Cocoa Market – Value-added Processing
An assignment for Strongim Bisnis, a program supported by the Australian Government in Solomon Islands.
Duration: Over 30 days in April/May 2018, 20 days of which will be in Solomon Islands (Honiara)
Specialist Inputs: One consultant is sought
ARF Level: C4
Background to the Strongim Bisnis program
Strongim Bisnis is an AUD14 million, three-year market systems development (MSD) program funded by the Australian Government in Solomon Islands, working under the umbrella of the Solomon Islands Growth Program (SIGP). Its goal is to stimulate growth in specific sectors (initially tourism, cocoa and coconut) through activities that catalyse business innovation, change practices, strengthen collaboration, manage risks, build resilience and increase women’s participation and empowerment. It commenced in July 2017.
The program has three end-of-program outcomes (EOPOs) to June 2020:
- Business is demonstrating potential for increased productivity, greater resilience, better risk management, more income earning opportunities and access to high value markets, measured by higher agricultural yields, more efficient use of assets and labour, and new business models that favour employment, incomes or trade.
- The private sector and government work together to increase opportunities for trade and investment, and form external partnerships that accelerate business growth, measured by a more favourable investment climate and external partnerships that accelerate changing business practice.
- Women and youth have increased economic opportunity, measured by women’s and youth participation in the above outcomes, and specific measures for women’s and youth economic empowerment.
Background to this Assignment
Cocoa in the Solomon Islands have historically been valued commercially for bulk market export, which is traded internationally for use in the production of cocoa powder, cocoa butter, chocolate and other cocoa related products. While bulk market has dominated the cocoa trade in the past, however, there has been a decline in the domestic market price, with inconsistency in prices, and high cost of transportation meaning that there are low margins for all cocoa farmers throughout the value chain. Recently, the introduction of solar drier technology has enabled cocoa farmers to export high quality dried beans directly to chocolate factories. Learning from these opportunities, has made cocoa farmers increasingly interested in exploring higher value markets to sell their quality beans. There has also been an increase in interest for cocoa businesses looking at value addition (cocoa powder, cocoa nips and cocoa butter) for both domestic and export markets and capturing more value out of their cocoa.
Given the unpredictability of cocoa price in the world market, cocoa sector stakeholders agree that future and sustainable growth of the sector will need to be driven by quality processing and value addition. However, cocoa stakeholders currently do not have the necessary market intelligence to properly guide their investment decisions.
Objective of the Assignment
The objective of the assignment is to inform Strongim Bisnis’ strategy in promoting value-added processing in the Solomon Islands. The assignment will include a deep demand assessment for cocoa value-added products in domestic, regional/international markets, as well as analyse the feasibility of operating value-added processing/sales operations at the micro, small, and medium-scale level in Solomon Islands. We want to show potential investors whether or not investing in value-added processing for specific products and using specific technologies is a good investment or not. The strategy will be devised using market analytics and trends, and will need to take into consideration Solomon Islands’ cocoa sector/actor context, capacities, and constraints.
Scope of Work
The consultant will undertake the following:
- Review relevant documentation including: the SIGP Design document the Solomon Islands Government National Development Strategy (2016-2035), The Cocoa Sector Strategy for Solomon Islands, The Cocoa Sector Market System Analysis (MSA), sectoral plans and policies for Cocoa, and any other relevant documents.
- Attend a briefing from the Strongim Bisnis, management team and undertake consultations with relevant stakeholders (to be determined based on gaps in knowledge from the desk analysis.)
- Conduct demand analysis:
- What is the demand for cocoa value-added products in regional and international markets?
- Building on the following existing studies:
- Cocoa Market Study - 17 April 2015 - 42444251/SOLS22/1.0
- Technical Report 84 - SOLS22 (Stage 2): Cocoa Marketing Study
- Solomon Islands: Improved Market Access for Cocoa
- Which markets and for what products (i.e. cocoa powder, cocoa nibs, cocoa butter, cocoa liquor) present the best opportunities for Solomon Islands exporters and why (keeping in mind the capacity of exporters and the constraints in the cocoa market system in Solomon Islands)?
- What standards/certifications or other requirements would need to be met to export into these new markets? What are the costs associated with the certifications?
- Who are the main buyers in these markets for the recommended products (company name, profile, website URL, contact information, products the company purchases)?
- What is the current/potential demand for cocoa value-added products in Solomon Islands?
- What products (i.e. cocoa powder, cocoa nibs, cocoa butter, cocoa liquor) have the biggest potential for production/sales in Solomon Islands and why (compared with competing imported products’ quality, price, packaging, and brand power)?
- What policies/regulations would have to change to promote Solomon Islands value-added processing/sales?
- Conduct feasibility studies (minimum 5 products including micro, small, and medium-scale processing):
- What products are feasible to produce in Solomon Islands for sale in domestic and export markets at the micro, small and medium scale? Analysing investment, production, transportation/shiping, and other operating costs and keeping in mind potential demand, competition from imported products, and local context/capacity?
- This will include an analysis of what specific technologies are suitable at the micro, small, and medium-scale processing level for the identified value-added products (within the Solomon Islands context and capacity/constraints)? Each processing technology recommended will include: name of technology company, equipment identification number, list of preferred regional suppliers of the equipment with contact information, description of volume capacity of equipment, description of power needs, and any other relevant specifications.
- The feasibility studies must include business cases (i.e. pro forma financial statements detailing the investment capital required, operating costs, and anticipated revenues – among other factors - with pessimistic/realistic/optimistic projections) using excel tables.
- Identify any specific market development opportunities; and
recommend any appropriate actions to meet those identified market opportunities including
any appropriate supply chain development and market development work.
- Conduct an assessment results workshop with industry stakeholders in Honiara.
Deliverables and schedule
The assignment will commence in April and require 30 days of inputs by the consultant (including travel, reading, consultation, analysis, and report writing). The assignment should be completed in May 2018. Submission dates for deliverables will be finalized upon contract signing. All deliverables must be approved by Strongim Bisnis.
Timeframe and deliverables
Up to 1 day (virtual)
Strongim Bisnis briefing
Up to .5 day
Draft report outlines
Demand analysis (regional/international)
Up to 3 days (virtual)
Draft demand analysis (regional/international) – MSWord
Final demand analysis (regional/international) – MSWord and PowerPoint Summary
Demand analysis (domestic Solomon Islands)
Up to 10 days
Draft demand analysis (domestic) - MSWord
Final demand analysis (domestic) – MSWord and PointPoint Summary
Up to 14.5 days (4.5days virtual)
Draft list of products and justification for choosing these products for analysis
Final list of products to be included in feasibility study
Draft feasibility studies – Excel analysis
Final feasibility studies – Excel analysis and PowerPoint Summary
Assessment results workshop with industry stakeholders in Honiara
Skills and experience required
The consultant should have:
- University degree in business, agricultural economics, agribusiness management, or a closely related field; MBA or post-graduate degree preferred.
- At least 7 years of relevant experience in agri-business; cocoa sector and pacific experience preferred.
- Demonstrated experience in conducting demand assessments and business feasibility studies; cocoa sector preferred.
- Demonstrated experience with value-added processing technologies for micro, small, and medium-scale processing.
- Understanding of the context, capacities, and constraints of cocoa value-added processing in the pacific region; Solomon Islands preferred.
- Proven ability to produce high quality comprehensible analytical reports and provide sound recommendations.
- Excellent command of English and excellent writing skills;