Chocolate Has New Latin King as Ecuador Overtakes Brazil

Ecuador, where the fatty beans used to make chocolate have been grown since pre-Columbian times, is surpassing Brazil as Latin America’s top cocoa producer after boosting planting and offering education programs for farmers.

Cocoa-bean output rose 13 percent last year to 220,000 metric tons and the South American country is poised to become the world’s fourth-biggest producer by 2015, said Ivan Ontaneda, president of Ecuador’s National Cocoa Exporters Association, known as Anecacao.

Ecuador, an OPEC nation better known for heavy crude oil and bananas, is taking advantage of rising global demand for chocolate to boost output and diversify exports as economic growth slows and its trade deficit widened to the worst level in three years. Output will continue to climb as trees planted in 2009 and 2010 begin to bear fruit and farmers helped by government programs improve harvests, Ontaneda said.

“In terms of total production, we outstripped Brazil in 2013,” Ontaneda, who’s also chief executive officer of cocoa exporter Eco-Kakao SA, said in an interview at his office in Guayaquil. “In 2015, we estimate we’ll produce more than 250,000 metric tons and we’ll become the number-four producer of cocoa in the world.”

In Ecuador, where chocolate makers like Nestle SA (NESN), the world’s biggest food company, operate, the establishment of new farms with higher yields are boosting cocoa output, according to a December report by the London-based International Cocoa Organization. “Ideal weather conditions” should help increase the 2014 harvest, the organization said in the report.

Witches’ Broom

Cocoa jumped 21 percent in New York last year on rising emerging-market demand and concerns dry weather in western Africa will cut output. Cocoa for delivery in March fell 0.7 percent to 1,729 pounds a ton on NYSE Liffe at 1:39 p.m. in London today. The contract for delivery in the same month fell 0.2 percent to $2,694 a ton on ICE Futures U.S. in New York. Prices will fall to $2,469 a metric ton this year, according to the median forecast of four analysts surveyed by Bloomberg.

Brazil’s cocoa output fell 15 percent last year to 194,382 tons from 228,881 tons a year earlier, according to Thomas Hartmann, head of statistics at the commercial association of Bahia state, where most of Brazil’s cocoa is grown.

An outbreak of the witches’ broom fungal disease in Brazil reduced the nation’s cocoa production last year. Repeated outbreaks of the disease since the 1980s displaced Brazil from the position of top producer and have since discouraged planting, while African countries took the lead.

Cocoa Disneyland

Bad weather also contributed to declines, Hartmann said. Ecuador’s cocoa crop doesn’t compete with Brazil’s and increased production in the Andean country shouldn’t affect the Brazilian market, he said.

Brazil’s “prospects for 2014 are better, of course — as always — depending on the weather, which so far has been friendly,” Hartmann said in an e-mailed response to questions.

West Africa accounts for about 70 percent of global cocoa output. The Ivory Coast is the world’s top producer, followed by Ghana.

The improving outlook for Ecuador’s crop is also pushing more local farmers to convert their coffee and banana fields into cocoa, Anecacao’s Ontaneda said. Exporters are working with the government to help promote cocoa similar to how Colombia promoted the Juan Valdez brand of coffee, he said.

“Ecuador is the Disneyland of cocoa, everyone wants to come here,” Ontaneda said. “There’s not a single bean that goes unsold.”

Fuente: Bloomberg

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