Progress 05/01/06 to 12/13/07
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.
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.
- None 2007 _____________________________________________________________________ ______
- We obtained a no-cost extension until December 31, 2007, but as we completed all our work before May, we would like to terminate this project as of May 31, 2007.