Cocoa farms in Ecuador: An inside look into the Biz

Forget about exporting handicrafts a minute.

Ecuador has some VERY rich people, but they export different things, for instance, the product I’m going to mention today is one of Ecuador’s chief exports… cacao (or cocoa, the seed chocolate is made from).

As the breeze off the plantation whisked past my forehead I sat in a hammock across from a friend of mine who is the plantation owner of a 100 hectare cacao producing farm near the border town of Huaquillas in the South of Ecuador.

I was picking his brain. The business really interests me… here’s what I learned:

Cacao needs a tropical climate and a lot of moisture in order to grow effectively.

Rarely will you find folks with farms in full production willing to sell, because it’s a cash machine. But sometimes we can get lucky.

Cacao requires two full years after planting the seeds to begin to deliver fruit, but once it begins to deliver fruit, it will continue to for a long time as long as you take care of the trees.

When looking at listings for already-producing cacao farms for sale you’ll notice a big difference in prices… right now in the south of Ecuador cacao farms in full production are costing around $20,000 per hectare if they have CCN51 type cacao, and around $9,000 per hectare if they have the local, national type cacao.

Why the difference? The purple colored CCN51 produces a little over twice the fruit as the green colored national type cacao, and both fetch the same prices at market. So if you think you found a bargain, be sure to ask which type cacao is being produced!

For every 3 hectares of cacao farm in full production you’ll need one employee, to whom you’ll have to pay about $300 a month or $3,600 a year. Those same 3 hectares in full production will produce around $15,000 a year in sales, which is a low-ball figure, according to the plantation owner, who was my friend and wasn’t trying to sell me anything.

He said after water, fertilizer and irrigation costs as well as subtracting the above cost for the employee, each 3 hectares will leave around $9,000 in annual profit.

Once in production, you will harvest different sections every 15 days, giving you a constant stream of income, for the rest of your foreseeable life! People love Chocolate. I believe my mom’s actually addicted.

One big benefit to working with Cacao instead of Banana is that if you don’t sell the Cacao for whatever reason, you can store it, dry it, and it becomes even more desirable to the exporters, whereas banana, if you don’t sell it immediately, you lose the whole crop.

It’s actually a much more hands off business than most assume. Most plantation owners have a “Jefe” or farm manager who runs the farm for them, the owner I spoke to rarely visits his farm (maybe once every week or 2).

And as for selling your production, it’s easy, most just sell it directly to an intermediary in their town, who then turns around and sells it to an exporter in one of the ports in Ecuador (like Guayaquil), who then sell it to an importer in the destination country, who then sell it to a distributor who then sells it to the final production plants.

Why don’t the producers try to skip the supply chain and export themselves for higher profits?

Volume.

The importers require a certain, large amount of the product delivered to them regularly, and most farmers can’t guarantee such a large amount with frequency… so that’s why they use an exporter who gathers the product from various farmers and intermediaries to ensure they always have product on a steady basis for the importers.

You can find cacao farms along the coast and lowland areas of Ecuador, as well as in the eastern Amazon third of the country. To make good money, consider farms only of at least 20 producing hectares or more.

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