Home' Trinidad and Tobago Guardian : November 15th 2015 Contents NOVEMBER 15 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
FINANCE | SBG15
It was the murder---execution-style, in
broad daylight--- of a friend and fellow
farmer in the Colombian countryside
that prompted German Sanchez to
finally heed government calls to get
out of the cocaine trade and plant
cocoa instead. Six years later, market forces,
more than concerns about personal safety, are
persuading him not to switch back.
Prices for cocoa, the raw material used to
produce chocolate, are climbing in international
markets, lining the pockets of Andean farmers.
Sanchez says he s getting about 6,800 pesos
(US$2.31) this year for a kilogramme (2.2
pounds) of cocoa beans, compared with 5,000
pesos last year and about 3,000 pesos in 2012.
Coca, the source of cocaine, "caused a lot
of bloodshed," said the widower, a father of
two. "Family members were killed and others
ended up in jail. The economic revenues didn t
justify the risk."
Cocoa futures have surged 39 per cent in
the three years through November 10, accord-
ing to data compiled by Bloomberg. The
Bloomberg Commodity Index, which doesn t
include cocoa, tumbled 40 per cent in the
same period. Cocoa for March delivery rose
0.5 per cent to US$3,329 a tonne on ICE
Futures US in NY.
The trend partly reflects supply constraints
in West Africa, which accounts for about 70
per cent of the world s supply. Dry weather
from the strongest El Nino since the 1997-
98 record has hurt crops there---mainly in
Ghana, the No 2 producer---although the return
of rainfall last month eased some of the con-
Even so, the 2015-2016 crop in Ivory Coast,
the No 1 producer, will be smaller than last
year s record of 1.8 million tons, and El Nino
continues to pose risks in Indonesia, the No
3 grower, and Ecuador, Rotterdam-based trader
Cocoanect BV said in an e-mailed report.
Old trees, disease and a younger generation
reluctant to follow their parents into the fields
also keep supplies tight as demand rises. Global
cocoa bean use will outpace crops by about
96,000 tonnes in the 12 months ending Sep-
tember 30, 2016, based on estimates by the
International Cocoa Organisation in London.
The chocolate market will grow to US$115 bil-
lion by 2020 from about US$50 billion in 2001,
Euromonitor International projects.
All this is supplementing years of effort by
governments and organisations in the US and
South America to reduce coca cultivation. The
illegal crop is grown exclusively in the Andean
region, with Peru accounting for about 39 per
cent of cocaine production, Colombia 33 per
cent and Bolivia 28 per cent. The final product
typically ends up in Europe and the US, the
biggest consumers, according to the US Office
of National Drug Control Policy.
The US Agency for International Develop-
ment began its alternative development pro-
gramme in Peru 20 years ago. Since 2002, it
has invested US$620 million assisting the
country in replacing more than 80,000
hectares (198,000 acres) of illegal coca with
legal alternative crops, including cocoa, said
Gregory Swarin, USAID regional programme
officer in Lima.
Farmers are on track to plant an additional
28,000 hectares of fine and aromatic cocoa
with help from a three-year plan started in
2013 by the Peru Cocoa Alliance, a US$36
million public-private partnership supported
by USAID, Swarin said.
Exports up 57 per cent
The value of Peru s cocoa exports rose 57
per cent to US$247 million in 2014 from a
year earlier, according to ADEX, the nation s
exporter group. Government data show that
production may double by 2020 from this
year s projected 80,993 tonnes.
Reyes Mulatillo, 36, is contributing to the
increase. With the help of the USAID and a
local group, he abandoned coca for cocoa three
years ago, to his wife s relief, he said in a tele-
phone interview from the town of Tingo Maria,
in the country s Huanuco region. He now has
one hectare planted with premium beans and
expects to reap more than 250 kilogrammes
this year, his first crop.
"We wanted a legal product and a more
peaceful life," Mulatillo said.
The Colombian government started its alter-
native development programme 10 years ago,
with support from the United Nations Office
on Drugs and Crime, or UNODC. About 54
per cent of total cocoa plantings in the coun-
try---58,886 hectares---are in areas where illegal
crops once grew, according to government
The shift has helped to boost Colombia s
cocoa production 11 per cent to 54,120 tons
in the 12 months ended September 30 com-
pared with the previous season, data from the
Bogota-based National Federation of Cocoa
German Sanchez, president of his local asso-
ciation of cocoa producers, switched to cocoa
beans with the encouragement of the Colombia
government programme. The Valdivia, Antio-
quia, farmer now has three hectares, about
the same as he once planted with coca, and
expects to reap five tonnes of the beans in
2016, up from three this year. A recent loan
through his association, Asocaval, from Banco
Agrario de Colombia SA will allow him to add
1.5 hectares of the safer crop.
The support for legal crops---and farmers
concerns about the violence and insecurity
associated with cocaine---helped cut combined
coca plantings in Peru, Colombia and Bolivia
to 120,000 hectares in 2013 from a year earlier,
the lowest since the mid 1980s, according to
the UNODC World Drug Report 2015.
Some farmers are sticking with the illegal
crop, partly because the reduction in plantings
caused the price of coca leaves to rise in certain
regions. Cultivation in Colombia rose 44 per-
cent in 2014, to 69,000 hectares, from 2013,
according to a July 2015 UNODC report, which
noted the expanse was mainly in communities
that already grew coca.
Pedro Suarez quit coca in 2000 and hasn t
gone back, citing dangers that include its link
to the conflict that involves rebels and para-
militaries. He began sowing cocoa beans six
years ago and is now the president of his local
cocoa association in Topaipi, Cundinamarca,
with three hectares.
A park ranger sponsored by the UN for
security is giving him confidence to stay with
cocoa, along with the price of the crop, which
"has improved a lot," he said by telephone.
It s "giving people the morale boost to keep
Why cocaine farmers are
turning to chocolate instead
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