Speaker: Daniel Liew (Armajaro Asia)
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Transcript of Speaker: Daniel Liew (Armajaro Asia)
KAKAO KONEK
NOV 2012
DAVAO, PHILIPPINES
Daniel Liew
Armajaro Asia
1This is the property of Armajaro KL. No distribution or copies of this is allowed without the consent of Armajaro KL.
OVERVIEW OF THE ARMAJARO GROUP
• Armajaro is a progressive and successful commodities and financial services business, headquartered in London. Founded in 1998, Armajaro has three main business activities :
• Commodities – coffee, cocoa, sugar and cotton origination, trading and distribution
• Asset management – commodities and other alternative asset investment management
• Structured products – arranging and dealing in bespoke financial instruments
• Over 1,000 people work for Armajaro and its various subsidiaries and associated companies around the world
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OVERVIEW OF THE ARMAJARO GROUP
• Armajaro is a leading supplier of cocoa beans and cocoa products to international chocolate manufacturing industry
• The Group as a whole turnover about 10% of annual world volume• Armajaro has wholly-owned sourcing operations in the world’s key cocoa
producing origins including Ivory Coast, Ghana, Indonesia and Nigeria• Armajaro’s associate company, Theobroma produces, trades and distribute
semi-finished cocoa products to the confectionery industry• Armajaro is also a leading supplier of green Robusta coffee to the world’s
major coffee manufacturers and roasters• Armajaro Trading Limited is headquartered in London with regional
marketing, sales and procurement management offices in Kuala Lumpur, New York, Singapore and etc
• Armajaro cocoa operations in Asia are based in Malaysia, Singapore, Vietnam and Indonesia. We also sourced cocoa through our agents in PNG, Solomon Islands and Vanuatu
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INTRODUCTION TO THE ARMAJARO GROUP
Cocoa
Coffee
Sugar
Coffee
Cocoa
Coffee
Coffee
Sugar
USA
Costa Rica
Colombia
Ecuador
Coffee
Peru
Brazil
CoffeeCocoa Cocoa Cocoa Coffee Cocoa Cocoa Coffee Coffee Coffee
Sierra Leone Liberia Ivory Coast Ghana CameroonNigeria UgandaBurundi Tanzania Kenya
Cocoa
Coffee
Indonesia
Cocoa
Coffee
Sugar
Malaysia / Singapore
Cocoa
Papua New Guinea
Cocoa Coffee
United Kingdom
Sugar
Vietnam
CoffeeCoffeeWarehouseTheobroma
ChinaIndiaGermanyNetherlands
Offices
Agents
Agents
AgentsAgent
Cotton Cocoa Cotton
Cocoa
Coffee
Sugar
Thailand
Sugar
New Zealand
Sugar
Agents
MEDAN
LAMPUNG
SURABAYA
JAKARTA
MAKASSAR
PALU
KOLAKA
JAYAPURA
SIGLI
PORT OPERATION
INTERIOR CENTRE
ARMAJARO CENTRES – SULAWESI, SUMATRA, JAVA, IRIAN JAYA
5This is the property of Armajaro KL. No distribution or copies of this is allowed without the consent of Armajaro KL.
ARMAJARO CENTRES - SULAWESI
PORT OPERATION
INTERIOR CENTRE
KOLAKA
MAKASSAR
PALUPOSO
PARIGI
DONGGALA
TINOMBO
KOTA RAYA
PALOLO
POLMAN
MASAMBA
SP 5
LAMBUNU
PASANGKAYU
GIMPU
BUNTA
TENTENA / TOMATA
TOLAI
6This is the property of Armajaro KL. No distribution or copies of this is allowed without the consent of Armajaro KL.
ARMAJARO CENTRES - SUMATRA
SIGLI LHOKSEUMAWE
KUTACANE
LAMPUNG
SRI BAWONO
PADANG CERMIN
MEDAN
INTERIOR CENTRE
PORT OPERATION
7This is the property of Armajaro KL. No distribution or copies of this is allowed without the consent of Armajaro KL.
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Current Cocoa Activities in Indonesia – organizational structure
Established network in Indonesia from farm level to export
This is the property of Armajaro KL. No distribution or copies of this is allowed without the consent of Armajaro KL.
Southeast SulawesiCapacity : 1.500 mt
Central SulawesiCapacity : 4.500 mt
South SulawesiCapacity : 6.000 mt
AcehCapacity : 650 mt
MedanCapacity : 3.000 mt
LampungCapacity : 2.500 mt
Strategic Partner
South Sulawesi - Masamba South Sulawesi - Masamba West Sulawesi - Polman
Central Sulawesi - Poso Central Sulawesi - KotaRaya SouthEast Sulawesi – SP5
• Is a dedicated team specializing in Development and Sustainability across cocoa commodity operations in Indonesia
• Owning the relationship from farm to brand – “value creation” • Help empowering farmers to improve yields and working conditions
Development and Sustainability (D&S)
D&S Activities Areas - 2012
UTZ Certified Farmers The first UTZ Certified Indonesian cocoa beans
KEY FACTORS INFLUENCING SUPPLY AND DEMAND
Demand – stable with upward trend• Chocolate is relatively inexpensive – less
affected by periodic economic downturns• No similar substitutes – unlike coffee vs. tea• In longer term, we should see increase
consumption due to :• Population growth – more people to consume
cocoa products• Usage diversifications into non-edible products –
cosmetics, spa etc
KEY FACTORS INFLUENCING SUPPLY AND DEMAND
• Change in consumer taste in non traditional chocolate consuming countries – China and India
• ICCO 2009 data – annual per capita chocolate consumption
• Germany – 11.34kg• United Kingdom – 10.94kg• Denmark – 7.39kg• USA – 5.09kg• Japan – 2.15kg• China – 0.10kg• India – 0.10kg• Just additional 100grams of annual consumption from both
China and India would increase world bean demand by 230,000mt
KEY FACTORS INFLUENCING SUPPLY AND DEMAND
• Supply – more erratic in short term and slowly declining
• Wild weather pattern – prolonged draught and flood
• Ageing trees in main producing countries – Ivory Coast, Indonesia
• Difficulty in combating cocoa disease – CPB, VSD – in adequate farmers training – financial constraints, attitude
• Competition from other crops - oil palm
PROJECTION OF SUPPLY AND DEMAND
• Production - violent swings in production cycle – especially 2011/12 season – favorable weather conditions in Ivory Coast – world top producer at 1.3 million mt – also marred by deadly civil war which disrupted cocoa trades, domestically and internationally
• Demand – steadily increased despite economic uncertainties since 2008
EMERGING AND POTENTIAL ORIGIN COUNTRIES
Philippines – annual production 6,000mt• Large population – 94 million – potential
for work force and market• Large coconut acreage – 2,000,000
hectare ?? – potential for inter-crop with coconut
• Already experienced in cocoa
EMERGING AND POTENTIAL ORIGIN COUNTRIES
Vietnam – annual production - 3,000mt• Large population – 88 million – potential
for work force and market• Availability of agricultural land – cocoa
acreage only 22,000 hectare – room for more
• Good connectivity with international ports – due to coffee and industrial items exports – cheap freight
EMERGING AND POTENTIAL ORIGIN COUNTRIES
South Pacific Islands• Papua New Guinea – already an established
origin – 50,000mt• Solomon Islands – 7,000mt• Vanuatu – 1,500mt• Known for bean quality• Located off major international sea traffic –
logistically difficult and expensive• Combined population of these 3 countries only
7.8 million – too small
CURRENT ISSUES IN COCOA
• Competition from other crop like oil palm for work force, land and government support
• Ageing trees – low yield – but replanting would mean loss of income for farmers -need alternative income in the interim period
• Industrialization – lack of interests by the younger generation in agri-business – example – Malaysia !
CURRENT ISSUES IN COCOA
• Competition from other cocoa origin – price sensitive grinders would look for best value for money – would learn about and try cocoa from other origins – Ecuador, West African – threat to traditional Asian origin like Indonesia
• Increased political / environmental scrutiny – accusation of child labour, deforestation etc
CURRENT ISSUES IN COCOA
• Heavy concentration of supply – Ivory Coast and Ghana account for more than 60% of annual world supply – need to diversify – opportunity for other origins
• Hot money – funds injection by central banks spill over into commodities market – more volatile swings in market – driving up food prices – what should we do ?
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