December 9, 2023

Cacao farmers are faced with economic realities that can lead them to make tough decisions, including selling their farms.

The cacao tree is blooming with a flower.

Costa Rica is not always associated with cacao or chocolate. For many, Costa Rica conjures up images of beach vacations and tropical jungles. There are cacao farmers and chocolate makers making chocolate. The economic realities of small farmers in places where fine-flavor cacao is grown can be very challenging. One such story has just been told to us.

Hugo Hermelink, who owned a 110-hectare cacao plantation, FINMAC, in August 2017, sold it to a pineapple plantation next door. His 110 hectares of organic fine-flavor cacao trees will be removed to make way for pineapple, a less environmentally friendly crop.

Hugo teaches participants at Ecole Chocolat Costa Rica

According to Julio Fernandez of Sibu Chocolate and George Soriano from Sibu Chocolate, who are friends and clients of Hugos, “the destruction of FINMAC is a loss of 20 % of the total cacao production in Costa Rica and a large portion of organic cacao production. Hugo struggled for years because his trees were getting older, and the costs of renewing the plantation appeared to be too expensive. It also shows how difficult it is for organic farmers to survive. Ironically, those who care for the environment, their employees, local fauna, aquifers, etc., are also the ones who have to pay for expensive certifications, spend on infrastructure, and prove their commitment over and over again. They are also the ones who have to spend money on infrastructure, pay for certifications, and continually prove their commitment. The big agriculture industry, however, is free to ignore the environment and their workers’ health and safety without any consequences. “The world is upside-down.”

Transporting harvest pods at the FINMAC cacao plantation

Julio and George view this crisis as an opportunity to mobilize chocolate artisans and cacao farmers in Costa Rica. We will support them and continue to educate our students on the dangers of fine-flavor cacao sustainability. We will also work harder to ensure that the Heirloom Cacao Preserve (HCP Fund is successful.

The Cacao pod trains arrive at the cracking facility

Hugo is a great chocolate maker, and we wish him the best of luck in his future ventures. We understand that decisions must be made. We thank him for his cacao growing philosophy, expertise in organic agriculture, and ability to produce flavor chocolate over the past nine years with our Cacao and Chocolate Making program in Costa Rica participants.

Feeling the heat from cacao fermentation

This is only one of many challenges facing the fine chocolate industry. We must continue to inform consumers why fine chocolate is more expensive and that certifications have little to do with the quality or flavor of the beans that are used to make the chocolate. We must support the small farms that source cacao to continue having a variety of chocolate flavors. We would hate to live in a chocolate-free world. Chocolate makers must also continue to produce quality products that delight their customers every time. We must support each other throughout the entire process of making chocolate.

Hugo Hermelink has been kind enough to provide more information on the background of the sale of FINMAC. Below, we will share his thoughts.

“It was easy to decide to sell, but it will be sad to see the trees cut down in the future. The decision to sell was made based on several factors.

Costa Rica’s high labor costs. The cost of our labor, including social charges, was almost 40 US$ a day for each field worker. The cost of delivery is low compared to the US and Europe but high when compared with cocoa-growing countries like Ghana, Ivory Coast, Ghana, Nicaragua, Dominican Republic, and Peru. Our labor cost was 75-80% of the total cost. We could still make it work by focusing on productivity, automation, high quality, certifications, and adding value through processing.

The high age of trees makes replanting in the coming years necessary. Although nobody knows the exact economic lifespan of grafted trees, we may see a gradual decline in the harvest.

Lower prices are in the future. We were fortunate to be able to sell the majority of our production for many years as cocoa liquor, and this was done with a very loyal European customer. Despite the drop in cocoa prices that we have experienced over the past 1.5 years, we didn’t need to lower our costs. Even so, I was afraid we were “outside of the market” and that the main client might ask us to adjust the prices. We would have a very hard time finding a market to sell our volume for a similar price if we lost that client. Globally, the fine-flavor cocoa industry is growing rapidly, and I think the premiums that this sector enjoys will come under pressure.

Working capital requirements for Chocolate del Caribe Honduras. We do our best in Honduras to produce chocolate and cocoa liquor of high quality using Central American flavor beans. We scraped together our savings to buy the factory because the bank would not finance it. This left us with little money to improve the factory and to stock.

Summary I suppose you could say the decision was made based on the fact that we believed Costa Rica did not provide the right conditions for reinvesting in cocoa farming to be a good investment. This, coupled with our expectation of future lower prices, the opportunity to get a fantastic offer, and the necessity to invest more money in our factory in Honduras, led us to this conclusion.

I think the primary purpose of the various players involved in the cocoa chain is to earn a decent income, aside from providing the end consumer with a chocolate product that they enjoy. We will continue working in cacao. We will continue to operate and expand our cocoa collection center in Costa Rica, where we purchase beans from 80 farmers of the Cariari/Siquirres area at very competitive prices. We are also assisting a Cooperative on the Panamanian border. We can finally focus on “Chocolate del Caribe” in Honduras. The factory is a great opportunity for farmers from Central America, as it offers them better prices to sell their cocoa.

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