Currently, investors looking to invest in the cocoa sector are limited to investing in processors, such as Barry Callebaut, as there are no large-scale listed producers of cocoa beans. This scenario is set to change as a forecasted long-term global cocoa shortage estimated to equal 1 million tons per year by 2020 will drive the establishment and growth of large scale cocoa bean plantation groups – much like what is seen in the palm oil sector which has 50 listed plantation groups with a combined market capitalization of approximately $100 billion. New cocoa plantations are being commissioned and London-listed Agriterra currently has a 4,000 hectare plantation in development in Sierra Leon. The global shortage and new varieties of cocoa trees developed in Ecuador are drawing significant projects. Agro Nica Holdings is planning an expansion to 8,000-9,000 hectares in Nicaragua, and ROIG Agro Cacao in the Dominican Republic now controls 3,000 hectares of organic cocoa trees. Other large-scale projects are under way in the Philippines, Indonesia, and West Africa. Profit margins in the sector could be impressive, outperforming palm oil at 66% at maturity.
To receive relevant news stories with summaries provided by GAI Research & Insight, subscribe to Global AgDevelopments, our free weekly enhanced eNews service