Bloomberg News

Armajaro Invests $1 Million to Boost Ecuador’s Fine Cocoa

May 03, 2012

Armajaro Trading Group Ltd., a London- based supplier of cocoa, sugar and coffee, is investing $1 million over three years to increase production of fine cocoa beans in Ecuador, the largest producer of the variety.

Ecuador accounts for more than half of the world’s supply of fine cocoa, according to the International Cocoa Organization in London. While cocoa production in the country jumped 86 percent over the past 10 years, a 2007 ICCO study shows the share of fine beans fell to just under 5 percent of global output from about 50 percent at the start of the century.

Farmers in Latin America’s second-biggest producer have been expanding plantations of a pest-resistant variety, known as CCN51, as yields can be about four times higher than those from the traditional Nacional Arriba cocoa, according to Nicko Debenham, Armajaro’s director of development and sustainability. About 110,000 metric tons of the 190,000 tons of cocoa the country will produce this season will come from CCN51 beans, he said. Those beans are considered ordinary cocoa, according to Ecuador’s National Cocoa Exporters Association, Anecacao.

“There are a lot of efforts to try and bridge the problem that is asking someone to grow Nacional with a quarter of the yields of a CCN51 and yet not paying them four times the price,” Debenham said in a telephone interview from London yesterday. “Concerns are that if Ecuador does not maintain its fine flavor crop because of the pressures of CCN51, chocolate makers will have to resort to a new source of beans, which will impact the flavor of their chocolates.”

Training Farmers

Armajaro’s investment will be used to train farmers in Ecuador to help them lift yields of their Nacional Arriba crop to at least a ton per hectare (2.5 acres) in small farms, Debenham said. The project started last year and it will run for another two.

Yields of Nacional Arriba in small properties can be as low as 200 kilograms (441 pounds) a hectare, compared with about 1 ton per hectare of the CCN51 variety, he said. In plantation- type areas, where cocoa is farmed intensively, Nacional yields can be about 400 kilograms a hectare, less than the 2.5 tons a hectare of CCN51, he said. Some new varieties of Nacional are able to generate much higher yields.

“There are lots of efforts and attempts to try and recover the yields of this very valuable cocoa, because the fine flavor users are desperate to ensure they have a good supply,” Debenham said. “We are working directly with farmers, particularly Nacional farmers, to try and help them significantly improve their yields of fine flavor cocoa.”

Armajaro is also segregating the two varieties in farms they are working with and ensuring there is a market for CCN51 as well, Debenham said.

Fine Flavor

“One of the biggest problems for the fine flavor concept of Ecuador is the blending of CCN51 into Nacional, which then ruins the fine flavor,” he said. “We promise to our customers that we will keep the two varieties separated.”

Ecuador is renowned for producing a fine bean, which is an aromatic, floral and spicy cocoa, according to information on the website of Nestle SA (NESN), the world’s largest food company. The maker of Kit-Kat and Crunch bars buys over a fifth of the world’s fine cocoa.

The CCN51 bean was created in Ecuador in the 1960s, according to Anecacao. The variety gained popularity, especially in the private sector, because it was more resistant to pests and provided higher yields, Debenham said.

“One of the biggest problems for Ecuador is Witches’ broom and Monilia, particularly on Nacional cocoa,” Debenham said, referring to pests that affect cocoa trees. “Until there is a very, very big awareness of a massive improvement in the yield of a Nacional, the growth will continue to be CCN51.”

To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.


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