KUALA LUMPUR: Cocoa and pepper continued their upward performance in 2024 driven by higher global demand and the government's support towards the commodity's growth.

Both commodities remained key contributors to Malaysia's economy, with notable increases in export values recorded this year.

According to the Ministry of Plantation and Commodities (MPIC), Malaysian pepper exports reached RM86.4 million from January to July 2024, compared to RM80.2 million recorded during the same period last year.

Meanwhile, export earnings from cocoa beans and products rose significantly, reaching RM12.09 billion from January to October 2024, compared to RM8.20 billion in the corresponding period last year, according to the Malaysian Cocoa Board (MCB).

This increase was primarily driven by higher production output and a stronger ringgit performance in 2024.

Higher cocoa price in 2024

The MCB highlighted that one of the main drivers of the positive performance in 2024 was the significant rise in cocoa bean prices, ranging from RM20,000 to RM27,000 per tonne—more than double the average price of RM10,000 per tonne last year.

This price increase has sparked renewed interest among estate owners and smallholders in cocoa planting, prompting efforts to rehabilitate existing cocoa fields and boost production.

"The export earnings from cocoa semi-finished products and chocolate reached RM10.3 billion from January to September 2024 , surpassing last year's total of RM8.2 billion," the board told Bernama.

However, the board noted challenges in the industry, particularly the heavy reliance on imported cocoa beans

It said 99 per cent of beans processed by local grinders are imported beans valued at RM 12.6 billion from January to September 2024.

"To address this dependency, the MCB launched a bean-sourcing mission earlier this year," it said.

EUDR compliance

The MCB expressed concerns about the potential impact of the European Union Deforestation Regulation (EUDR) on cocoa exports, particularly to EU markets.

To meet the EUDR requirements, the MCB has developed a traceability system that tracks cocoa beans from cultivation to chocolate production and is implementing various programmes to support the production of premium cocoa beans.

In collaboration with the Malaysia Space Agency (MYSA), MCB is leveraging geospatial data and remote sensing technology to enhance the efficiency of cocoa farm monitoring.

On low cocoa bean production, the MCB will assist smallholders by providing advisory and training on technology adoption, smart farming, good agricultural practices, and the distribution of agricultural inputs.

The board is also working to resolve import procedure bottlenecks at ports by engaging with additional ports and relevant authorities to streamline the importation of cocoa beans.

While higher dry cocoa bean prices have benefited farmers, they have also led to a two- to threefold increase in the cost of cocoa-based products, such as chocolate.

However, with the consumer preference for premium chocolate, such as single-origin chocolate and healthy functional chocolate, the demand for cocoa-based products will remain high despite the high prices.

The strengthening of the ringgit

The MPIC highlighted that a stronger ringgit could lower the cost of importing agricultural inputs, thereby lowering production expenses for smallholders and increasing their profit margins.

However, fluctuations in the ringgit's value have a limited direct impact on smallholders' income, as cocoa production primarily serves domestic markets to meet the demands of local processing factories.

Farmgate cocoa prices in Malaysia are mainly influenced by global supply and demand trends, rather than changes in the exchange rate.

Strong demand for pepper

MPIC Deputy Minister Datuk Chan Foong Hin highlighted the significant demand for Malaysian pepper, with the Japanese market accounting for nearly 50 per cent of the country's pepper exports.

"Japan is our traditional market, as Malaysia's peppers have a different type of spiciness than those from other countries. Apart from Japan, other major pepper export markets are China, South Korea, and Sweden," he said.

Chan also noted encouraging trade with Singapore, where pepper exports rose to RM8.20 million (368.1 tonnes) during the first seven months of this year, compared to RM5.86 million (288.44 tonnes) in the same period last year.

"Singapore is an important trade partner for the pepper sector, offering vast growth potential based on economic and trade relations with Malaysia as well as geographical factors," he noted.

Additionally, he pointed out that pepper cultivation in Malaysia expanded to 8,215 hectares in 2024 up from 8,172 hectares last year.

"The number of farmers rose to 39,137 this year from 38,986 in 2023. This reflects the pepper industry's rapid growth driven by the government's development initiatives through the Malaysian Pepper Board (MPB)," he added.

Government support for pepper

The government, via MPB, is implementing several dynamic and integrated programmes, projects, incentives, and assistance involving smallholders and pepper entrepreneurs, said MPIC Minister Datuk Seri Johari Abdul Ghani.

"These efforts ensure the sustainability of the pepper industry while boosting the development of upstream and downstream sectors," he explained.

Under the 12th Malaysia Plan, the government has allocated RM50 million for the New Pepper Planting Scheme and the Mature Pepper Planting Scheme, alleviating financial burdens for farmers.

"The government has also allocated RM3 million to implement the premium quality pepper projects, while another RM5 million was allocated to increase the involvement of competitive downstream entrepreneurs," he said.

Pepper and Cocoa Outlook for 2025

The price of dry cocoa beans is expected to remain high next year, motivating farmers to increase production and estates to replant cocoa.

Increased agricultural incentives will benefit approximately 3,295 cocoa farmers covering 2,126 hectares from 2024 to 2026.

MCB said 2025 will see an expansion of about 360 hectares of new cocoa planting area including 60 hectares of new planting in Kuala Tahan, Pahang; 50 hectares of rehabilitated abandoned cocoa areas; and 260 new cocoa planting areas in the plantation sector.

To showcase and promote Malaysian cocoa and its products, MCB will organise the Malaysian International Cocoa Fair (MICF) 2025 from May 24-27, 2025, at the Sabah International Convention Centre in Kota Kinabalu, Sabah.

For pepper, MPIC projects global pepper demand to continue its upward trajectory in 2024 and 2025.

It said the growth was attributed to the potential applications of pepper in various sectors, including pharmaceuticals and cosmeceuticals, which are driving this positive trend.