2024-04-03 16:41:22
The bonanza in cocoa prices has generated positive expectations among producers in the department of Huila, who hope to benefit from this unexpected increase in the value of the grain.
Diario del Huila, Economy
Amid the expectations generated by the bonanza in cocoa prices, cocoa farmers in the department of Huila hope to benefit from this situation that predicts a positive scenario for their sector. With production from major global cocoa producers declining, mainly in Africa due to a severe drought, the market has seen a significant rise in prices, providing unprecedented opportunities for local producers.
Orlando Escobar Martínez, Technical Secretary of the Cocoa Chain and producer of the municipality of Campoalegre, expressed his surprise at the price increase, which has almost tripled the value of cocoa. From 8 thousand pesos per kilo, the price has climbed to almost 32 thousand pesos. This unexpected increase has generated renewed optimism among cocoa farmers in the region, who hope to capitalize on this economic boom.
This rise in cocoa prices is mainly attributed to the decrease in production in the main producing countries on the African continent, which have been affected by adverse weather conditions, especially due to the El Niño Phenomenon. This situation has generated a deficit estimated at close to 350 thousand tons of cocoa, which has boosted demand and, therefore, prices.
The current situation of the cocoa market is similar to the experience lived by Colombian coffee farmers during past crises in the coffee market, when high prices benefited local producers.
According to Orlando Escobar, Huila cocoa farmers have been facing challenges for the last four years in terms of productivity, maintaining a constant dialogue with the previous administration. They have been dedicated to devising strategies to improve it.
According to national studies, Productivity currently stands between 450 and 500 kilos per year, a figure that is unprofitable for the sector. In this sense, the goals established in the action plan have focused on the renewal of cocoa trees, with the aim of increasing productivity until reaching at least one thousand kilos per year.
Escobar also pointed out that they are anticipating results this year, especially in the areas that have been subject to rehabilitation and pruning during the last four years, adding more than two thousand hectares in total.
They remain hopeful that, in the next harvest, whether in April-May or December, a significant increase in productivity will be observed. He emphasized that, beyond fluctuations in prices, the primary focus must be on improving productivity, regardless of market conditions.
Where does Huila’s cocoa go?
Regarding the destination of Huila cocoa, the leader of the Cocoa Productive Chain has observed a flow of external buyers interested in purchasing this product. This situation has generated concern in the regional industry, since the lack of cocoa has made the operation of local companies dedicated to the production of chocolate difficult, resulting in a lack of profitability. It has been noted that some of this cocoa is being exported to Ecuador, while companies such as Casa Luker have also been purchasing large quantities.
This problem is aggravated by the effects of the El Niño Phenomenon, which has severely impacted local production. In some areas, cocoa has been affected by drought, which has caused significant delays in its growth and development.
Although the first rains have begun to revitalize the crops, it is estimated that it will take at least six months for the flowers to develop into mature ears.
In addition, the sector faces another important concern: the decrease in the number of families dedicated to cocoa cultivation. As the census is updated, a reduction in the number of producer families has been noted, going from more than 3 thousand to approximately 2,600.
Many of these families have cocoa on their farms, but do not consider it a priority crop, which leads to neglect in its maintenance. In order to address this problem, seeds are being distributed to encourage the renewal of cocoa farms and increase productivity in the region.
Impact of high prices
The cocoa market has seen skyrocketing prices over the past two years, culminating in an unprecedented rebound this year. Futures contracts have more than doubled in just three months, reaching levels in March that are more than double the previous record.
This phenomenon, which has its roots in small farms in West Africa, has been exacerbated by climate change and the complexities inherent in the futures market. Part of this increase is attributed to the financial turbulence generated when commodities rise so rapidly that they defy strategies designed to mitigate their volatility.
The result will inevitably be more expensive chocolate that may come in smaller portions. Although prices may decline in the future, they are likely to remain elevated for an extended period.
Cocoa futures in New York and London have reached record prices in nominal terms, surpassing all-time highs seen in 1977 during another cocoa shortage crisis.
This record supply crisis has been driven by several factors, including extreme weather conditions in West Africa, where the majority of global cocoa production is concentrated. Both heavy rains and droughts have negatively affected crops, exacerbating the spread of diseases that damage cocoa trees.
In addition, low wages for farmers in Côte d’Ivoire and Ghana, the world’s two largest producers, have made it difficult to invest in improvements and defend against diseases, thus limiting production.
Despite this price spike, farmers in these countries have yet to reap the benefits. Prices set by local governments in previous seasons have prevented farmers from fully benefiting from the current rebound.
The impact of these high prices will be felt throughout the chocolate supply chain, from manufacturers to consumers. Manufacturers are already considering adjustments such as increasing retail prices, reducing package sizes and promoting products with less cocoa.
However, uncertainty remains in the cocoa market as high prices could trigger a response in both demand and supply. Meanwhile, producers in Latin America and other regions are ramping up production to take advantage of higher prices, although it will take time before these new supplies ease global shortages.