2024-07-13 14:06:07
In Ecuador, the government does not regulate cocoa prices. In addition, organized crime breathes down the necks of producers.
Julia Avellán thought about abandoning the family tradition of planting cocoa. But an unexpected boom due to high international prices made her change her mind, although the eyes of organized crime have been fixed on the producers. Wearing glasses, a cap and with pruning shears in hand, the 41-year-old woman walks around her farm full of lush cocoa trees in Buena Fe, in the province of Los Ríos (coastal center).
In the middle of the harvest, he splits one of the fruits in half to extract the slimy seeds, which give off a sweet aroma. These seeds have been in high demand since 2023, reaching USD 10,000 per tonne in New York for the first time in March. This is due in particular to strong global demand and a significant reduction in supply from West Africa.
In Ecuador, where the government does not regulate cocoa prices, profits are increasing. This year, Avellán sold a hundred-pound quintal for USD 420. Before the boom, “there were prices of USD 50 to USD 60 that did not justify (the investment), it made me want to stop being a cocoa farmer,” the farmer told AFP.
Now, “thanks to these prices we are going to make our families more sustainable and we are going to have better conditions and (…) take care of our plants with much more reason, because now (cocoa) is the golden seed,” the producer celebrates.
Historical prices
“These prices are historic, we have never had them before,” says Iván Ontaneda, president of the National Association of Cocoa Exporters of Ecuador (Anecacao). In Ecuador, small farmers produce 80% of the total cocoa grown in 22 of the 24 provinces.
The rest is produced on medium and large plantations. The beans are dried under the Ecuadorian sun in storage centres, where millions of brown seeds are placed in sacks to delight the world. After the Ivory Coast and Ghana, Ecuador is the world’s third largest producer with some 420,000 tonnes a year.
But in recent months, extreme weather changes and plant diseases have ruined crops in Africa, tipping the financial balance in favor of the South American country.
Almost all production is exported: in 2023, cocoa generated USD 1.323 billion. Thanks to high international prices, between January and April 2024 the country has already sold USD 774 million, according to the Central Bank.
Its main markets are:
Indonesia
Malaysia
USA
Netherlands
Belgium
Kidnappings and extortions
For cocoa farmers, the boom is marred by a phenomenon unrelated to agricultural work: the violence of crime.
Los Ríos is one of the most troubled provinces in Ecuador, with a homicide rate (111 per 100,000 inhabitants) higher than that of Guayas (86), whose capital is the dangerous commercial port of Guayaquil, the main exit point for drugs to the United States and Europe.
“My colleagues have been kidnapped. Not long ago, not even eight days ago, a young man was kidnapped (…) they have stolen cars (trucks loaded with cocoa) from companies,” Avellán says.
Threats from criminals mean an “increase in costs” in the cocoa chain, Marco Landívar, manager of a processing plant for the exporter Eco-kakao, told AFP.The loads have to be transported with private security, all movements to port have double custody,” Add.
Ontaneda notes that exporters spent around USD 20 million on security in 2023. There is fear in the industry that criminals will contaminate their shipments with cocaine.
Blood for sharks
The leader also acknowledges that the high and volatile price of cocoa on the stock exchanges generates “concerns and problems (…) for other actors in the industry” due to speculation. “It was blood for the sharks in these financial houses. Speculative funds entered the market to buy cocoa in paper form,” that is, production to be harvested, and the price soared, he explains.
In Ecuador, for example, there are breaches of contracts signed in advance because producers and intermediaries did not supply exporters. “The unexpected rise in prices requires much more liquidity, which the export sector does not have at the moment.
The quadrupling of cocoa prices has impacted the global industry, grinding, demand and ultimately consumption of chocolate, the main cocoa derivative. The Anecacao representative and other international analysts warn that chocolate consumption will fall dramatically due to costs.
By: PRIMICIAS