NO BEANS ABOUT IT

Peru 2015 | AGRICULTURE | INTERVIEW

TBY talks to Anthony J. Kozuch, Executive Director of United Cacao Limited SEZC, on how Peru is on the verge of being a leader in global cacao production, the importance of partnering with small farmers, and the future of the industry.

Anthony J. Kozuch
BIOGRAPHY
Anthony J. Kozuch is an Executive Director of United Cacao Limited SEZC. He was born and raised in Mexico City and graduated Georgetown University’s Edmund A. Walsh School of Foreign Service in Washington, D.C. Over the past 14 years, he has been the Chief Financial Officer of Communiqué Conferencing, Inc., an international conferencing services company he co-founded in 2001. Previously, he served in various marketing and business development roles with telecommunications providers in the US and Latin America.

How does Peru fit into the global cacao industry?

The country, alongside Ecuador, is the only growth markets for cacao production in the world due to the CCN 51 clonal material available for planting and ideal growing conditions. As a sector, cacao is facing a structural deficit. This deficit has been a long time in the making and is not easily solvable given the long lead-time to production for the cacao tree. The only areas of growth in cacao production are in Latin America; specifically, in Ecuador and Peru, and that is in large part due to optimal soil, sufficient and evenly-dispersed rainfall with no dry season and our genetic material. The availability of deforested land and a zero export tax policy also benefits us.

Why is Latin America not currently the leader in cacao production?

Brazil is the world's 4th largest producer of cacao (however internal demand has exceeded their internal production recently) and Ecuador is the 6th largest globally. Peru is the world's 9th largest player. So collectively the Latin origin markets are already meaningful producers. Within the next five years however, we expect Ecuador to overtake Nigeria, Brazil and Indonesia and become the world's 3rd largest producer. Peru is a lower cost cacao producer than Ecuador but the industry is younger here and doesn't have the government's backing and support like in Ecuador.

What is the current status of the project?

We expect to have 2,000 hectares planted by the end of the year making United Cacao Limited SEZC the largest cacao plantation in the country. We currently own over 3,500 hectares and employ over 500 people on-site, making us the largest cacao plantation in Peru and in the Americas. When we reach our goal of 3,250 hectares we expect to be the largest cacao plantation in the world.

Is this move from a smallholding model to a large plantation model something that will transform the cacao industry?

Large-scale cacao cultivation on estates is more efficient and results in higher productivity making a smaller environmental footprint. Many tropical crops are cultivated on large estates such as palm oil, rubber, banana and sugar so cacao is really the outlier. 99% of the cacao industry is small farmer and they are not able to meet the growing demand worldwide so there is a clear market role for larger estates such as United Cacao's.

What do you say to criticism that you should be supporting small farmers rather than establishing larger plantations?

It is important to do both as the small farmers benefit from the skill-set, resources and experience of a larger corporate estate. Supporting small farmers, through our PAPEC program, is the right thing to do and will double the revenues of United Cacao over time. Part of our role to encourage the development of the cacao sector in the country is to not only develop the corporate plantation, but also stimulate small farmer planting of cacao. To achieve this goal, we have recently announced the launch of a small farmer program for the nearby communities called PAPEC (Programa Alianza de de Produccion Estratégica de Cacao). It is a microfinance program in which we will offer credits to small farmers in the form of seedlings, materials, fertilization and proper training. The farmers then sell the wet cacao beans to the company, which, in turn, will process the beans. This program is set up to help hundreds of people in the poorest areas of Perú get out of poverty once and for all through a sustainable, environmentally-friendly development of their own land.

Where do you expect to see the future of United Cacao in 10 years' time?

In 10 years, the project will be fully planted and yielding the crop volume that we have projected to the market. We also see a vibrant small farmer program that will contribute to overall production volume. We recently announced the goal to expand the PAPEC program to up to 3,250 hectares of small farmer land which will double the production volume in the region.

What makes Peru a solid destination for investment?

Thanks to its recent history of stability, freehold land titles, and its favorable demographic trends, the country is an attractive place in which to do business. When you consider the age profile of the workforce and the steady track record of sensible macroeconomic policies that the Central Bank has followed, the outlook for the country is extremely positive.