Brazilian Cocoa Farms Use High Tech to Boost Sluggish Markets

(Bloomberg) - In Brazil, cocoa beans worth their weight in gold pour out of what appears to be a small train, passing through tropical fruit trees and leaving only the husks on the ground.

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In contrast to the traditional labor-intensive harvesting process, in which the fruit is picked from the tree and the stalk is cut open manually with a blade, this machine greatly improves and automates the process of shelling the ripe cocoa pods.

It's part of an effort by Brazil, a major cocoa powerhouse, to modernize its cocoa production methods and help revive the country's cocoa industry. More broadly, the change could bring much-needed help to a global market facing an acute shortage of cocoa beans from West Africa's top growers.

Cocoa prices have more than doubled this year to record highs as weather, disease and knotty problems have hurt cocoa supplies in Ivory Coast and Ghana. New York cocoa futures closed Friday at $9,312 a ton, up about 3%. Low wages have hampered people's ability to invest in improving production, limiting the amount of cocoa trees that can be harvested. This has led to more global interest in Brazil, which has a wealth of industrial know-how and the financial resources to invest in new crops.

"Africa's production patterns tend to dry up over time, which creates opportunities elsewhere," said Ralte Moraes, Cargill's South American Food Ingredients Division Managing Director of Artefacts." Brazil has all the conditions to become a very efficient and effective cocoa producer.

The giant trading company is part of a group that has adopted new technologies to grow cocoa in atypical areas of Brazil. After recently reaching an agreement with farmers in the Cerrado savannah region, Cargill is currently negotiating with resonance producers to establish a partnership with farmers for the next phase of cocoa investment.

Brazil produces less than 5% of the world's cocoa and is now a net importer of cocoa beans. The South American country used to be a prominent global supplier of cocoa beans, but in the 1980s production declined sharply due to a tree-killing disease known as "witch's broom".

Brazil is preparing to revitalize its cocoa industry as the country's main television channel updates a 1990s television series about cocoa farmers. The Brazilian Cocoa Board (Ceplac) is aiming to double production by 2030 to more than 440,000 tons per year. This would make Brazil one of the highest producers, probably surpassing Nigeria and Cameroon, although there is still a big gap with the number one supplier, the Ivory Coast.

Previously, the production methods used in Brazil allowed cocoa to be produced only in a few smaller, wetter areas under the shadow of tall native trees. Now, the new machines can operate in bright sunlight and on plains.

Through improved irrigation, extensive use of fertilizers and pesticides, and the selection of sunlight-resistant seedlings, producers believe they can increase the yield of their cocoa crops, as well as their resistance to disease and extreme 耑 weather.

Several farmers using the new technology say they can produce about 3,000 kilograms of cocoa per hectare, much higher than the national average of 491 kilograms per hectare.

Extensive irrigation has allowed cocoa to be grown in drier areas - similar to the spread of soybeans and corn in the same areas - helping Brazil become a major exporter of these commodities.

"A lot of people who are new to the cocoa industry are starting to explore it," says epidemiologist Silvino Kruschewsky Neto. They have a very well-developed business vision, and their culture dictates that the crop must be highly productive and technologically sound.

Agrícola DM4, a farming group in the south of Bahia, is using this train-like harvester to reduce costs. Fernando De Martins, the group's chief executive, said that the cocoa is being planted faster than initially planned on the farm, which grows both black pepper and coffee, because soaring prices mean that the crop is becoming more profitable.

"Producers have an incentive to grow more crops," says DeMartins." Cocoa price levels have changed and I don't believe there will be low prices for years to come.

Read moreWhy are cocoa prices rising and what does it mean for consumers?

Even PepsiCo Inc., which uses cocoa in a popular Brazilian instant resonance drink, has had good results after experimenting with combining cocoa plantations with coconut trees in some of Brazil's driest regions.

"The vitality of the cacao plant amazes even the experts," said Ricardo Tinoco, the company's botanist. PepsiCo is considering expanding the cocoa flour on one of its farms to 450 hectares (1,112 acres), and possibly to some of the farms in the region that supply it with coconut milk.

Similar results have been achieved by Schmidt Agricola, which worked with Cargill two years ago to cultivate the new cocoa technology. Cargill's Moraes said crop growth was encouraging, with the trees already bearing an "unusually" large number of fruits.

While it will take time for some of the more recently planted areas to begin to bear fruit, new methods of planting are beginning to attract the world's attention as the global market begins to look for alternative suppliers of cocoa.

"Brazil has become the talk of the town," says De Martins.

(Fourth paragraph updated with Friday cocoa prices. (Previous version corrected location of stadium in paragraph 14).

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