Philippine Cacao Industry Eyes Growth as Prices Rise, but Low Productivity Remains a Major Hurdle

 

The Philippine cacao industry has a clear opportunity to expand, but realizing that potential will depend on whether producers can overcome persistent productivity and processing constraints.

A policy brief from the University of Asia and the Pacific-Center for Food and Agri Business (UA&P-CFA) identified improving cacao prices and the growing reputation of Philippine chocolate as key factors that could strengthen the sector’s competitiveness. However, the country continues to fall short of its production capacity, leaving a substantial portion of domestic demand dependent on imported cocoa products.

One of the strongest signals of opportunity is the sharp increase in farmgate prices. The average price paid to local cacao farmers climbed to P243 per kilogram in 2025, more than double the P92 per kilogram recorded in 2021. Global supply disruptions among major cocoa-producing countries helped tighten supplies and improve prices received by Philippine growers.

For farmers, the price movement provides a stronger economic incentive to expand production. Yet higher prices alone cannot solve the industry’s underlying supply problem.

Productivity remains the industry's biggest weakness

Philippine cacao farms generally produce only around 0.5 to 1 kilogram of dried beans per tree annually, well below the industry target of 2 kilograms per tree.

That productivity gap has limited the pace at which national output can grow. Production increased from approximately 10,000 metric tons in 2021 to 11,870 metric tons in 2025, a gain that remains modest considering the country’s expanding domestic and international market opportunities.

The situation can be viewed as a pipeline with strong demand at one end but insufficient supply entering from the other. Unless farm productivity improves, higher prices and growing market recognition will have limited impact on the industry’s ability to scale.

The productivity issue also directly affects farmer earnings while restricting the Philippines’ capacity to supply both local manufacturers and overseas buyers.

Davao remains the center of Philippine cacao production

Production is heavily concentrated geographically, with the Davao Region maintaining its position as the country’s leading cacao-producing area.

Known as the Cacao Capital of the Philippines, Davao accounted for 68.7 percent of national cacao production, or about 8,150 metric tons. Its favorable climate and dependable rainfall provide conditions well suited to cacao cultivation.

Other significant producing areas include Calabarzon at 7.1 percent, the Zamboanga Peninsula at 5.3 percent, and Soccsksargen at 2.7 percent.

The industry itself remains largely composed of smallholder farmers, cooperatives, farmer organizations and a smaller number of commercial farms and enterprises. Among notable participants are Kennemer Foods International Inc., Malagos Agri-Ventures Corp., Kablon Farms and various regional cacao growers’ associations.

Philippine chocolate is gaining international recognition

While the Philippines still has considerable ground to cover in raw bean production, its chocolate sector has demonstrated that locally grown cacao can support internationally competitive products.

Brands such as Malagos Chocolate, Auro Chocolate, Theo & Philo Artisan Chocolates, Dalareich Chocolate, 1919 Chocolate and MS3 Agri-Ventures Corp. have helped raise the profile of Philippine-made chocolate.

International recognition received by several local producers is particularly significant because it demonstrates that the country’s opportunity extends beyond selling raw cacao beans. Greater value can be generated by processing locally and developing finished chocolate products for both domestic and export markets.

Exports are rising, but imports reveal an untapped market

Philippine cacao exports have generally strengthened between 2021 and 2025. Last year, exports reached $46.23 million in value, with total shipments of about 5,930 metric tons.

At the same time, the country continues to import cocoa-based products to satisfy local consumption. Imports increased by 69.8 percent from 2021 to 2025, reaching $2.14 million and 281 metric tons in the figures cited by the UA&P-CFA brief.

The coexistence of cacao exports and substantial imports points to a major weakness in the domestic value chain. The Philippines can produce cacao for overseas markets, yet local manufacturers and consumers still rely on imported processed cocoa, particularly cocoa powder and chocolate.

That imbalance represents more than a trade concern. It is a potential growth market for Philippine processors.

Industry faces multiple barriers to expansion

Increasing production will require more than planting additional cacao trees. Farmers and businesses continue to contend with elevated input costs, climate-related threats, pests and diseases, inadequate post-harvest infrastructure and limited domestic processing capacity.

These constraints make investments in farm productivity, post-harvest handling and value-added processing critical to the sector’s long-term development.

For the Philippines, the next stage of cacao growth could therefore come from strengthening the entire supply chain rather than simply increasing bean production. Better farm yields can raise farmer incomes, while expanded domestic processing can allow more of the crop’s economic value to remain within the country.

The combination of rising farmgate prices, growing international recognition and strong domestic demand gives the industry a favorable opening. The central challenge now is converting that opportunity into higher yields, stronger processing capabilities and a more competitive Philippine cacao value chain.