Cacao trees grow and produce well in Hawaii. How can we develope cacao growing and chocolate production to best utilize this asset? This project research will help define the potential for cocoa production in Hawaii and whether sufficient high end gourmet cocoa products can be produced in a scaled-down factory, appropriate in size for local production, sold at a high enough price and in large enough quantities to support cacao farmers, cocoa processors and retailers. OBJECTIVES: Cacao trees grow and produce well in Hawaii, where orchard crops are being developed rapidly by smallholders. Unable to compete with the international market, a chocolat d'origin gourmet product was established five years ago which supports cacao growers on a small scale. An assessment of potential production and an economic analysis of cacao growing is required to determine the requirements for processing. Likewise, the capability and potential capacity of micro-processing cocoa nibs and further processing into chocolate must be assessed to determine if small scale production can support the larger industry. Some marketing research, including the potential for a new raw food product, will also be undertaken in preparation for larger scale market research in Phase II. APPROACH: Phase I research will have five basic technical objectives to provide information which will lead to the overall goal of assessing feasibility of developing a sustainable cocoa industry in Hawaii. This overall goal can only be accomplished by determining the feasibility of all parts of cocoa production, processing and sales: Defining the economics of cocoa production, assessing chocolate manufacturing techniques and products and learning more about the market for high-end cocoa products from Hawaii. In the long-term, the feasibility of a high-end market for processed cocoa beans (as chocolate or other products) must be established as well as its ability to sustain substantially higher prices paid to farmers than they would receive on the world market. The farmers who can produce the cocoa for our unique Hawaiian products are as important to our value-added processing endeavor as we are to them. However, in the short-term, information on farmer requirements, our ability to produce small-scale cocoa products and the viability of our products will be required before the longer-term questions can be researched. These short-term questions will be resolved during Phase I and will answer these technical questions: a. What are the economics of sustainable small-scale cacao/cocoa farming in Hawaii and what will farmers require to become economically successful in the production of cocoa? b. How can the small-scale production of chocolate be continually increased in output and efficiency to provide a sufficient market to cocoa growers as field production increases? c. How can our cocoa products best be marketed? d. What additional cocoa products might be popular? Although none of these objectives can be totally resolved in the short period provided by the Phase I program, the information that will be gained from the studies listed is essential in designing a successful Phase II program. With all of the players presently in place, OHCF is in an ideal position to orchestrate this research and, in time, resolve each of these questions which we hope will result in a significant new agricultural industry in Hawaii. PROGRESS: 2006/05 TO 2007/12 a. Viability of cacao production in Hawaii: Virginia Easton-Smith of the University of Hawaii Extension Service handled an initial, cursory survey and the analysis of the data which suggested that what we pay for cacao may be sufficient to allow cacao farming to be profitable. Due to the lack of time and funds for this study, Dr. Kent Fleming, the senior economist, is proposing to conduct a full survey and analysis during Phase II. b. Ability to increase our demand to meet future cacao production: Dr. Robert Chase analyzed the results of our survey of the number and age of the cacao trees in Kona. This analysis revealed that we are presently purchasing 60% of the potential Forastero cocoa beans and 50% of the Criollo beans produced in Kona (most of the rest are not picked). It also projected a doubling of potential production over the next 5 years. If farmers pick all their produce and potential production is realized, we could have a four-fold increase in the amount of beans that we need to purchase if we are to continue to support Kona cacao growers. More importantly, new and larger cacao farms are being planted this year, further increasing future potential production. As part of our research into increasing production, Phase I funds allowed us to evaluate our own potential to increase production. Through purchases that increased efficiency we saw a major impact on productivity through decreasing difficulty and drudgery and increased efficiency. Funds were provided to replace our major bottleneck, an inefficient winnower, but the cost of this item was far greater than the funds provided. c. Marketing requirements: Dr. Chase also analyzed the cost of production for our six chocolate products and determined that (1) profits from our dark and milk chocolate are approximately the same, (2) these profits are sufficient to allow us to continue paying high prices for locally produced cocoa beans and still provide the profits we need to keep in business once we increase our production and (3) of our three products, our 3oz. chocolate bars are the most profitable. We developed new packaging for our products that both reduced the labor time and costs and improved their visibility. This new packaging was enthusiastically received by our retailers. d. New products: If we are to increase our chocolate production in support of the local cocoa bean production we will have to increase sales by dramatically improving our marketing. We engaged a local marketing firm that helped us analyze our marketing program and to help define how to improve it. In terms of new products, students at the West Hawaii Culinary Arts program made a Jaboticaba Original Hawaiian Chocolate Syrup and a Kona Coffee Original Hawaiian Chocolate Syrup. These were taste tested at a USDA conference in August 2006 where the Kona Coffee syrup won. While we are certain that we could create a new and successful product selling processed cocoa beans, the profit from this would be relatively small. We have surveyed our retailers, tourists and consultants who believe that a 1.5 oz bar would be a compliment to the new 3 oz. bar and would increase sales and profitability. IMPACT: 2006/05 TO 2007/12 This project allowed us to (1) assess how much cocoa bean production we can expect from local trees on Kona farms over the next five years (2) our costs of production (3) bottlenecks to our production and how to resolve them and (4) how to better market our chocolate (new products, upgraded marketing program). This has allowed us to determine if cacao farming coupled with chocolate production could be mutually profitable in Kona and how large our chocolate factory must become in order to provide a sustainable market for the upcoming cocoa bean production. Our factory is an essential market for locally produced cocoa beans since we pay many times more than in the commodity market which, our Phase I research shows, can make both cacao farming and chocolate production economically feasible
