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So, most of JB Food's current loans are trade finance (to fund inventories) and the increase in value of finished goods (cocoa powder/butter) is driven by increased cocoa bean prices since the cost is "pass-through". That said, the company also suspects that the current high prices will start to increase bidding prices among processors like themselves and eventually, developing new recipes using less cocoa ingredients, may reduce overall demand in the future.
SHAREHOLDERS’ QUESTIONS IN RELATION TO THE ANNUAL REPORT 2023
The cocoa bean price is a pass-through cost given that the Company has adjusted the selling prices relative to the increase in cost. Having said that, the current cocoa bean shortage is unprecedented, and industry players face challenges in securing an adequate and consistent supply to meet their production demands. This scarcity can lead to increased competition among processors for the available cocoa beans, which in turn can drive up prices. Accordingly, cocoa processors may face higher input costs for cocoa beans, which can reduce their profit margins if they are unable to pass on
these increased costs to their customers. Industry players are using their best efforts to negotiate the delivery arrangements in light of the global cocoa bean supply situation.
The Group’s existing financial institutions have provided and extended additional working capital facilities to the Group to manage the high bean prices.
https://links.sgx.com/FileOpen/JBFL%20An...eID=797088
SHAREHOLDERS’ QUESTIONS IN RELATION TO THE ANNUAL REPORT 2023
The cocoa bean price is a pass-through cost given that the Company has adjusted the selling prices relative to the increase in cost. Having said that, the current cocoa bean shortage is unprecedented, and industry players face challenges in securing an adequate and consistent supply to meet their production demands. This scarcity can lead to increased competition among processors for the available cocoa beans, which in turn can drive up prices. Accordingly, cocoa processors may face higher input costs for cocoa beans, which can reduce their profit margins if they are unable to pass on
these increased costs to their customers. Industry players are using their best efforts to negotiate the delivery arrangements in light of the global cocoa bean supply situation.
The Group’s existing financial institutions have provided and extended additional working capital facilities to the Group to manage the high bean prices.
https://links.sgx.com/FileOpen/JBFL%20An...eID=797088