Venezuelan cocoa exporters scramble to raise cash
Venezuela has been exporting large quantities of cocoa in recent months, as it is the one commodity in that country not yet subject to US sanctions.
This has resulted in stockpiles of cocoa from Venezuela in the warehouses of the ICE commodities exchange in New York in the US, being at their highest levels since 2014, and nine times higher than in May last year.
“In the last three years, many exporters have jumped into the cocoa market as it’s one of the few commodities left to do business in,” explained Alejandro Prosperi, the Carupano-based president of the country’s cocoa industry group, CAPEC.
The sanctions imposed on the oil industry in Venezuela’s by the US government, had seen the country’s economy reaching the verge of collapse in recent years.
Since 2016, Venezuela had officially experienced hyper-inflation, and had endured one of the longest runs of “warp-speed price increases” in the world, according to Steve Hanke, professor of applied economics at Johns Hopkins University in Baltimore in the US.
Historically, Venezuelan cocoa had demanded premium prices due to its high quality. However, due to economic constraints exporters were now willing to forego these high prices. In addition, as new exporters entered the market there had been some deterioration in quality.
This was the result of some farmers rushing their beans to the market in the fear that their harvests would be confiscated, thereby cutting short the fermentation period of the beans, an important factor in quality, he explained.
“Many of [exporters] are [also] in the military and exerting their power. They know nothing about the business itself, but figure that this is a way to translate cocoa into foreign exchange,” said Jorge Redmond, president of Venezuelan chocolate manufacturer, Chocolates El Rey in Caracas.
By the end of May, an estimated 47 000 bags of 65kg each of Venezuelan cocoa amounting to about 3 055t and worth an estimated US$7,3 million (about R110 million) were being warehoused at the ICE commodity exchange.
According to media reports, the dominance of Venezuelan cocoa in ICE warehouses was unusual because it was a relatively small producer of cocoa, producing an average of 20 000t annually, compared with top global producer, Côte d’Ivoire, where about two million tons of cocoa was produced annually.