Money from the 'food of the gods'

Sunday, May 1, 2011

FROM the late 1960s to the early part of 1980s, there was massive production of cacao in Southern Mindanao. At that time, the region produced huge volume of cacao beans. But when the prices plummeted in the later part of 1980s, farmers started to cut down their cacao trees and planted them to banana and other crops.

However, farmers in San Isidro, Davao del Norte did not follow suit. They believed in "the promise of a bright future in cacao." True enough, cacao is again emerging as one of today's most important crops in the market, not only in the Philippines but in other parts of the world.

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Southern Mindanao produces a little more than 5,000 metric tons, with San Isidro accounting for more than half of the production. In 2004, the local government unit declared cacao as its main product.

"Our farmers have prevailed over the test of time," said Dante R. Muyco, Jr., one of the staff of the CSI Trade Ventures. CSI or Chokolate de San Isidro, Inc. was formed in 2006, incorporating farmer cooperatives, local investors, marketers and cocoa liquor or tablea-producing households.

"Cacao is the reason why our town is progressing," Muyco said, who presented their experience during the Philippines Cacao Development and Investment Workshop held at Davao City recently.

"We send our children to school because of cacao. There is peace and order in our town because of cacao. There is business because of cacao," he said.

While nearby towns are experiencing insurgency problems -- probably because of extreme poverty, such is not the case in San Isidro. "We believe that there is progress in our town," Muyco pointed out, "because we put our acts together thereby helping collectively the development of cacao industry."

In 2006, CSI built a tablea factory with the brand name Sikwate. When it was introduced in the market, it was an instant hit. Three years later, CSI sent its first shipment of cacao beans to Europe.

"Today, we have the reputation of delivering quality cacao beans to the rest of the world," Muyco said.

As a result, farmers are now enjoying the fruits of their labor. Farmers who are growing cacao have increased their income by 80 percent. From P15,000 per hectare per year in 2008, a farmer now gets an income of P27,000 per hectare per year.

Indeed, there is money from "the food of the gods," as cacao is popularly known. There is a growing demand here and abroad. Demands for cacao are in the forms of beans (cocoa), grindings, and finished chocolate products. Grinders purchase beans and cocoa powder and butter used for finished chocolate products.

"Forty one percent of grinding takes place in Europe, 22 percent in the Americas, 19 percent in Asia and Oceania and 18 percent in Africa," reported Adam Keatts and Christopher Root in a position paper. "Forty one percent of grinding is done in the country of cacao bean origin."

The European Union and the United States are the two biggest finished chocolate product consumers, accounting for three-quarters of total chocolate consumption, the position paper reported. Other significant chocolate consumers are Russia, Japan, and Brazil.

"Though the majority of cacao is consumed in North America and Europe, demand is growing more rapidly in Asia where strong economic growth, particularly in India and China, is resulting in more people being able to afford luxury foodstuffs such as chocolate," Keatts and Root wrote.

Although cacao grows readily in the Philippines, the country has a hard time joining the international market. Its domestic demand alone (30,000 to 40,000 metric tons per year) cannot be supplied.

Last year, the country produced 5,000 to 7,000 metric tons of cacao beans. That was only about one sixth or one eighth of the domestic demand. To think of, the country produced 35,000 metric tons of cacao beans in the late 1980s.

Whatever happened? "The decline in cacao production is due to several factors including the agrarian reform started in the late 1980s that resulted in large cacao plantations being broken up, large buyers pulling out, and farmers cutting down trees in response to a lack of buyers," Keatts and Root surmised.

More recently, cacao production in the country has been adversely affected by cacao pod borer insects, the steep rise in input costs (especially fertilizer), replacing cacao trees with banana and other crops, and weather conditions (like droughts brought about by the El Ni¤o phenomenon).

Is the future of cacao in the Philippines bleak? Dr. Nicolas K. Richards doesn't think so. In fact, he believes the country will be one of the biggest cacao producers in Asia along with Malaysia and Indonesia.

Richards is the chief of party of Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance (ACDI/VOCA), an economic development organization that specializes in food security, agribusiness, community development, financial services, and enterprise development.

By 2020, Richards believes the Philippines can produce 100,000 tons of cacao beans. This means that in the next nine years, some 500 million more cacao trees are already growing in about 150,000 to 200,000 hectares of land.

"Cacao is highly suitable to intercropping and mixed farming systems, and can add more than US$1,500 per hectare of income from 500 mature trees per year," Richards said. "It is a proven crop in the Philippines, ready for resurrection."

Meanwhile, San Isidro has recently earned the moniker, "Chocolate Hub." It is now frequented by tourists and agripreneurs who are seeking for better opportunities. Farmers themselves are banking on cacao as the crop that will bring them out of poverty.

"The price of cocoa now has motivated many farmers to rehabilitate their farms and increase their cacao production areas," said Laureno Pintor Jr., the municipal agricultural officer. "A few years ago, we exerted a lot of efforts to convince them to plant more cacao trees; today, without being told, farmers do it themselves. There is so much enthusiasm now at the farmer level. We are glad and at the same time excited to what the future brings for our cocoa industry here."