Imports and Exports in Nicaragua
1. Coffee (14%)
2. Gold (12%)
63. Cocoa Beans (0.16%)
393. Chocolate (0.00%)
1. Refined Petroleum(14%)
2. Crude Petroleum (6.1%)
Although Nicaragua is a large exporter of coffee and gold, it exports relatively little cocoa or chocolate. Very few people think of Nicaragua when they think of cocoa producing countries around the world. For my final project, I decided to explore more about cocoa production in Nicaragua as a possible source of income for the country.
Rising Consumption of Chocolate
Bloomberg news predicts that by 2020, the global deficit of cocoa will reach one million metric tons. Demand for chocolate and cocoa around the world has been increasing at a faster rate than is the production of cocoa. The world shortage in cocoa will raise prices of chocolate by at least 10% in 2014 because supply cannot keep up with rising demand.
The following infographic describes chocolate production around the world. Currently Africa is leading in the production of cocoa beans. American chocolate producers are also in the lead in chocolate production.
Ritter Sport is a German chocolate producer that sells 60,000 metric tons of chocolate in 93 countries. The German country recently invested US$25 million in Nicaragua to promote the production and exportation of cocoa in Nicaragua.
In the following infographic, we can see that Nicaragua only produces 3,000 tons of cocoa each year, exporting half of it. Relatively speaking, Nicaragua’s cocoa makes up a very small percentage of worldwide cocoa production. In recent years, however, cocoa production has risen and more income has been generated from the cocoa exports.
A Strategic Crop
Cocoa is a “strategic crop” in Nicaragua because it is relatively easy to grow and suitable in Nicaragua’s terrain and climate. Cocoa also has a lot of potential for generating more income in Nicaragua. In the past year, cocoa exports have generated US$4.2 million in profits for Nicaragua.
We can see from the infographic above that the RAAN produces the most cocoa compared to the other Nicaraguan territories. The RAAN cultivated 6,261 manzanas (1 manzana = 1.75 acre) of cocoa, just under a half of all cocoa plants cultivated in Nicaragua. The RAAN’s bosowas and mountainous region makes it an extremely suitable place for cocoa plants.
Between 2012 and 2013, exports of cocoa have increased by 9% with the income generated from the exports increasing by 38%. The national production of cocoa is currently 61,500 quintals (1 quintal = 100kg) a year with an average yield of 5.71 quintals per manzana. 10,750 manzanas are currently being used in cocoa planting with an additional 9,200 mansions in development.
The price of cocoa has risen by 31.17% between 2012 and 2013. With the rise in price, cocoa producers will benefit from the income boost. There are currently 39 cocoa cooperatives that exist in Nicaragua and about 7,500 families are dedicated to the cultivation of this crop. For many families, cocoa production is the main source of income for the household.
There are risks involved with cocoa production. Threats of climate change are worrisome for cocoa producers as a year’s crop can easily be destroyed by a change in climate. Cocoa producers are particularly worried about the abundant rainfall that falls in the RAAN, the largest cocoa producing region. Excessive rain in the RAAN can cause a macroscopic impact on Nicaragua’s exports of cocoa. Although there is a lot of potential for income and growth of cocoa production in the RAAN, there is also tremendous risks involved.
Nicaragua has suitable land to cultivate cocoa in almost all parts of the country, from coast to coast. More than 500 thousand manzanas can be potentially cultivated under systems of agroforestry.
The 2014-2015 production plan set by the Nicaraguan government is to cultivate 13 thousand manzanas to produce 128 thousand quintals of cococa. The “Desarrollo del Cacao” program lead by the government includes encouraging the seeding of 60 thousand manzanas under a system of agroforestry in the RAAN, RAAS, and central regions of the country. However, it is important to note that there are possible environmental ramifications of increased cocoa production as many natural forests and areas of land would have to be cleared out and replaced by cocoa plants.
Giving Added Value
In addition to chocolate, cocoa can be used to make liquor, wine, pastries and more. Many producers are beginning to focus on theses specialty products made out of cocoa. By advertising cocoa products, the demand for cocoa would increase even further and cocoa producers would be able to scale up production and gain from the extra income.
Tourism to more rural parts of the country have also increased. Cocoa producers have begun profiting off the increased tourism, creating more cocoa products to be sold domestically.
A possible way of increasing efficiency in cocoa yields is by installing a local collection center to ferment, dry and process the cocoa in batches instead of having each individual cocoa grower conduct the process themselves. This method would generate more jobs and increase income for cocoa families. Cocoa producers would be able to increase their capacity to produce to 30 quintals a day. Additionally, they would be able to increase exports and enter the competitive international market.
Resources for Cacao Producers
Cocoa is a crop that families can easily learn to produce. The Lutheran World Relief (LWR) has published a 10-step guide for families to learn how to grow cocoa and profit from it on the market. The steps range from cocoa planting up to certification and marketing. The guides are available here.
Choco Trim is a small scale chocolate factory in Rosa Grande. The Community Development team will have an opportunity to visit the chocolate factory when they are in Rosa Grande. Choco Trim produces chocolate that range in size from 6 grams to 100 grams. Cesar Augusto Ordonez, the owner of the chocolate factory, is looking for new markets to boost their brand. Currently, Choco Trim sells its product in Siuna and occasionally at fairs they are invited to. Choo Trim’s Facebook page is here
As we can see from the picture below, the chocolate factory is small scale and produces its chocolate with limited machinery.
Choco Trim Obstacles
Some obstacles that Choco Trim faces in terms of growth include:
- Its rural, non-tourist location makes it hard to profit from tourism
- Local market is small and does not have a large area for growth
- There is a lack of governmental support in the chocolate sector so it is hard to get access to resources to grow as a company
- Nicaragua’s climate change causes fluctuating prices in cocoa
- The small size of the company makes it difficult to penetrate into the large world chocolate market
Possible ways for Choco Trim to grow include:
- Partnering with a cocoa grower. Both the grower and Choco Trim will benefit from the alliance. Choco Trim would be able to market itself as a reliable chocolate factory and let consumers know exactly where there chocolate is from and what it is made from
- Specialize. Many successful chocolate companies around the world have a specialty that makes them well known. An example is chocolate made from organic and locally grown cocoa beans.
- Machinery. With better machinery, Choco Trim is able to produce more chocolate without having to hire additional labor. Better machinery would also improve the quality of chocolate produced.
- Investors. With investors, Choco Trim can generate more capital and use it towards expansion and growth efforts.
What Makes Choco Trim
Choco Trim is unique because of its small size and local roots. Although it would be great for Choco Trim to grow, some would say that it is better off at its current size, serving the local community and being truly one of a kind.