Pepper, cocoa fare well in 2021, tin sees disruption
KUALA LUMPUR,. The cocoa and pepper sectors have fared well during the pandemic, catching up the pace to meet rising world demand, while tin experienced production disruption and gold remained mostly untraded this year.
Pepper and cocoa remained a major component of the country’s economy, with both recording an improvement in terms of export value this year.
For instance, pepper export as at October this year stood at RM117 million, up by 22 per cent from RM96 million in same period last year, while the export revenue of cocoa rose 9.4 per cent to RM5.07 billion.
Tin, however, saw its trading session cut short, following the force majeure announcement by the world’s third largest tin producer, Malaysia Smelting Corporation Bhd (MSC).
High-income strata buoyed demand for cocoa
According to the Department of Statistics Malaysia (DOSM), the increase in demand for the commodities despite the world being hit by COVID-19 signalled the demand for quality food as people’s income strata expanded with China being one of the high-consuming countries.
Chief statistician Datuk Seri Mohd Uzir said this trend is expected to continue ahead of the world population projected to reach 10 billion in 2050.
Hence, he called for the country to revisit the agriculture sector as a potential source of employment and increase capital investment in modernising this sector.
“This was in cognisance of the significant impact brought by COVID-19 on agriculture production and prices, which increases the importance of food security,” Mohd Uzir said in November.
Commenting on cocoa performance this year, Malaysian Cocoa Board deputy director-general (operations) Dr Ramle Kasin said Malaysia was ranked second largest in cocoa grinding and ninth in terms of production in Asia.
“From January to September 2021, the export revenue of cocoa beans and products increased 9.4 per cent to RM5.07 billion from RM4.59 billion in the same period last year.
“Cocoa butter was the highest contributor in terms of export revenue, accounting for 36.9 per cent, followed by cocoa powder 22.9 per cent and chocolate 14.8 per cent,” he told Bernama.
Malaysia’s cocoa butter was mainly exported to the United States (15.7 per cent), followed by Japan (12.4 per cent) and Turkey (10.4 per cent).
As for cocoa powder, China was a major buyer, taking 12.1 per cent, Thailand (9.2 per cent), and Indonesia (8.2 per cent). Chocolates were mainly exported to Japan (23.1 per cent), China (12.0 per cent), and Thailand (9.5 per cent).
“Regionally, the Asia-Oceania region is the major trading partner of Malaysian cocoa and cocoa products, accounting for 61.3 per cent of the total export revenue for January to September 2021,” he said.
As for grinding, Ramle said from January to September 2021, cocoa bean grinding increased 9.5 per cent to 250,438 tonnes from 76,461 tonnes previously.
However, production of local beans for January to September 2021 was 436 tonnes, down 8.6 per cent compared to the same period last year.
Hence, he expresses concern over the shortfall in local production to meet the grinding capacity, saying that in 2021, more than 95 per cent of grinding was imported cocoa beans.
The Malaysian Pepper Board said Sarawak pepper, which is reputed for premium quality and unique aroma, was still in high demand, thus making Malaysia a major competitor to the world’s major pepper-producing countries, especially Vietnam, Indonesia and India.
Malaysia is the world’s fifth largest producer of pepper.
It said pepper production for Vietnam was at 240,000 tonnes, Indonesia (77,000 tonnes) and India (60,000 tonnes) in 2020, while Malaysia was at 30,800 tonnes.
“The overall market value of the Malaysian white pepper increased to more than RM60 million during the first six months of this year from RM40 million last year due to lower pepper production, and it is seen as an advantage in generating income for the country,” the board said.
Tin and Gold
MSC’s force majeure, which came into force on June 7 as a measure to curb COVID-19 from disrupting production, was lifted on Dec 20.
A force majeure declaration aims to free parties in a contract from their obligations due to extraordinary circumstances.
It was reported that MSC accounts for 7.0 per cent of global supplies estimated at about 330,000 tonnes in 2020. According to the International Tin Association, MSC produced 22,400 tonnes of tin in 2020.
With the trading session shortened, the Kuala Lumpur Tin Market (KLTM) recorded a year-to-date (YTD) high of US$32,350 per tonne on May 7, boosted by strong demand.
As for gold, trading on Bursa Malaysia Derivatives Gold Futures (FGLD) hit year-to-date high of RM255 a gramme on Dec 8 and low of RM225 a gramme on May 31.
The precious metal remained mostly untraded this year.