In the Peruvian Amazon, High Cocoa Prices Have Everyone Back on the Farm

Our Sales and Marketing Director, Tom Hanlon Wilde, had the chance to interview Luis Mendoza Aguilar, the General Manager of The Peruvian Association of Cacao Producers (APPCACAO) last month. We are curious to know how the surges in world cocoa prices were experienced by many Peruvian cocoa farmers.

Ing. Luis Mendoza Aguilar is the General Manager of The Peruvian Association of Cacao Producers, known by the Spanish acronym APPCACO. As the national trade association that represents Peruvian cacao producers on national and international policy issues, APPCACAO represents over two dozen farmer cooperatives with over 30,000 small-scale producers throughout the country.

Peru is the world’s leading producer of organic cocoa and the grower members of APPCACAO are the driving force behind that success. I caught up with Luis while he was in the offices of Cooperativa Pangoa to talk about the impact of record-high world prices for cocoa.

People who support fair trade and know that global cocoa prices are high expect farmers to receive great prices and benefit economically. How are those farmers investing the extra income?

Well, I’m in Pangoa now participating in a workshop with groups of women cocoa farmers. Everyone is very encouraged by the price. You know well, that for years it has been a struggle to reach USD 3,500 per ton, but now we are above USD 10,000. The price this week at the farm is S/. 30 for conventional, S/32 for organic. Imagine that, it’s almost eight dollars per kilo!

The high price is a stimulus to improve the farm. Talking to producers, they are investing the extra income to increase production. They know that these high prices do not last and they are doing everything they can to take advantage of today’s good price to buy organic fertilizer and improve the farm. It’s time to harvest, cultivate and invest to produce more for our customers.

Women Farmer Training Program with New Cocoa Fermentation Tanks at Pangoa Co-Op

Throughout cocoa-growing regions, there is more interest in the harvest. It’s a good harvest coming in strong, and it’s been a good year for production here. On all sides, there is more interest in growing and participating in the harvest. Everyone recognizes that the climatic problems in West Africa and the low productivity of the old farms there can change quickly. They usually start harvesting in West Africa in August, so take advantage of the good prices before then. They are the reasons they invest.

When crop prices rise, farmers often hold on to their crop to wait for higher prices. Are smallholder cocoa farmers in Peru able to hedge the market by stockpiling cocoa beans in the hope of getting the highest price?

A high price is good for the producer but difficult for organizations. During the last few weeks, sometimes the price in the field is higher than the international market price. How is this possible? It’s because cocoa butter is worth a lot and middlemen think they can earn more. The same intermediaries accept any quality, beans with about 20% moisture and other types of poor quality. But cooperatives can’t speculate like that, they don’t produce other products with cocoa. It becomes difficult for cooperatives because co-ops are going to meet the quality requirements of good customers.

With so many people looking to buy cocoa, cooperatives receive less cocoa from their farmer members. I was talking to Santiago Paz (Co-director and Export Manager of Norandino) and it’s a small miracle to receive 50% of the production from the partners. The cooperatives have done a lot of training for their members over the past few years and offer a new advance price every week so that producers don’t speculate. There is a concern that the price is going to fall. Cocoa farmers are harvesting, delivering their produce, and improving their farms.

When coffee prices skyrocketed years ago, many cooperatives had to increase security. At a cooperative in El Salvador, two security guards were killed during the robbery of three truckloads of coffee. How are cooperatives dealing with the issue of security now that cocoa is in high price and high demand?

The other thing is that because prices are high, people are going back to abandoned plots. There is a lot of energy and interest in producing, and everyone is working. It’s good to see abandoned farms coming back into growing cocoa.

There are still no security issues. The warehouses have a regular security person, and that’s enough. Because prices are high, people harvest more often. Normally, farmers pass through the trees every 20 days, but now, with these prices, they go to harvest every 7 days so as not to lose a single fruit.

Anything else?

Yes, you and your readers should come visit us! This year’s Salon de Cacao y Chocolate is set for July 18-21 in Lima. This will be the best one yet, and we hope to see you.

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