize on-farm result demonstrations. Extension programs should emphasize

on-farm result demonstrations and encourage cultural practices with demonstrable

economic gains.6. Integrate market-oriented production and economic research. Research needs to

be practically oriented to satisfy social and economic requirements of niche markets.

A steering committee is proposed to monitor research programs in cocoa and coffee.

7. Integrate production into rural development strategy. Cocoa and coffee

production need to be integrated into a rural development strategy that takes into

account all crops that can be profitably produced in various farming systems.

8. Take a census of producers. A census of all cocoa and coffee farms, whether

abandoned or not, should be completed as a joint undertaking of MALMR and CCIB.

9. Survey industry. A survey of cocoa buying agents, brokers, and manufacturers

should be undertaken by MALMR and CCIB for the purpose of better understanding

market requirements.


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Cocoa and Coffee Industry Board Needs AssessmentTable of Contents

1.0 Introduction.......................................................................................................................................11.1 Brief history of cocoa cultivation in Trinidad .......... .......... ........... .......... ........... .......... ........... ..........11.2 Current production situation......... ........... ........... ........... .......... ........... ........... ........... ............ .......... ...21.3 Purpose..............................................................................................................................................5

1.4 Needs assessment process .................................................................................................................6

2.0 Cocoa and Coffee Needs Assessment ........... ........... ........... .......... ........... ........... ........... ........... ........62.1 Organization of the cocoa and coffee sectors........... ........... ........... ........... ........... .......... ........... ........62.2 The market economy for cocoa and coffee ........... ........... ........... ........... .......... ........... ........... .......... .92.2.1 Current conditions and marketing arrangements........ ........... ........... ........... ........... .......... ........... ......92.2.2 Elements making up cocoa and coffee prices....... .......... ........... ........... ........... ........... .......... ...........112.2.3 World market situation for cocoa, October 1999 .......... ........... ........... ........... .......... ........... ........... .112.2.4 World market situation for coffee, October 1999................. .......... ........... ........... .......... ........... ......122.3 The position of cocoa and coffee in the agricultural sector............. .......... ........... ........... ........... .....132.3.1 The agricultural sector...... ........... ........... ........... ........... .......... ........... ........... ........... ........... .......... ...132.3.2 Positions of cocoa and coffee in agriculture......... .......... ........... ........... ........... ........... .......... ...........132.3.3 Socio-economic context ..................................................................................................................142.4 Condition of cocoa and coffee plantations .......... ........... ........... ........... ........... .......... ........... ...........142.4.1 Coffee plantings ..............................................................................................................................152.4.2 Cocoa plantings...............................................................................................................................152.4.3 The large plantations .......................................................................................................................152.4.4 Cocoa estates ...................................................................................................................................172.5 Stakeholders in cocoa and coffee subsector .......... ........... .......... ........... ........... ........... ........... .........172.5.1 Producers views on factors influencing industry .......... ........... .......... ........... .......... ........... ........... .192.5.2 Buying agents..................................................................................................................................232.5.3 Farmer organizations...... ........... .......... ........... ........... .......... ........... ........... .......... ........... ........... ......232.5.4 The Cocoa and Coffee Industry Board (CCIB) ........... ........... ........... .......... ........... ........... ........... ...242.5.5 Market for coffee.......... .......... ........... .......... ........... ........... .......... ........... ........... .......... .......... ..........272.5.6 Market for cocoa .............................................................................................................................282.6 Cocoa and coffee government support structures............. .......... ........... ........... ........... ........... .........292.6.1 Research ..........................................................................................................................................29

2.6.2 Extension services...........................................................................................................................312.6.3 Public rehabilitation policy .............................................................................................................312.6.4 Experience with the experimental fermentation unit............. ........... ........... .......... ........... .......... .....332.6.5 Overall conclusions regarding experience with government intervention and challenges

for future policy...............................................................................................................................34

3.0 Recommendations...........................................................................................................................373.1 Remove coffee from CCIB and liberalize its trade ........... ........... .......... ........... ........... .......... .........373.2 Open up the cocoa export market to the private sector .......... ........... ........... .......... ........... ........... ...393.3 Modify the cocoa quality buying system.......... .......... ........... ........... ........... ........... .......... ........... ....403.4 Liberalize the cocoa sector ........... ........... ........... .......... ........... ........... ........... ........... .......... .......... ...433.5 Develop a policy to encourage the development of farmer associations...... ........... ........... ........... ..433.6 Step up extension work ...................................................................................................................44

3.7 Step up research for agricultural development ........... ........... ........... ........... .......... ........... ........... ....453.8 Timing of implementation.......... ........... ........... .......... ........... ........... ........... ........... .......... .......... .....473.9 Incorporate cocoa and coffee into a rural development strategy .......... ........... ........... ........... ..........473.10 Conduct production surveys........... ........... ........... .......... ........... ........... .......... ........... ........... .......... .483.11 Conduct survey of cocoa buying agents, brokers, and manufacturers............... .......... ........... .........49

4.0 Conclusion.......................................................................................................................................49

Appendix I .....................................................................................................................................................51Appendix II....................................................................................................................................................54


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Cocoa and Coffee Industry Board Needs Assessment

1.0 Introduction

Cocoa and Robusta coffee have been grown in Trinidad for over two centuries and

figured for a long time among the main cash crops, providing the country with much of its export

earnings. The first official cocoa exports date back to 1796, with 96,000 pounds (43,545 kg)

shipped. The first coffee production dates back to the same period, but coffee was often planted

as a secondary crop around the edge of cocoa plots. Initially, both crops were planted in large,

colonial-type plantations and then spread to small- and medium-sized farms. This production

structure led to a distinction being made between plantation quality cocoa and estate qualitycocoa from family-run farms. Although Trinidad is best known for its cocoa, coffee production

has been not insubstantial.

1.1 Brief history of cocoa cultivation in Trinidad. The Spanish, with the corresponding

development of large plantations, introduced the Criollo cocoa variety (Venezuelan origin) in

1525.

In 1727, natural disaster and disease resulted in the sudden destruction of cocoa

plantings. Subsequently, in 1856, the Forastero variety was introduced from Venezuela. Wild

hybridization between Forasteros and the remaining Criollos varieties gave rise to the Trinitario

variety.

By the end of the 19th century, there was an increase in the area planted and particularly

in the replacement of sugar cane with cocoa in the large French and Spanish plantations.

In 1920, the Government of Trinidad intervened by setting up a loan system for small

cocoa farmers. This program, along with favorable growing conditions for the Trinitario variety,

helped to make Trinidad become the worlds fifth largest producer. However, in 1928, witches


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broom disease, caused by Crinipellis perniciosa,appeared in Trinidad, causing a substantial rise

in production costs.

In 1935, the first selections of Imperial College Selection (ICS) clones were developed

and distributed to growers by the Imperial College of Tropical Agriculture.

In 1939, oil production began, and coupled with low returns for cocoa, resulted in an

increasing lack of interest in cocoa, which was exacerbated by World War II. As a result, the

cultivated area decreased by 50 per cent and production fell by 75 percent.

In 1945, the Cocoa and Coffee Industry Board (CCIB) implemented the first cocoa

rehabilitation program.From 1959 to 1960, there was an increase in the area planted and in production, along

with the creation of propagation units for selected hybrids distributed initially in cutting form

(clones), then also in seedling form. Genetic improvement (resistance to black pod rot and

witches broom) continued, and TSH (Trinidad Selected Hybrids) or TSA (Trinidad Selected

Amazons) lines, derived from crosses between Trinitario and Upper Amazon materials, were

created for resistance to black pod rot and witches broom. Almost eight million plants were

distributed, covering 10,000 ha. These actions, however, did not stem the decline in cocoa

production that began in about 1960 and continued through the late 1980s (Figure 1). A new

cocoa rehabilitation program initiated in 1987 has facilitated recent stabilization of production at

a relatively low level.

1.2 Current production situation. At the beginning of the 1920s, Trinidad was the worlds

fifth largest cocoa producer with almost 35,000 tons (75,238,000 pounds in 1921), but Trinidad

only exported between 1,500 and 2,000 tons of cocoa per year over the last decade. For coffee,

the situation is even more drastic, since Trinidad switched from being an exporter to an importer.


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Figure 1. Cocoa Production in Trinidad Since 1796

0

5000

10000

15000

20000

25000

30000

35000

40000

1796

1804

1812

1820

1828

1836

1844

1852

1860

1868

1876

1884

1892

1900

1908

1916

1924

1932

1940

1948

1956

1964

1972

1980

1988

1996

Cocoa production (in tons) in Trinidad

Production is no longer adequate to supply the local roasting and instant coffee industries. Table

1 and Figure 2 indicate cocoa and coffee production trends over the past 30 years and extrapolate

trends to the next fifteen years if no steps are taken rapidly to stem the decline of these two

crops. Between 1921 and 1999, productivity/ha decreased 75 percent (430 kg/ha in 1921 as

opposed to 120 kg/ha in 1999).

If past trends continue, Trinidad will cease to be a cocoa exporting country within the

next 15 years, as has happened in coffee, despite the good reputation of cocoa from Trinidad.

The few tons currently going into the niche markets will not be enough for Trinidad to maintain

recognition in the international market.

Official statistics indicate that Trinidad has around 16,000 ha of bearing cocoa and coffee

trees that are mostly intercropped. In reality, the area in production is undoubtedly less with

8,000-10,000 ha being harvested by 4,800-5,000 growers, according to data gathered by the

Cocoa and Coffee Industry Board (CCIB). Average yields are extremely low, ranging from 100-


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Table 1. Production Data for the Last 30 Years (in Metric Tons)

Production Production

Years Cocoa Coffee Years Cocoa Coffee Years

1970/71 4 334,860 3 853,860 1980/81 2 777,304 2 676,901 1990/91

1971/72 4115.710 3 293,490 1981/82 2 531,937 1 900,000 1991/92

1972/73 4 815,100 2 745,500 1982/83 1 780,579 1 391,273 1992/93

1973/74 4095760 1 922,450 1983/84 1 743,030 871609 1993/94

1974/75 5180950 3 911,410 1984/85 1 555,910 2 141,641 1994/95

1975/76 2319870 2 557,880 1985/86 1 313,000 1 350,000 1995/96

1976/77 4309900 2 669,940 1986/87 1 655,239 1 842,278 1996/97

1977/78 3537610 2 372,770 1987/88 1 897,858 586240 1997/98

1978/79 2887360 2 364,680 1988/89 1 438,942 1 145,836 1998/99

1979/80 2091036 2 707,803 1989/90 2 077,046 1 985,817 1999/00*

* Forecast.Source: Cocoa and Coffee Industry Board.


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Figure 2. Production Curves and Projected Trends

-

1 000

2 000

3 000

4 000

5 000

6 000

1970/71

1973/74

1976/77

1979/80

1982/83

1985/86

1988/89

1991/92

1994/95

1997/98

Cocoa

Cof f ee

COCOA AND COFFEE PRODUCTION

metr ic t ons of cocoa and cof f ee beans

Tr ends f or t he next 15 year s

250 kg/ha for cocoa and 100-150 kg/ha for coffee. Fewer than 10 of the large cocoa plantations

achieve yields of more than 400-500 kg/ha.

1.3 Purpose. The purpose of this needs assessment was to evaluate the Cocoa and Coffee

subsectors of Trinidads agricultural economy with a major emphasis on the role and operation

of the Cocoa and Coffee Industry Board (CCIB). Specific tasks performed included:

Develop a baseline set of data.

Assess the entire supply chain including the input delivery system, the transport

system, and the harvest and post harvest systems.

Evaluate the role, function, operation, and performance of the Cocoa and Coffee

Industry Board. Special attention was given to policy implications of the Board.

Evaluate performance of the Board. Where deficiencies exist, indicate why, and

propose remedies.


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Identify constraints at each link in the supply chain and recommend solutions to

alleviate the constraints, rendering the entire chain more profitable.

1.4 Needs assessment process. The needs assessment for cocoa and coffee was led by Daniel

Duris who is Head of the Tree Crops Department, Centre de Cooperation Internationale en

Recherche Agronominque pour le Developpement (CIRAD), headquartered in Montpellier,

France (Appendix I). CIRAD is internationally known for the expertise of its staff in both cocoa

and coffee.

Assessment of CCIB and the related industry was completed in the following sequence:

1. Previous assessments of the cocoa and coffee industry in Trinidad were reviewed.

2. A database on the industry was developed and analyzed.

3. CCIB was reviewed, and its role and performance were analyzed.

4. Producers of cocoa and coffee were interviewed.

5. CCIB was given an opportunity to review and comment on a draft of this report

(Appendix II).

6. The final draft of this report considers comments received from CCIB.

2.0 Cocoa and Coffee Needs Assessment

2.1 Organization of the cocoa and coffee sectors. A general organization of the cocoa and

coffee sectors is shown in Diagrams 1 and 2.

For domestic marketing, the channels are extremely simple. Cocoa and coffee are

delivered to the buying agent near the production zones. The buying agents then deliver to aprivate company, Produce Marketing Associates (PMA), which packages the product and

handles its shipment.


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In 1945, Trinidad set up the Cocoa and Coffee Industry Board (CCIB), to implement the

first cocoa rehabilitation plan (1945-1965), which guaranteed that all production would be

purchased at a fixed price. CCIB, under the authority of the Ministry of Agriculture, Land, and

Marine Resources (MALMR), is also responsible for marketing the produce on the international

market.

CCIB occupies a monopoly position for sales of coffee and a quasi-monopoly for cocoa.

According to CCIBs charter, cocoa growers producing more than 30,000 pounds of cocoa or

coffee (13,608 tons) may obtain an export license from CCIB for their own produce.

Reportedly, only three producers currently export their own cocoa. For privately exported cocoa,CCIB ensures quality control and issues certificates of quality and origin.

Once CCIB has negotiated a contract on the international market, PMA handles the

marketing. An inspector appointed by CCIB is responsible for checking the quality of the

delivered product and arbitrates in the event of disputes between stakeholders: producers versus

buyers and buyers versus PMA.

Payment to producers, buying agents, and PMA is established by CCIB:

Producers receive 12 TT$/kg for cocoa and 11 TT$/kg for coffee beans.

The buying agents, approved by CCIB, receive a commission amounting to 0.45

TT$/kg of product collected.

PMA receives a commission of 0.83 TT$/kg for product packaging plus a two percent

fee as loader, calculated from the FOB value of the product.

2.2 Market economy for cocoa and coffee.

2.2.1 Current conditions and marketing arrangements. For the 1999-2000 season, the farm-

gate price for cocoa was raised from 9.55 to12 TT$/kg, and that for coffee from 8.36 to


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11 TT$/kg. The previous prices had been fixed 15 years ago. The producer pays for produce

transportation from farm to buying agent; the buying agent pays for produce transportation from

buying agent to PMA. The bags (10 TT$/50-kg bag) required for primary collection and delivery

to PMA are purchased by the buying agents, or possibly by producers when they deliver directly

to PMA. Curiously, producers do not receive the 0.45 TT$/kg collection commission when they

deliver directly. On delivery, producers receive 8 TT$/kg for cocoa and 7 TT$/kg for coffee. A

few days or weeks before Christmas, they receive an additional 4 TT$/kg.

Buying agents pay for their purchases from their own funds, without financing from the

banking system, as short-term interest rates greater than 10 percent are too high to be covered bythe 0.45 TT$/kg collection commission. On delivery to PMA, the buying agents are paid

immediately.

Cocoa is sold entirely on the international market by CCIB. It is bought according to

quality. There are two quality grades corresponding to very precise classification criteria:

Grade 1, or plantation cocoa receives a price of 12 TT$/kg (TT$ 8 + TT$ 4) with 90

beans or less/100 g, a moisture content of under 11 percent, and no defective beans.

Grade 2, or estate cocoa receives a price of 8.40 TT$/kg (TT$ 4.40 + TT$ 4) for

cocoa with a maximum of 110 beans per 100 g, a moisture content of under 11

percent, and a maximum of six percent defective beans.

If these criteria are not satisfied, producers have to redry their cocoa and sort it. A

systematic two percent weight deduction is applied to transactions between producers and buyingagents or between producers and PMA to compensate for any losses, irrespective of grade.

Coffee is entirely sold to local industries. Coffee growers usually deliver unhulled, dry

coffee (cherries). The cherries are hulled by the buying agents or PMA at a cost fixed by CCIB


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of 0.24 TT$/kg of green coffee. Producers are remunerated according to the green coffee weight

obtained after hulling. They receive 11 TT$/kg of green coffee (TT$ 7 + TT$ 4).

2.2.2 Elements making up cocoa and coffee prices. Producers of cocoa and coffee both face

the following marketing cost structure in TT$/kg.

CCIB operating costs $0.45PMA packaging costs $0.83PMA commission as loader $0.23(2 percent of average FOB value)Total $1.51

For the 15 seasons prior to 1999-2000, the end price for cocoa was 11.51 TT$/kg.

According to CCIB, the average value of international transactions was based on contracts

exceeding US$ 2,000 per ton (12.40 TT$ /kg), leaving a minimum margin of 0.89 TT$/kg. Given

its organoleptic qualities, Trinidad cocoa is sold for more than bulk cocoa.1

For coffee, the price rise following the 1994 crisis enabled CCIB to make a profit.

International Coffee Organization (ICO) prices, which are indicative of the world market price

from 1994 to 1998, respectively, were US$ 2,716, US$ 2,777, US$ 1,807, US$ 1,695, and

US$ 1,820 per ton. These prices are an equivalent of 10.51-17.22 TT$/kg, depending on the

season.

2.2.3 World market situation for cocoa, October 1999. The cocoa market is depressed;

though according to some analysts, the beginning of the harvest season always shows a

downward trend. The indicative price2of the International Cocoa Organization (ICCO) for the

first week in October (1999) was US$ 1,126.35/ton (6.99 TT$/kg) for bulk cocoa. World bean

1Trinidad cocoa is renowned for its organoleptic qualities. This point will be covered later. Hence, as demand isstrong from the fine chocolate industry, this use still benefits from high prices compared to bulk cocoa.2The ICO and ICCO indicative prices are average prices calculated from all the days transactions. They provide agood idea of trends.


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production in 1998-99 was estimated to be 2,759,000 tons with a 41,000-ton increase for West

Africa and Indonesia. This increase more than compensates for the decreases in Brazil and the

Dominican Republic. Initial indications for the 1999-2000 season suggested world production at

least as good as 1998-99. Grindings could decrease by about one percent. Grindings have a

strong influence on the fixing of world prices, much more so than the amount of cocoa

physically available. The experts note a production deficit of 50,000 tons for the 1998-99 season

but expect a return to a surplus situation in 1999-2000.

The cocoa market lacks transparency, because producing countries that carry out grinding

provide insufficient information. The recent decision by the European Union to allow theaddition of fats other than cocoa butter in chocolate is not likely to bolster world prices.

Lastly, the Cocoa Producers Alliance, which has 11 members, supplies 72 percent of the

worlds cocoa and therefore influences prices considerably. Apart from Gabon, which would

appear to produce only 1,300 tons, all the others offer volumes 500 to 600 times larger than those

of Trinidad. Despite a relatively privileged position on the world market, Trinidad cocoa has to

cope with an unfavorable economic climate from the perspectives of both size and production

costs.

2.2.4 World market situation for coffee, October 1999. Coffee prices have been steadily

falling for the past three years, following the sudden surge in July 1994. Analysts are forecasting

that this downward trend could continue for another year or two; then prices should stabilize

around US$ 1.65/kg (10.25 TT$/kg). CCIB could theoretically find itself in a price support

position. Coffee is made more complicated by the existence of two different products, Arabia

and Robusta--the latter being used for preparing Arabia-based blends and instant coffee

production. The price of Robusta coffee is lower than the Arabia price but follows the same


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general trends as the Arabia price. However, over the last 25 years, major coffee price

fluctuations have occurred, and in the event of climate problems (frosts in Brazil, El Nio),

Robusta prices can be very high and virtually the same as prices for Arabia.

2.3 Position of cocoa and coffee in the agricultural sector.

2.3.1 The agricultural sector. Since the oil boom in the 1960s, the agricultural sector as a

whole has been depressed. Many farms have been abandoned; some of them are now isolated

from lines of communication and transportation. The proportion of aging farmers is on the

increase.

Income from cocoa in the 1950s and 1960s enabled the schooling of many young people,giving them access to the University. The young left the land to try their luck in urban areas,

where they hoped to find more pleasant living conditions (higher wages, leisure activities, less

arduous work, few or no risks). Some emigrated and many obtained salaried employment.

Outside the urban zones, where market garden crops predominate, most agricultural

production involves sugar cane, banana and plantain, citrus fruits for fruit juices, pineapple, and

papaya. Earnings from these crops are often much higher than earnings derived from cocoa and

coffee and offer the advantage of bringing in weekly or monthly income. Forestry is also

beginning to attract numerous farmers who plant mahogany and cedar, despite the 15-20 years it

takes before harvest. For these producers, forestry requires very little work, little or no inputs,

and constitutes worthwhile capital that is not depreciated for their heirs.

2.3.2 Position of cocoa and coffee in agriculture. Cocoa and coffee play only a secondary role

on most farms. In many cases cocoa and coffee have been abandoned for more profitable crops.

According to farmers, production costs are at least the same as the prices paid to the producer,

and are often much higher. That can easily be explained by the fact that growers, in addition to


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low output per hectare, primarily use hired labor, partly because the farmers are old and partly

because their children have left the farm.

2.3.3 Socio-economic context. The poverty line3is estimated at TT$ 623 per capita per month.

While poverty affects urban areas due to unemployment, the rural world is not spared, and many

farmers figure among the new poor or are gradually moving into that category. For a family of

four, (2 adults and 2 children) the poverty level would be TT$ 22,164 per year, the value of

1,885 kg of cocoa. With average yields of 150-170 kg/ha, that means between 11 and 13

hectares of cocoa, excluding inputs. This yield corresponds to the current extensive crop

management practice, with 35-40 working days per hectare per year, including harvesting.Therefore, it is virtually impossible for a family to survive on cocoa production, as it will also

have to devote work to food crops. For these families, it is also impossible to invest the

essential minimum for fertilizer and chemicals to improve the productivity of their cocoa trees.

Several producers mentioned the low educational levels of those remaining on the land.

According to them, this situation is tending to increase, meaning that those excluded from

economic development following the oil boom have no alternative but to return to the land. This

attitude seriously discredits farm work and has been one of the factors leading to reduced cocoa

production.

2.4 Condition of cocoa and coffee plantations. Cocoa and coffee plantations are both largely

in a depressed economic state. Given that most of the plantations visited involved cocoa, more

emphasis will be placed on that crop. Moreover, Trinidad has a degree of pride in its cocoa and

has placed greater emphasis on that crop. Nevertheless, the coffee situation is very similar to

that of cocoa cultivation.

3Linda Hewitt, The determination and measurement of poverty in Trinidad and Tobago, September 1996.


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2.4.1 Coffee plantings. Virtually all the coffee produced comes from plantings mixed with

cocoa and other species. The only monoculture visited was in the southern region. That farmer

felt that coffee was more economical to produce than cocoa since no inputs need to be

purchased.

The coffee trees, which are spaced wide apart (9 x 9 and frequently 12 x 12 feet) like the

cocoa trees, are propagated from seeds harvested from the most productive trees. The plantings

are all under natural shade. With weeds being limited by natural shade, there is minimal upkeep

required. No sucker removal or cutting back is carried out. The plantings receive no inputs.

The coffee trees are usually vigorous and do not appear to suffer from mineral deficiencies.Nevertheless, it would not be surprising in more intensive farming systems to see the occurrence

of iron deficiencies through a blockage of that nutrient by excess lime in the soil. Average yields

are around 100 kg/ha. As in cocoa, coffee growers use hired labor for upkeep and harvesting.

The daily harvesting task involves gathering an average of 25 kg at a cost of 4 TT$/kg (at a daily

wage rate of TT$ 100). With green coffee bringing 7-8 TT$/kg, it is easy to understand why

coffee is not judged to be profitable.

2.4.2 Cocoa plantings. Two major types of cocoa cultivation are found:

Plantation cocoa, cultivated on large domains, where cocoa is grown more or less as a

single crop.

Small, family-run farms or estates on which the share of cocoa is tending to fall

substantially, and the cocoa trees are intercropped with numerous plant species(banana, citrus, forestry, etc.).

2.4.3 Large plantations. About 300 plantations, including those belonging to MALMR,

produce more than 1,000 kg of cocoa per year. These large plantations are not necessarily


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efficient, and some have yields/ha equivalent to those of small holders. Only a few of these large

plantations are efficient.

Two exceptions where cocoa is the main activity were encountered:

The Grand Couva plantation (privately owned) is in the center of the island, which is

located on the best cocoa soils in the country. This plantation, which is primarily

planted with Trinitario material, produces between 400-600 kg/ha depending on the

year. The trees, which average over 40 years old, are grown under artificial shade.

They are regularly pruned for maximum ventilation to minimize the incidence of

black pod. Major care consists of three to four applications of copper hydroxide per

year to protect against black pod, mosses, and epiphytes that develop on trunks and

branches.

The cocoa trees, which were propagated by cuttings from a major collection

planted more than 50 years ago by the ancestors of the current owner, are spaced very

wide apart (12 x 12 feet or 3.94 x 3.94 m). The average planting density is 400-500

cocoa trees per hectare. Materials from this collection are used by researchers at the

Cocoa Research Unit (CRU), a department of the University of the West Indies

(UWI). There are still other plantations of this type, but smaller, around the Grand

Couva plantation. The plantation plans to produce cuttings for its own use and

possibly for the neighbors. The Trinitarios will be propagated.

The second plantation, near Sangre Grande in the East, is less than 10 years old andconsists primarily of TSH4material planted with very little forest cover at a density of

2,580 trees/ha (6 x 6 feet or 1.97 x 1.97 m)--i.e., four times higher than that of

4Trinidad Selected Hybrids: selection carried out for resistance to black pod rot and witches broom.


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traditional plantations. According to the owner, production amounts to 1,200-1,300

kg/ha. The planted material consists of cuttings planted along the boundaries and

seedlings. The soils, which are much less fertile than those in the center of Trinidad,

require substantial applications of mineral fertilizers. Also, according to the owner,

black pod rot does not appear to be a limiting factor, though preventive copper

applications are carried out regularly. However, most of the care given involves very

severe pruning of the trees and drain upkeep, as the soil has a high clay content, and

the land is flat. Weed cover is kept to a minimum (leaf litter and self-shading).

2.4.4 Cocoa estates. Around 4,800 estates produce 1,000 kg of cocoa per year on average(source: CCIB, 1997). As a general rule, the cocoa trees receive little upkeep, including the

largest ones; there are no post-harvest treatments, and damaged pods remain on the trees. A

large majority of growers have installed additional shading to varying degrees with chayote

(Sechium edule), which provides weekly income. Missing trees are replaced by other plant

species, e.g., breadfruit (Artocarpus altilis) and citrus.

Most of the estate material was planted about 30 years ago and is made up of TSH

cuttings and seedlings at a density of 640 plants/ha. Their genetic potential, estimated at two

tons/ha by research, is under-exploited. Many farmers are highly skeptical about the merits of

planting at higher densities and fear rapid exhaustion of the plantation.

The estates visited primarily belong to farmers who also have other activities. In all

cases, cocoa is only the second or third source of income.

2.5 Stakeholders in the cocoa and coffee subsector. This section analyzes the status of the

various stakeholders in the cocoa and coffee industry of Trinidad and Tobago. It is based on the

survey work of Abdul-Karimu, which is complemented by interviews with stakeholders


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representing segments in the Trinidad and Tobago cocoa and coffee subsector. The results of

these interviews and the survey results are then combined with the extensive knowledge base of

the consultant responsible for this report.

Among the most recent work on cocoa in Trinidad, the survey by Abdul-Karimu5

undoubtedly gives the most complete recent picture. The following three tables (Tables 2-4)

summarize the results of his survey in terms of some of the key demographic and cultural

characteristics of the industry.

Table 2 indicates the number of cocoa farmers and the sample size utilized by Abdul-

Karimu. The sample is certainly too small for statistical validity, but the data gathered areundoubtedly the most precise that exist today.

Table 3 provides a summary indication of estate size, yield, and age of trees. Most of the

trees are mature and old, indicating a substantial need for rehabilitation. This study was not able

to determine why the east region has the best yields.

Table 2. Number of Cocoa Farmers and Farmers Sampled In SurveyRegions Number of Farmers Interviewed Farmers Percent

Central 2800 78 2.8

East 1700 47 2.8

South 910 25 2.8

Total 5410 100 ----

Source: Farmers Perspective of Cocoa Planting Material in Trinidad and Factors Affecting Output From CocoaEstates, Cocoa Research Unit, University of West Indies, St. Augustine, Trinidad, February 1999.

5There is a file at CCIB in which producers who sell their own cocoa and coffee are registered. The site of thefarm, the property's title, the total area of the farm, and the area planted to cocoa and coffee is indicated. Theconsultants of a feasibility study for the revival of the cocoa sector used part of the file. However, the data gatheredare incomplete and inaccurate.


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The south region, which is economically the poorest and the most distant from the urban centers,

seems to be continuing to develop its cocoa cultivation. It is also the region that has the

highest rate of families living below the poverty line. Cocoa offers the possibility of generating

some cash receipts with fewer constraints than fresh produce.

Table 4 summarizes the cultural practices found to exist in the Karimu study. The three

cultural practices applied by producers are weeding, pruning, and moss control. However, the

lack of any treatment against black pod rot renders moss control pointless.

2.5.1 Producers views on factors influencing industry. The main factors affecting the cocoa

industry, as reflected in producer/farmer opinions as determined from the survey by Dr. Karimu,are indicated in Table 5. The costs of inputs and labor and cocoa prices are the main concerns of

farmers, though curiously cocoa prices come in third position.

2.5.1.1 Cost of inputs. Cocoa input costs are high when they are bought at retail or in small

quantities, but the chemical companies are ready to offer a 30-50 percent discount for large

purchases. For instance, Kocide, a copper-based fungicide sold at retail for 75 TT$/kg can be

obtained for about 32 TT$/kg by commercial operators.

Inappropriate choices in the use of pesticides were noted during the visits with producers.

For example, on one plantation with moderate upkeep, the producer purchased herbicides for

weeding but did not purchase fungicides to protect his harvest or to keep floral cushions free of

moss. The plantation had very low yields, not because of weeds but solely because of the

abundance of moss on floral cushions, which prevented flowering. In addition, the existence of

numerous rotten or mummified pods clearly showed that no fungicides were used.


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Table 3. Estate Size (ha) and Yield (kg/ha) - Age of Trees (Years) as a Percent of Number of EstatesRegions Estate Size and Yield Age of Trees

Mean Size (ha) Range Mean YieldYoung

25 Y&M Y&O

Central 5.2 1.6-16.2 178 3.9 6.4 23.4 5.12 6.4

East 6.1 1.0-30.4 370 14.1 17.9 28.2

South 5.3 0.8-16.2 170 20 20 4

Table 4. Cultural practices and post-harvest processing (%)Regions CULTURAL PRACTICES POST-HA

Weed control PruningFunguscontrol

Insectcontrol Fertile.

Mosscontrol Fermentation

Manual Chemical Sweat box HeapCentral 97.9 2.1 100 0 4.3 14.9 95.7 42.5 55.3East 100 0 94.5 7.7 16.7 16.7 62.8 46.1 53.9

Table 5. Factors Affecting the Cocoa Industry as Reflected in Farmer Opinions

Percent of interviewed farmersFactors Central Region East Region

Very Serious Serious Not Serious Very Serious Serious Not Serious Very Cocoa input costs 100.0 --- --- 87.2 10.2 2.6 88Labor costs 91.5 4.2 4.3 79.5 6.4 14.1 92Cocoa prices 81.5 8.5 --- 87.2 10.2 2.6 80Road access 76.7 2.1 21.3 73.1 1.3 25.6 44Extension services 78.7 8.5 12.8 73.1 10.3 20.5 36Planting material 27.6 53.2 19.2 28.2 42.3 29.5 36

Weather 12.8 29.8 57.4 34.6 23.1 42.3 12Labor availability --- 10.6 89.4 23.1 19.2 57.9 16Source: Farmers Perception of Cocoa Planting Material in Trinidad and Factors Affecting Output from Cocoa Estates, Cocothe West Indies, St. Augustine, Trinidad, February 1999.


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2.5.1.2 Labor costs. The minimum wage in Trinidad and Tobago is 57 TT$/day. In the central

region, where there is competition with sugar cane, laborers are paid up to 100 TT$/day.

Essentially all producers employ hired labor for at least 60-80 percent of the work time required

for a plantation. It takes at least 30-35 days work for plantation upkeep and 5-10 days for

harvesting and treatment under the conditions in Trinidad, for yields of 150-200 kg/ha. Hired

labor, therefore, accounts for at least 135-175kg of cocoa. Because of high labor costs, for yields

under 150 kg per hectare, producers probably settle for simply harvesting themselves or abandon

the plantation altogether. In other words, self-harvesting is the final stage before abandonment.

Under these conditions, it is understandable why it is impossible to purchase inputs.During the plantation visits, a large number of mummified pods were seen on trees, some

because they were rotten; animals had attacked others. There were also healthy pods that had not

been harvested because the farmer considered that yields were too low to be worth harvesting.

Full harvesting, including mummified and rotten pods, minimizes black pod attacks.

Although labor costs are a real problem, labor availability is satisfactory according to the

survey. Nevertheless, farmers feel that the Unemployed Relief Program, introduced by the

Government, discourages the unemployed from seeking work.

2.5.1.3 Productivity of the cocoa plantings. Although it was not mentioned in the survey,

producers often mention the low productivity of cocoa plantings. This is attributed to the age of

the plantings. Farmers ignore, or are unaware of, the fact that a lack of care directly causes low

yields. The overall condition of cocoa plantings, missing trees, over-dense shade, moss on

trunks and branches, etc. results from a lack of upkeep. Age has nothing to do with these

problems. This lack of producer knowledge may be the result of inadequate Extension education

programs.


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2.5.1.4 Production costs. With low yields, production costs were found to be in a range of 7-11

TT$/kg. Costs in this range are the same as those obtained when calculated from operating

budgets. In fact, higher production costs were found when an attempt was made to maximize

yields by only using hired labor. On the other hand, by using family labor only, production costs

could be reduced to between four and seven TT$/kg, depending on the degree of intensification.

Lastly, the best profit is not obtained with the highest yields, which require heavy investment in

inputs. That is, fertilizer costs increase as application rates rise, and fungicides are very effective

but also very expensive.

A plantation of one or two hectares with yields of 400-600 kg/ha, run exclusively withfamily labor, can attain a net income of TT$ 5,600-9,600 annually, which is not enough to

provide a living for the family, but neither does it require all of the available family labor. Other

crops are also required to keep cocoa on a family farm. But cocoa needs to be used as a

diversification crop in order to minimize agricultural risks.

Analysis of operating budgets shows that cocoa and coffee are profitable while the

plantation is still in the production phase, but investment for new plantings will be difficult to

recoup. Efforts, therefore, should be made initially to rehabilitate existing plantings.

2.5.1.5 Access roads. After cost and price problems, farmers complain about the poor condition

of access roads to the estates. Some plantations have become totally cut off and abandoned, as

their produce can no longer be transported to market. In view of the major investment required

to rehabilitate roads, choices have to be made. For the cocoa and coffee sub-sectors alone, roads

have not been seen as a priority for assisting rehabilitation. However, agriculture as a whole is

absolutely dependent on an adequate road system if it is to be profitable. Put more directly, if

agriculture is to be profitable, Trinidad and Tobagos rural road system must be improved.


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2.5.1.6 Extension service. Although MALMR has an Extension Service, farmers widely

complain that they very rarely or never see Extension officers. In fact, farmers do not need the

current basic advice that Extension provides, since farmers have sufficient technical knowledge

to maintain a plantation (installation of shading, crop protection, pruning, fertilization, etc.).

Some farmers reported that Extension officers teach how to dig a hole when planting, or

recommend that we weed our plantations. Producers expect more than strictly simple

technical advice. Farmers are not sure that they want to be visited by the current Extension

officers. During discussions with farmers, it was noted that if a technical innovation is proposed,

the reaction of farmers is to refuse it. However, they are prepared to try it out once its economicfeasibility is demonstrated. And a universal method of Extension teaching is field

demonstrations!

2.5.2 Buying agents. An expanded role for middlemen between isolated producers and PMA is

essential for current conditions in Trinidad. Most of these producers are cocoa and coffee

producers who are also involved in other commercial activities. Some have grouped together in

cooperatives to counter PMAs monopoly, and at least one of these cooperatives intends to

export cocoa. It is obvious that buying agents can play a major role in farmer organizations, but

producer organizations without buyers as members should also be able to market their cocoa and

coffee production directly on the domestic market.

2.5.3 Farmer organizations. Officially, a Cocoa Producers Association (CPA) representative

sits on the CCIB Board. The association virtually disappeared with the drop in production at the

beginning of the 1960s, and no true association existed for almost 30 years. Recently, a few new

CPAs have been emerging including:

Montserrat Farmers Association (Caroni County).


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Cocoa Growers Association (Rio Claro, Nariva County).

Cocoa and Coffee Marketing Cooperative Society Ltd. (Victoria County).

These CPAs were set up on the initiative of buying agents who are also producers. It is

important that an association movement is taking shape, but it is regrettable that no organization

composed strictly of producers has yet to emerge. This not only bears witness to the interest in

cocoa shown by some stakeholders in the sector but also reveals concerns about the future of

cocoa production. Spontaneous association movements tend to spring up when there is a crisis,

as is the experience in most countries.

2.5.4 The Cocoa and Coffee Industry Board (CCIB). CCIB is virtually the only exporter of

cocoa from Trinidad, the share of the few private exporters being less than five percent of

national production. CCIB also has a total monopoly for coffee trade on the domestic market.

Coffee exports ceased four years ago (ICO statistics). The quantities currently produced are

inadequate for supplying the domestic market. Apart from the guarantee of fixed prices, CCIB

only has a commercial role, since neither extension nor research is under its direct control.

Boards were set up to protect producers from price fluctuations in the international

markets and from speculation. Only crops such as cocoa and coffee, usually grown by isolated

small farmers, have been integrated into the Boards. International crops such as rubber or oil

palm are managed by large multinational companies, which control the entire commodity chain.

UNILEVER and FIRESTONE are typical examples of such multinational agribusiness supply

chain management systems.


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Over the years, the Boards have become extremely important political instruments.

Three models predominate the international scene, including:

Some boards, such as the Kenyan Coffee Board (KCB), have integrated parts of the

subsector by including research, extension, domestic marketing, and export functions

of the supply chain. However attractive such an approach might be, producers remain

totally dependent on the policies of the Board.

Other countries, such as Indonesia, have totally liberalized their sectors, with the

consequence of a relatively inefficient research mechanism and ineffective Extension

services.

Some countries, such as Colombia with its Federacin Nacional de Cafeteros (FNC),

have opted for multiple producer associations that are federated at the national level.

FNC then subsidizes research and extension. Domestic and export trading are in the

hands of the private sector (including private firms and producer associations). In

addition, FNC acts as a partial price stabilization organization, but prices are not

fixed. FNC is an interprofessional structure, and its members include all stakeholders

in the sector, including producer credit organizations. General coffee policy is defined

within FNC. The drawback of this system is that it does not totally take into account

social demand for diversified cropping systems.

2.5.4.1 Producer complaints about CCIB. Apart from price levels, producers make several

complaints about CCIB practices, including:

Buying based on quality.Quality based buying is justified on the basis of

fermentation, performance in drying, and on the absence of defective beans.

However, for fermentation to be as good as possible, it is essential to have a


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minimum volume of fresh beans of around 100 kg. However, taking the number of

dry beans/100 kg as a quality measure does not make sense for the following reasons

and pointlessly penalizes producers:

Bean size depends on climatic conditions and the varieties cultivated, two factors

over which the producer has little influence.

Bean size affects the butter content, and that criterion is only valid for cocoas

intended for the butter extraction industry and not for chocolate making.

Moreover, the reputation of Trinidad cocoa is due to a special flavor, and the

flavor compounds are found in the cocoa powder, not in butter. The industry and, particularly, chocolate manufacturers prefer to roast batches of

uniform bean size for a uniform product.

Cocoa grading, like coffee grading, is part of the packaging operations, which are

usually carried out by exporters who also do the bean polishing.

Discount for losses.The two-percent discount is supposedly to compensate for any

losses linked to insufficient cocoa drying by the grower. But it is also a collective

penalizing measure applied on an individual level and is, therefore,

counterproductive. It is clear that producers who dry their cocoa to 11 percent

moisture content will soon learn that it is in their interest to deliver cocoa with 13 or

14 percent moisture. The systematic deduction of two percent sets cocoa at an

effective price of 11.76 TT$/kg for Grade 1 and 8.232 TT$/kg for Grade 2. Thededuction could possibly be acceptable for grouped sales by producer associations, in

which case it means applying group discipline, though it would be preferable to have


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an objective means of checking moisture content (which can be done using a moisture

meter).

According to producers and inspectors, disputes between producers and PMA are

very frequent and acrimonious. This is particularly the case when producers deliver

directly to PMA. There is an obligation to producers who deliver directly to PMA to

buy bags at a rate of 10 TT$/bag. This problem was not mentioned when producers

sell to buying agents, but the latter are required to procure them.

Producers pay for transportation of cocoa and coffee products from the farm to the

buying agents or PMA. There is no collection or procurement allowance for

producers, whereas for other agricultural produce such as banana, citrus, and

pineapple, the traders come to the farms.

2.5.4.2 Buying agents complaints. Buying agents complaints are more about PMA, which has

a domestic marketing monopoly, rather than about CCIB. Buying agents complain about the

autocratic manner of PMA relations. It is largely for that reason that they form producer

associations.

2.5.5 Market for coffee. The coffee collected by PMA on behalf of CCIB is sold to the local

roasting and instant coffee industries at a price of 12.68 TT$/kg (5.75 TT$/lb), the world price at

the time of the consultancy interviews. Local roasted and ground coffee consumption is around

500 tons per year while Trinidad production is 300-400 tons. The instant coffee unit (Nestl) can

produce 6,000 tons of instant coffee (12,000 tons of green coffee). Nestl currently operates atone-third of its capacity. Nestl also has a decaffeination unit that is standing idle. To make up

the difference between local production and consumption, the local industry imports coffee from

Brazil and Mexico, providing work for over 100 people.


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As shall be seen, it is technically easier to produce coffee. For average yields of 500-800

kg/ha, this crop primarily requires labor and virtually no other inputs except fertilizer.

2.5.6 Market for cocoa. The chief asset of Trinidad cocoa is its organoleptic quality, which

gives it access to highly specific markets, namely fine chocolate and luxury products. Trinidad

cocoa, which is traded on the world market through brokers, still benefits from prices slightly

above those of bulk cocoa, which enables CCIB to not be in a support position. This situation is

very likely to disappear in the coming seasons with the expected drop in prices. There are three

manufacturer markets for chocolate that are of concern to Trinidad:6

Large manufacturer market. The large candy manufacturers (Kraft Jacob Suchard,

Mars, Cadbury, Nestl, Hershey, etc.) become very demanding in terms of the quality

of other sources. Their strategy is to offer consumers a product of consistent quality

with an identical taste over time. To do that, these groups blend different sources. If

one source is missing, it is replaced by another, and the composition of the blend,

whose base might be a Ghana or Ivory Coast type cocoa, is modified to recover the

taste of the brand.

Medium manufacturer market. A large number of medium-sized fine chocolate

manufacturers exist, although they have less flexibility than the large group. They

obtain their supplies either directly from producing countries or from brokers. These

manufacturers are set on supplying products of guaranteed origin but with as little

variation in taste as possible for dark chocolates.

Luxury manufacturer market. There exists a luxury manufacturer market, which

specifically seeks a source to promote its product but cares less about having a

6There is an additional flavored market, but the source of its chocolate is not important.


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chocolate of identical taste over time than about offering vintages to its consumers.

In other words, like fine wine, there are expected to be annual variations in

organoleptic quality. This industry is very demanding on cocoa quality: no defective

beans, no molds, uniform bean size, etc. As a general rule, cocoa earmarked for this

sector is bought directly from the plantation or from exporters where relations of

confidence are established. The cocoa is always bought after sample analysis. Two

ways of buying are generally common: 1) payment of a special premium, or 2) a fixed

price supply contract covering periods of three to five years. The demand for this

type of product is relatively small and concentrated in Europe. Nevertheless, in anincreasingly affluent society, it is highly likely that demand will increase in the

coming years, and the same will happen as has happened in the gourmet coffee

market. This can provide a good opportunity for Trinidad cocoa if producers are in a

position to take advantage of such niche opportunities.

2.6 Cocoa and coffee government support structures.

2.6.1 Research. There are two research structures involved in cocoa:

The Research Division of MALMR has its main station at Centeno with sub-stations

distributed throughout the country. The substations are intended to set up

demonstration plots and produce planting material for growers. But a brief tour of the

sub-station near Biche (East) and of the one near Sangre Grande revealed that cocoa

activity was virtually nil. The Research Division staff for cocoa is limited to fourpeople, three agronomists and an IPM specialist. This staff component does not cover

all of the disciplinary requirements for effective cocoa research. The most pressing

need is for a plant pathologist to deal with disease problems. There is a basic need to


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set up an applied research program for cocoa and coffee. As in the countries of

Central America and Colombia, it would be helpful if some researchers could switch

from research to Extension and vice versa. Such a system enables them to remain

very pragmatic, essential for maintaining the applied research orientation.

The Cocoa Research Unit (CRU) is a department of the Faculty of Agriculture and

Natural Sciences (FANS) at the University of the West Indies (UWI). This structure

performs research at the Centeno center and at UWI at St. Augustine. CRU

undertakes research projects, some of which are implemented in partnership with the

private sector. CRU has a very good reputation internationally, although this trust

may reduce its usefulness to Trinidad as an applied research unit. No coffee research

is currently carried out in Trinidad.

CRUs recurring budget is funded by the private sector (Biscuit, Cake, Chocolate, &

Confectionary Alliance, UK; US$ 202,000) and by the Government of the Republic of Trinidad

and Tobago (US$ 174,000) in addition to a cocoa researcher. Additionally, individual research

projects are funded by various foreign public and private organizations. For example, the current

projects being carried out by CRU researchers include:

American Cocoa Research Institute (ACRI) project: witches broom control, at a level

of US$ 51,000 annually.

EU Chocolate, Biscuit, and Confectionery Association (CAOBISCO) project: black

pod control, at a level of US$ 24,000 annually.

Common Fund for Commodities (CFC) project: evaluation and characterization of

germ plasm, at a level of US$ 35,200 annually.


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The research carried out under these projects is primarily basic research with no

immediate impact on development. CRU has an international reputation but is of very little

service to Trinidad and Tobago with respect to short-term results.

2.6.2 Extension services. Extension services are under the authority of MALMR and are

theoretically responsible for training producers for all crops grown in Trinidad. The Extension

officers are in charge of disseminating improved farm management practices developed by

research. As noted previously, the producers contacted for this study did not find this to be the

case. With the exception of the south region, they specifically complained about the lack ofExtension services. Extension currently appears to be a nonfactor in cocoa and coffee

production with the possible exception of the south region.

2.6.3 Public rehabilitation policy. The first intervention by the public authorities in 1945 was

launched to revive cocoa production. It was implemented by CCIB and lasted until 1965, with a

disappointing overall result. While production increased from 3,000 tons (1946) to almost

10,000 tons (1956), it then declined steadily. In 1965, Trinidad only exported 4,700 tons. Even

the modest rise in production was linked to the introduction of new planting material. More

than 16 million seedlings were distributed over that period. Production, however, continued to

be carried out by traditional methods

A series of policy proposals/recommendations have been made but have never been

implemented including:

In 1978, a second cocoa revival plan was proposed. The goal was to double

production in 10 years by introducing a system of loans granted by the Agricultural

Development Bank (ADB). A Steering Committee including CRU, UWI, and CCIB,


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research and Extension (MALMR) was proposed to monitor the operations. The first

guaranteed prices were introduced in 1979.

In 1991, a study proposed setting up 5,000 hectares of new plantings over a 10-year

period (Tahal Report). Centralized fermentation units were also proposed to improve

quality.

In 1992, a study recommended setting up 1,000 hectares of new cocoa plantings on

15 hectares farms (Task Force Report). As previously proposed in the Tahal report,

central fermentation units were again proposed.

In 1996, MALMR submitted a Work Program calling for a rehabilitation plan for

7,500 hectares and a 3,000-ton increase in production over two years. It

recommended that relations between CCIB and MALMR be redefined, with CCIB

becoming the prime contractor for the project.

In 1998, MALMR proposed a new action program with the setting up of 2,000

hectares of new plantings, using state farms.

The latest attempt (1999) to rehabilitate cocoa cultivation would no longer fix

quantitative objectives regarding areas or production volumes but proposed a set of

incentive measures to revive production:

26 percent increase in the price of cocoa and coffee.

Subsidy of 4,000 TT$/ha for setting up new coffee or cocoa plantings.

Subsidy of 2,000 TT$/ha for rehabilitating old plantings.

Subsidy amounting to 10 percent of the cost of work, with a ceiling of TT$

10,000, for the installation of central fermentation units.


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Producer training in fermentation and drying.

2.6.4 Experience with the experimental fermentation unit. During the 1997-98 season, a pilot

central fermentation unit was set up on PMA premises, with the objective of producing high

quality cocoa. Producers delivered fresh beans to the unit. This experiment showed that such

units are difficult to operate, and farmers are not enthusiastic about them.

Farmers have the feeling that they have not been paid the true value of the dry cocoa.

That is easy to understand, since the fresh beans lose large amounts of water as soon as they are

removed from the pods and placed in boxes. Deliveries have been staggered in time, and the

mean moisture rate varies considerably. A study of the conversion rates shows that the dryfermented cocoa to fresh cocoa ratio varies from 40 to 25 percent. Even with satisfactory

conversion rates, farmers judge that it is in their interest to ferment their cocoa themselves. It is

farmers experience that fermenting does not take much work. Processing costs at the central

unit have been too high, and the obligation to deliver at predefined, specific periods is too

restrictive.

At the pilot unit, it was found that the quality of the beans delivered was highly

heterogeneous, including over-ripe and under-ripe beans and beans from rotten or gnawed pods.

There were also supply problems in that the dry cocoa to fresh bean conversion rate was too

variable. Although not mentioned by pilot unit management, it is also likely that fermentation

quality was not good. Indeed, when beans with very different moisture rates are placed in boxes

together, fermentation is difficult to manage properly. There are risks of obtaining over- or

under-fermented beans.

A similar pilot experiment was conducted in the Ivory Coast (Africa) in the early 1980s.

Despite substantial technical facilities and fermentation with sensors measuring the temperature


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and oxygen concentration in the mass, it took two years to master the process. The project was

abandoned because of supply problems and also because it was so complicated to monitor the

fermentation process.

The search for the best possible quality is a worthwhile objective, but depriving

producers of a part of their normal activities is psychologically frustrating. Apart from the

technical problems that could be solved, delivering fresh beans to a central fermentary turns a

producer into virtually a poorly paid farm laborer. The quality issue is considered in too global a

way, and the first thing to be done is to ascertain market requirements by breaking down the

quality concept as follows:

Organoleptic quality, which primarily depends on the variety cultivated.

Physical quality of the product, which concerns the absence of defects in batches. In

this case, a farmer is quite capable of sorting his beans.

Fermentation quality (under- and over-fermented beans). The technical solution may

lie with central fermentation units, but it also lies with the producer. Heap or basket

fermentation can give excellent results when it is not possible to carry out box

fermentation. Fermentation quality primarily depends on the volume of beans and

good practices (draining off the sweatings, protecting from rain, and cooling of the

mass). As a reference, most of the cocoa in Ghana is fermented in heaps.

2.6.5 Overall conclusions regarding experience with government intervention and

challenges for future policy. In an attempt to compensate for the drop in cocoa and coffee

production and protect producers from market fluctuations, the Government in Trinidad, as have

many countries, has set up a price stabilization and support structure. The oil boom led to

profound economic upheaval, resulting in higher labor costs overall. In order to try to remain


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competitive on the world market, the cocoa and coffee prices paid to producers were frozen for

about 15 years while the costs of production increased.

It is essential to remember that any crop is intended to provide a living for at least the

family that grows it, whether it be consumed by the family or marketed. It is also quite frequent

that the personal interests of the farmer do not coincide with national interests, especially where

commercial crops earmarked for export markets are concerned. Policymakers forget that too

often. By setting up structures and support schemes, they do not take into account the true needs

of all the stakeholders in the sector.Each intervention was based on a strictly technical approach, without taking into account

the needs of producers. That is probably the main reason the steps taken had such disappointing

results. While it is easy to fix land area and production targets in the office of a ministry,

achieving such targets, which must take the human factor into account, is a more difficult, if not

impossible, mission. With respect to the latest measures taken by MALMR, it is virtually certain

that there will be little, if any, impact on production. It is not even certain that producers are

interested in the subsidies, given the dire straits in which they find themselves. Moreover, the

price increase is considered normal, but none of the contacted farmers wished to devote any

more effort to his plantation.

The major handicap of cocoa in Trinidad is its production cost, which approximates the

level of world prices. Improving productivity of the cocoa plantings is undoubtedly the best way

of lowering unit production costs, but it would be utopian in the short- or intermediate-term to

expect an increase in productivity from 100-150 kg/ha to more than 600 kg/ha through various


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government incentive programs. Such an approach is totally unrealistic as no country in the

world has been able to increase productivity five-fold in that way.

Trinidad and Tobago is now in a critical situation where the prices paid to producers are

higher than world market prices. As a result, Trinidad can no longer compete with the major

producing countries. A few more profitable crops (citrus, banana, pineapple) are replacing cocoa

and coffee. Cocoa and coffee have advantages over these fruits because they are dry products

that are easy to store and transport, whereas fruits are perishable and have to be transported fresh

to the consumption centers, as there is little processing at present.

Nevertheless, Trinidad benefits from some positive assets for cocoa and coffeeproduction, including:

A considerable shortfall in coffee production for local roasting and the instant coffee

industry should make it possible for producers and industrialists to work together to

increase current production. The coffee policy must first and foremost answer the

following question: Should green coffee be considered as an export product, or

should it be produced for the domestic market?

Cocoa quality is greatly appreciated by the premium chocolate industry, and this

opens up a niche market opportunity, where world prices have less impact. The

prospects for extending these niche markets are also favorable. For cocoa the

foremost questions are: Does the future lie in the bulk cocoa markets, as an improver

of average quality cocoas, or as a cocoa for the butter industry? Should niche marketsbe sought and expanded?

Additional questions raised by this analysis include: Is it worth maintaining support for

cocoa because of its contribution to social demand, sustainability, and the well being of rural


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populations? Would it be better to abandon these programs and grow other crops? In the latter

case, which crops and for which existing and potential markets? The remainder of this needs

assessment will attempt to provide recommendations relative to these questions.

3.0 Recommendations

3.1 Remove coffee from CCIB and liberalize its trade. Apart from the political aspects of

guaranteed prices, there is no justification for maintaining coffee within CCIB. Neither is there

any technical justification for maintaining the Producer Buying Agent (PMA)-CCIB link to the

industry segment of the market channel.

It would be simpler and more efficient to have direct sales from producers to industrybuyers. Such a sub-sector liberalization should be carried out as soon as possible, giving priority

to the need to supply the local processing industries for domestic consumption. The consultancy

agrees with CCIB's comment that unless local coffee processors are prepared to make a major

contribution the local coffee industry, it will die. It disagrees that this prescribed death is

inevitable. Market forces and the profit incentives provided by them are powerful. Major

contributions and leadership are manifestations of successful entrepreneurship that should not be

assumed to be absent in Trinidad and Tobago.

In order to avoid total disorganization of the coffee sector and risk seeing production

disappear completely, a transition period will be necessary. This should be accomplished by:

1. Setting up an interprofessional committee comprising seven members (including two

producer representatives, two industrial representatives, two representatives of CCIB

and/or MALMR, and one research representative). The committee should remain in

place after the transition period. The role of this committee will be to promote coffee

production to supply the local industry. In particular, it will be responsible for


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making the necessary recommendations for research and extension needs. The

committee will be responsible for circulating all technical and economic information

to producers, along with information about desirable quality standards. However,

MALMR and the Central Statistics Office (CSO) will need to play a key role in

timely data collection and summarization.

2. Launching a series of information meetings for producers and industry representatives

with cooperation from Extension specialists.

3. Introducing an incentive system for local buying and maintaining guaranteed and

fixed prices for a limited period, but negotiated with producers and industries. In theevent of lower world prices than fixed prices, the differentials will have to be reduced

to favor green coffee manufacturers as an incentive to buy local coffee.

4. Encouraging the creation of private sector producer associations.

After the transition period, prices paid to producers must vary with world prices. Prices fixed by

government should be removed. Producers will need to negotiate with industry buyers to arrive

at domestic prices. MALMR will need to collect, and distribute to producers (and industry),

economic information on production, consumption, and prices (both domestic and international).

CCIB welcomes the establishment of an interprofessional coffee committee with the suggested

tasks. However, it feels that the committee is unlikely to be effective unless linked to an agency

with dedicated resources. The consultancy does not subscribe to this fatalistic attitude regarding

the potential effectiveness of the suggested interprofessional committee. All that would be

required is an initial appointment by the Minister of an organizing committee with the prescribed

membership, to be followed by a staggered election/appointment process.


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3.2 Open up the cocoa export market to the private sector. Private individuals, whether

farmers or not, should be permitted to purchase cocoa from producers and export it directly

themselves. This access to exports should be introduced gradually, by granting one or two

additional licenses per year over three to five years, with CCIB also remaining a cocoa buyer.

The following steps should be initiated as soon as possible, but within two years:

Create an interprofessional cocoa committee, whose role would be essentially the

same as the coffee committee, but would also be involved in defining rules for

transactions in export markets and their linkage to domestic markets. This committee

will differ from the interprofessional coffee committee, as the markets are different.

However, the balance of representation should be in favor of producers. CCIB

recommends that this interprofessional committee be part of or report to the Board.

The consultancy disagrees because this would be a means by which CCIB could

exercise control. The interprofessional committee should be independent of CCIB.

Maintain the guaranteed price during this period of three to five years but permit

private exporters the option of buying above this guaranteed price. CCIB comments

that it was established to help small- and medium-size producers who were

disadvantaged by the practices of private exporters. Moreover, it indicates that

Trinidad's cocoa industry is not large enough to support a multi-exporter system.

The consultancy responds that it would only anticipate three to five exporters during

the transition period (including CCIB). In the longer run, competitive forces mayresult in only two or three exporters. There is currently at least one profitable private

exporter that is of the size that the consultancy's proposed structure would indicate.

Moreover, niche market buyers prefer to deal with private firms rather than public


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institutions. This proposal will bring private individuals into competition with each

other, as well as with CCIB.

Allow exporters to seek out markets and sell in those markets--the aim being to

develop niche markets. The final objective of this strategy must be the definition of

Trinidad and Tobago cocoa in the same context as Kona and Blue Mountain coffee or

as wine produced in the St. Emillion or Medoc regions of France. This requires an

excellent knowledge of demand, which would be acquired by exporters, and the

adjustment of production to demand. CCIB indicated an interest in exporting niche

market cocoa, but has not done anything about it. The strategy employed by CCIB of

producing cocoa first and then trying to find markets will certainly fail.

During the transitional phase, CCIB should have the role of monitoring operations to

ensure that rules are respected and to prevent illicit agreements in the private sector.

In other words, it should serve the function of maintaining and certifying quality as

requested by the interprofessional cocoa committee. However, CCIB should not

intervene in the international transactions of the private sector, but it will have the

possibility of developing its own markets.

Encourage the creation of producer associations.

3.3 Modify the cocoa quality buying system. The following steps need to be taken to assure

the initial stage of the evolution of the cocoa sector.

Phasing out the practice of pricing according to grade with a systematic deduction of

two percent for each level, and fixing a single price for bulk cocoa having a number

of acceptable defects and moisture content.


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Introduction of a system of payment for quality, based on bonuses and discounts,

depending on the quality delivered.

Demand greater rigor from producers regarding cocoa quality by (1) refusing

inadequately sorted deliveries and (2) refusing inadequately dried cocoa.

These steps need to be taken as soon as possible, while conducting an information and awareness

drive aimed at producers.

CCIB objected to the notion that cocoa prices should be based on prices relative to

market demand conditions. They contended that purchase by grade should be maintained

because in the world market the decision to purchase is as much based on nib yield as on flavor

considerations. The consultancy strongly objects to this view, having verified with at least one

French luxury chocolate manufacturer that these manufacturers look more to special flavor

considerations than to nib yield, simply because they can get cocoa butter very easily. In

addition, they contend that purchasing on grade reduces costs and losses to the Board. They

wanted to know how this consultancy would define quality.

This consultancy would introduce a pricing system based on two main factors:

Moisture content with a system of bonuses and discounts, developed based on careful

study and experience, an example of which follows (Table 6):

Table 6. Moisture Table ExampleDiscounts No bonus/No discount Bonuses

11.6 - 12.0%12.1 - 12.5%12.6 - 13%

>13%

-1%-2.5%-4%

rejected

11 - 11.5%10.6 - 10.9%10.1 - 10.5%


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should receive depends on the targeted markets. All of these defects result from bad

post-harvest practices. A quality coefficient would be objectively determined based

on a composite sample of 300 grams of cocoa out of which 100 grams would be

randomly cut for testing. However, farmers can readily be trained to detect defects

without a cut-test so that sorting can be done on fa

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