Armajaro is a leading global commodities and financial services group headquartered in London. It has three main business activities: commodities trading, asset management, and structured financial products. Armajaro is a major supplier of cocoa beans and products worldwide. It has operations in key cocoa producing countries and sources from agents in other origins. Armajaro faces challenges from issues affecting the global cocoa market like aging cocoa trees, competition from other crops, and concentration of supply.
05 4th speaker gil a. yarra csi kakao konek presentation
05 2nd speaker d liew armajaro group kakao konek - nov 2012
1. KAKAO KONEK
NOV 2012
DAVAO, PHILIPPINES
Daniel Liew
Armajaro Asia
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2. 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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3. 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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4. INTRODUCTION TO THE ARMAJARO GROUP
Agents
United Kingdom Netherlands Germany India China Thailand
Cocoa Coffee Sugar Theobroma Warehouse Coffee Coffee Sugar
Offices
Agents Vietnam
Cocoa
Coffee
Sugar
Malaysia /
USA Singapore
Cocoa
Cocoa
Coffee
Coffee
Sugar
Sugar
Costa Rica Indonesia
Coffee Cocoa
Coffee
Colombia
Coffee
Papua New
Ecuador Guinea
Cocoa Cocoa
Agents
New
Peru Zealand
Coffee
Sugar
Brazil
Coffee Sierra Leone Liberia Ivory Coast Ghana Nigeria Cameroon Burundi Uganda Tanzania Kenya
Sugar Cocoa Cocoa Cocoa Coffee Cocoa Cotton Cocoa Cotton Cocoa Coffee Coffee Coffee Coffee
Agent Agents
5. ARMAJARO CENTRES – SULAWESI, SUMATRA, JAVA, IRIAN JAYA
SIGLI
MEDAN
PALU
JAYAPURA
LAMPUNG
KOLAKA
JAKARTA
SURABAYA MAKASSAR
PORT OPERATION
INTERIOR CENTRE
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6. ARMAJARO CENTRES - SULAWESI
LAMBUNU
KOTA RAYA
TINOMBO
TOLAI
PARIGI
PASANGKAYU
DONGGALA
GIMPU
PALOLO POSO
PALU
BUNTA
MASAMBA
TENTENA / TOMATA
POLMAN
PORT OPERATION
KOLAKA
MAKASSAR
INTERIOR CENTRE
SP 5
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7. ARMAJARO CENTRES - SUMATRA
MEDAN
KUTACANE
SIGLI LHOKSEUMAWE
SRI BAWONO
PORT OPERATION LAMPUNG
PADANG CERMIN
INTERIOR CENTRE
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8. Current Cocoa Activities in Indonesia – organizational
structure
Established network in Indonesia from farm level to export
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9. Central Sulawesi
Capacity : 4.500 mt
Southeast Sulawesi
Capacity : 1.500 mt
South Sulawesi
Capacity : 6.000 mt
10. Aceh
Capacity : 650 mt
Medan
Capacity : 3.000 mt
Lampung
Capacity : 2.500 mt
12. South Sulawesi - Masamba South Sulawesi - Masamba West Sulawesi - Polman
Central Sulawesi - Poso Central Sulawesi - KotaRaya SouthEast Sulawesi – SP5
13. Development and Sustainability (D&S)
• 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
14. D&S Activities Areas -
Nanggroe Aceh
Darussalam
2012
East
Kalimantan
North
Riau Island Central Sulawesi
Sulawesi
North
West West
Sumatera North
Kalimantan Gorontalo Irian Jaya
Maluku
Bangka Central West
Belitung Kalimantan Sulawesi
West
Sumatera
Papua
Bengkulu South South East
Jakarta Kalimantan Sulawesi Maluku
Central Java
Lampung South
Sulawesi
Bali NTT
Banten
West Java
East Java
Jokjakarta
NTB
UTZ Certified Farmers
The first UTZ Certified Indonesian
cocoa beans
15. 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
16. 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
17. 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
18. 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
19. 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
20. 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
21. 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
22. 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 !
23. 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
24. 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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