Journal of Agriculture and Ecology Research International

22(1): 1-9, 2021; Article no.JAERI.63274

ISSN: 2394-1073

Cost and Return Analysis of Small-scale Cacao

(Theobroma cacao) Production in Camarines Sur,
Philippines
Ma. Teresa B. Lirag1*
1
Central Bicol State University of Agriculture, Pili, Camarines Sur, Philippines.

Author’s contribution

The sole author designed, analysed, interpreted and prepared the manuscript.

Article Information

DOI: 10.9734/JAERI/2021/v22i130178
Editor(s):
(1) Dr. Nhamo Nhamo, Zimbabwe Open University, Zimbabwe.
Reviewers:
(1) Rameshprabu Ramaraj, Maejo University, Thailand.
(2) Khanna Samratvivekanand Omprakash, Sardar Patel University, Shree P. M. Patel Institute of P.G. Studies & Research,
India.
Complete Peer review History: http://www.sdiarticle4.com/review-history/63274

Received 05 October 2020

Original Research Article Accepted 10 December 2020
Published 15 January 2021

ABSTRACT

The presence of cacao industry plays a critical role in the economic development of a country. A
study was conducted to determine the cost, return and added value along the value chain stages of
cacao in Camarines Sur, Philippines. Sixty-eight farmers served as respondents using purposive
sampling technique and interviews/key informant surveys were conducted. Results of the study
showed that cacao production has high return on investment of 77.89% and 160% for the farmer
and processor, respectively but a low return on investment of 13% for traders. The value added
from farmer to processor is Php 590.00/kilogram, and Php 125.00/kilogram from processor to
trader. Various opportunities and prospects for cacao production had been identified such as
increased technical and production support from the government, presence of R & D programs,
increasing trend towards wellness & healthy lifestyle, and increasing businesses offering cocoa-
based products. Recommendations include improvement in access and availability of processing
facilities, improvement of market information for farmers, provision of trainings to enhance
capability of farmers, strengthening of farmers’ groups to increase their access to technical and
financial assistance from government and provision of infrastructure support and storage facilities.

Keywords: Cacao production; cost and return analysis; value addition; return on investment.
_____________________________________________________________________________________________________

*Corresponding author: E-mail: materesa.lirag@cbsua.edu.ph;

 Lirag; JAERI, 22(1): 1-9, 2021; Article no.JAERI.63274

1. INTRODUCTION the national target. Bicol regions’ industry

stakeholders’ commitment to the 2022 cacao
The presence of cacao industry plays a critical challenge is 3,000 metric tons in production
role in the economic development of a country volume which represents 3% of the total
and has made significant impact in the global commitment from the 17 regions all over the
and local market. In the cocoa market review for country.
August 2017 of the International cocoa
organization (ICCO), it reported that world cocoa The task at hand is gigantic in terms of achieving
bean production is expected to increase by the goal set for the next 5 years as enunciated in
18.1% which is equivalent to 4.7 million tons. the Cacao Roadmap. It is imperative then, that
Price movement on the other hand, is recorded local industry stakeholders in Camarines Sur has
at an average price of US$ 1,989 per ton [1]. to make aggressive moves in order to achieve
the regional goals. This can be done through an
In the Philippines, the trend of the volume of in-depth analysis of cacao production at the local
imports for cocoa had been increasing from level, coupled with an investigation on the cost
2011-2015 with 31,920 metric tons and 48,480 and return associated with its production and the
metric tons for 2011 and 2015, respectively. growing opportunities and prospects available for
Likewise, there was a tremendous increase in the cacao industry hence, this study.
the value of imports of cocoa from US$
103,370,000 to US$ 199,690,000 for 2011 and 2. OBJECTIVES
2015, respectively [2]. Furthermore, the highest
recorded volume of cocoa imported to the This study aims to:
Philippines was from Malaysia with 10,360 metric
tons valued at US$ 26,010,000 (PSA, 2016). The
1. Determine the socio-economic
high number of cocoa import recorded for the
characteristics of cacao growers in
Philippines is to be expected because cacao
Camarines Sur
production only stands at 10,000-12,000 metric
2. Estimate the cost and return associated
tons from 20,000-25,000 hectares of land planted
with cacao production
with cacao [3].
3. Determine the added value along each
The Philippine cacao industry needs serious stage of the chain in cacao production
attention not only from the government but from 4. Provide recommendations to increase
the other industry stakeholders as well. Realizing productivity of small-scale cacao
this critical need, the Philippine Cacao Roadmap production in Camarines Sur
for the next 5 years has been crafted to serve as
guide towards the development of the cacao 3. METHODOLOGY
industry in the country. In this roadmap, cacao
stakeholders envision a competitive and The research study employed the descriptive-
sustainable Philippine cacao industry by year evaluative method. A total of sixty-eight (68)
2022. This vision is expected to be achieved cacao growers/farmers served as respondents in
through the realization of the goal dubbed as the this study. They were selected based on the list
2022 Cacao challenge. This goal is to produce provided by the Department of Agriculture from
100,000 metric tons of fermented beans by the the municipalities of Tigaon, Lupi, Baao, Pili,
year 2022 for the export and domestic markets Iriga, Minalabac and Buhi, Camarines Sur,
through a 40% annual increase in production [3]. Philippines. Purposive sampling was used in the
Likewise, the roadmap further defines the selection of the respondents. A survey-
contributing factors that will lead to the questionnaire was used as the main tool for
attainment of the goal by increasing farmers’ gathering the needed data. The questionnaire
income to at least Php 130,000.00 per hectare was pre-tested and consisted of open-ended
per year and an increase in export sales by at questions to determine the socio-economic
least 250 million US dollars per year. characteristics of farmers. Farm visits, focused
group discussion and key informant surveys
This national goal needs the concerted effort were conducted to get first-hand information
from the various regional sectors all over the regarding the present status of cacao industry in
country. Towards this end, regional commitments Camarines Sur. Document review and analysis
were made in order to attain the industry goal of data was also undertaken to confirm and
and objectives by taking a percentage share from validate the data gathered from the survey.

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Secondary data were also gathered from other chocolate, dark chocolate and pure cocoa.
agencies such as Department of Environment Channels of marketing include face-to-face and
and Natural Resources (DENR) and Department the use of social media (Facebook) and through
of Trade and Industry (DTI) which may have friends.
relevant information for the project. Likewise,
data were also gathered from publications of Table 1. Socio-economic Characteristics of
various government offices, private institutions, Respondents
previous researches/thesis/dissertations, journals
and articles. Cost and return analysis was used Number %
to determine the return on investment and value Gender
added along the different stages of the cacao Male 51 75
value chain. Female 17 25
Total 68 100
4. RESULTS AND DISCUSSION
Age
Table 1 shows the socio-economic Above 50 37 54
characteristics of selected cacao growers in 41 – 50 24 35
Camarines Sur, Philippines. Of the total, 75% are 31 – 40 6 9
males and 25% are females. In terms of age, 21- 30 1 2
about half of the respondents are above 50 years Below 20 0 0
old, 35% belong to the age bracket of 41 to 50 Total 68 100
years old and the remaining respondents are 40 Educational
years old and below. About 34% of the farmers Attainment
are high school graduates, while 24% are College Graduate 13 19
elementary graduate. A few are college graduate College 11 16
(19%) and college undergraduate (16%) and the Undergraduate
rest are high school or elementary High School Graduate 23 34
undergraduate. About half of the respondents High School 4 6
(49%) have an average family size of 4 to 6, 38% Undergraduate
have family size of 1 to 3 and the rest (13%) Elementary Graduate 16 24
have big household size consisting of 7 to 9 Elementary 1 1
members in the family. Undergraduate
Total 68 100
In terms of farm size, 52% of the respondents Household Size
have 1 to 3 hectares farm, 28% have less than 1 7–9 9 13
hectare and the rest have more than 3 hectares 4–6 33 49
of farm land. Thirty per cent (30%) of the 1–3 26 38
respondents are into farming for 1-5 years and Total 68 100
24% had been involved in farming for 6-10 years. Farm Size ( in
The same number of respondents (15%) is into hectares)
farming for 11-15 years and 16-20 years and the Above 9 3 4
rest had been farming for more than 21 years 7.1 – 9.0 0 0
already. 5.1 – 7.0 8 12
3.1 – 5.0 3 4
In Camarines Sur, cacao production entails 1.0 – 3.0 35 52
several crucial activities which start with planting Less than 1 hectare 19 28
of seedlings. Pruning and clearing follows when Total 68 100
five or more branches have grown. The next Years in Farming
process is fermentation using wooden boxes and
Above 25 years 6 9
a perforated bottom for aeration and drainage of
21 – 25 4 6
sweating. After fermentation, drying is done
16 – 20 10 15
slowly and evenly and beans are turned
11 – 15 10 15
occasionally. Dried beans are then, processed to
6 – 10 16 24
come up with appropriate products. Processing
1– 5 21 30
of dried beans consist of roasting, grinding,
Less than 1 year 1 1
moulding, packaging and labelling. Processed
Total 68 100
products include milk chocolate, classic

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Currently, the involvement in the cocoa- size, access to credit, chemical inputs and farm
chocolate global value chain in our country is age were identified as the significant factors
limited as it primarily acts as an importer of affecting the output of cocoa production.
immediate and final products for domestic
consumption [4]. Likewise, despite many Previous study also found differential profitability
competitive advantages, the country’s exports and environmental impact of cacao based on the
remain low as it ranks 72nd in terms of exports, type of farming systems used. While cacao
as its global market share of less than 0.01% [4]. produced in monoculture systems are much
more profitable, cacao produced in agroforestry
4.1 Cost and Return Analysis systems rated higher in biodiversity and
ecological benefits. Agroforestry systems, which
Grafted cacao seedling usually cost Php35.00 are planted with wider arrays of other crops,
per piece however, if the buyer is a member of native plants, and trees, maintain better soil
the association, he gets a discount of Php quality [8]. Because traditional cacao is a
25.00/piece. If scion is bought, the price is lower modified forest and not a field crop the research
at Php10.00 per piece. Some of the associations needs to be based on both the holistic
mentioned by the respondents are the Bicol understanding of the cacao forest ecosystem
Cacao growers, Tigaon Cacao growers, Iriga alongside with the more traditional agronomic
cacao growers, Minalabac cacao growers and B approaches. It remains to be seen how
Farmers Community associations. comfortably the ecological and agronomic
approaches to cacao production can coexist [9].
Based on the cost and return analysis in Table 2,
a kilo of dried cacao beans will cost Php 85.00 To further enhance the profitability of cacao
however, if sorted, the cost can increase production, there should be a holistic approach in
between Php 100.00-Php 150.00/kilo. The total the distribution channels of small organic cacao
sales is P63,750.00 and the total cost is P35, companies [10]. Companies should focus on
835.00 which is used for buying tools, seedlings, multiple components to enhance profits in their
materials and labor. The net return is P27, distribution channels. The key components
915.00 with a return on investment of 77.89%. identified were price point strategy, Business to
The high return on investment is indicative that Business (B2B) relationships, differentiation,
cacao production is highly profitable. On the strategic location, and building customer
processor side, a kilo of cocoa will result to a relationships. Strategically addressing all of
sales value of Php 675.00 and a total cost of Php these components enhances small organic
260.00. This will give a net return of Php 415.00 cacao companies’ profits.
and a return on investment of 160%. On the
trader’s side, the return per kilo is computed at 4.2 Value Addition in Cacao
Php 800.00 with a cost of Php706.00. This
results to a net return of Php 94.00 or an ROI of Fig. 1 shows the various activities performed in
13%. cacao production, processing and trading before
the final product reaches the target consumers.
The cost and return analysis for cacao can vary The key players are the cacao growers who are
because price fluctuation is expected since responsible for planting, harvesting and drying of
cacao is a globally traded commodity [5]. For beans, small processors who are responsible in
instance, in a study in Solomon Islands [6], the the transformation of dried beans to tablea,
market trend analysis demonstrated that prices traders who buy processed cocoa products in
have increased by an average of 13% and wholesale and retail and the consumers. The
relative to this, production had increased by an diagram further shows that given the various
average of 5% over the last decade until 2013. computed selling prices at different stages of
Based on projections, price increases of between cacao production/processing, the value added is
10% and 30% annual production is realistically Php 590.00/kilo (with a share value of 82%) and
expected to reach what is considered to be an Php 94.00/kilo (with a share value of 18%) from
achievable target of around 10,000 metric tons farmer to processor and processor to trader,
by 2020. respectively.
In a similar study conducted in 2012, results 4.3 Opportunities and Prospects
showed profitability and efficiency ratios were
2.33 and 3.33 respectively implying that cocoa Based on the findings of this study, cacao
production is profitable and efficient [7]. Farm farming is profitable and there is a multitude of

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Table 2. Cost and return analysis

Farmer Processor Trader

ITEM Cost Unit No. Total ITEM Cost Unit No. Total ITEM Cost Unit No. Total
I. Return
Average 85 per kilo 750 kls. 63,750 Sales per kilo 135 Per 5 pouches Sales per 160 per 5 pouches 800
Dried pack @200g 675 kilo pack @ 200 g
Beans (kg) each
Total 63,750 675 800
Return (P)
II. Cost II. Cost II. Cost
1) Tools 5,000 1) Dried 85 Per 1 kl Additional 141 per 5 packs/kl 706
(bolo, water beans kilo 85 Sticker pack
hose,
scythe)
2) 35 Per 500 Pcs 17,500 2) Brown 68 Per 1 kl 68 P25/sheet @ 4
Seedlings grafted sugar kilo stickers/sheet = P6.25/pack
seedling + 135/pack = 141.25
3) Materials 89 per bag 15 Bags 1,335 3) Standing 15 Per 5 pcs 75
(jute bag) pouch pc/
200g
4) Labor 250 per wk 48 Wks 12,000 4) Grinding 20 Per 1 20
kilo
Land prepn
Planting 5)Transporta 20 Trans 10 kls 2
tion Cost
Fertilizer 6) 2 Per 5 labels/ 10
Application Sticker/Label label kl
Harvesting
Total Cost 35,835 260 706
(P)
NET 27,915 415 94
RETURN
Return on 77.89 % 160 % 13 %
Investment

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Fig. 1. Value Addition Diagram for Cacao Production in Camarines Sur, Philippines

opportunities available for small-scale cacao This is further corroborated by a study whereby
farmers. One enabling opportunity is the training of farmers on nursery development on
provision of free seedlings from the Department the establishment of their own farms or individual
of Agriculture (DA) to cacao farmers since backyard is a development option towards a
Camarines Sur was identified as a potential area more sustainable production of planting materials
for cacao production and industry. There is an [13]. On top of this, other constraints and
increased support from the government challenges on harvesting, sorting, drying and
considering the volume of seedlings being storage as well as economic and social
distributed freely to farmers. In 2014, DA constraints should be seriously considered [14].
released cacao seedlings to farmers and for With all these issues, the government should
2017, 1 million seedlings were released with UF come up with programmes aimed at improving
18 variety. The government sees the potential of farm size and development, provide trainings,
this crop in the province and with the increasing make credits available at no or little interest,
interest in cacao production, it can respond to the provide basic amenities in the rural areas and
inadequate supply in domestic and global facilitate the development of locally made farm
market. machineries at affordable prices.

Given this scenario, government intervention is Furthermore, growing cacao in Camarines Sur
indeed highly imperative to ensure increase and may be accelerated because there are available
continuous production of cacao [7,11]. Without large coconut and banana farms which may be
government support, cacao production may not used for intercropping with cacao. This
reach its optimum level. Previous studies corroborates with the findings that large coconut
revealed that farmers have limited technological and banana areas are available for intercropping
trainings and information on value-adding on in the country [5]. Likewise, the presence of R &
food processing and product development [12]. D programs for cacao will also be a great help to

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farmers to increase their production and make global market. There is also sufficient area of
their processing more efficient. A previous study banana and coconut farms where cacao may be
suggested that improving productivity will require used for intercropping. Likewise, government
support to Research and Development [6]. support is evident in terms of providing budget
Extensive R & D on varietal improvement is also for research and development undertakings and
crucial for cacao production [5]. R & D must be providing seedlings to cacao farmers.
coupled with public and private partnerships
between government, development partners and Based on the findings of this study,
private sector enterprises including domestic and recommendations are: increased access and
international stakeholders will offer opportunities availability of processing facilities that will allow
for improving services to the cocoa industry [6]. farmers to increase their farm productivity level;
increased accessibility to market and market
Consumers nowadays are increasingly information by the farmers; provision of trainings
concerned about health and safety of their food, and workshops to enhance capability of farmers
as well as the environmental and social especially on processing; strengthen farmers’
implications of cacao production; they are groups/cooperatives to increase their access to
beginning to truly grasp the meaning of “organic” technical and financial assistance from
and “fair-trade” and demand such products from government and non-government organizations,
their retailers. They are increasingly willing to pay effective integrated pest management for cacao
premium prices for luxury, differentiated cocoa pest and diseases and provision for infrastructure
products, usually darker chocolate with a higher support especially on storage facilities.
cocoa content [15].
Increased competitiveness of cacao over other
It was also observed that farmers have continued high value crops is crucial. Focusing on
to expand production even when cocoa prices hit fundamental supply chain effectiveness such as
record lows, although production rates varied production, post-harvest, consistent quality,
across countries [16]. This suggests that, even in farmer group capacity building, infrastructure,
periods of low cocoa prices, cocoa has remained market information and diversification will deliver
relatively competitive compared with other crop results for the majority of cacao producers [17].
options and/or there are other factors that
motivate farmers to expand cocoa production. The future of cacao industry is very optimistic as
the need for more quality cocoa beans is
The opportunities for cacao production are clear undeniably certain as well as the insatiable
and highly motivating for farmers. The demand for chocolate [18]. It is evident that
Department of Trade and Industry (DTI) has financial stability and income of cacao key
identified the most pronounced strength of our players can be increased with the proper
country in terms of cacao production, that is, the investment in production, processing and
geographic conditions that allow for growth of marketing systems and processes. As one
higher-value cocoa beans across the country, as author puts it and aptly describes, “Money may
well as its location, which is close to emerging not grow on trees, but chocolate does” [19]. It is
markets [4]. therefore, imperative to address all the critical
needs of stakeholders engaged in the various
5. CONCLUSION AND RECOMMENDATI- links along the supply chain in order to raise the
overall sector revenue and household income of
ONS
cacao farmers. In doing so, the country is
assured of a more dynamic, sustainable and
Cacao production is economically feasible with a
competitive cacao industry.
high return on investment of 77.89% and 160%
for the farmer and processor, respectively but a CONSENT
low return on investment for traders. The value
added from the farmer to processor is Php As per international standard or university
590/kilo, and Php 125/kilo from processor to standard, respondents’ written consent has been
trader. collected and preserved by the author(s).

There are various opportunities and prospects for COMPETING INTERESTS

cacao production. There is an increasing
demand for cacao-based products however; the Author has declared that no competing interests
supply is still inadequate at the domestic and exist.

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© 2021 Lirag; This is an Open Access article distributed under the terms of the Creative Commons Attribution License
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