Latin America cacao profits look set to disappoint

Subject

Cacao production.

Significance

Development agencies, national governments and private firms across Latin America are committing to substantial investments to increase the region's cacao output. Such expenditure, motivated by years of high prices, is intended to bolster economic growth, tackle poverty and provide smallholders in the Andean region with an economically viable alternative to coca cultivation.

Impacts

• Production at the sub-national level is likely to fluctuate as localised flooding and droughts affect parts of the Andean region.
• Lower cacao prices will complicate efforts to tempt Colombian farmers away from growing more profitable coca plants.
• Long-term, cacao crops could help reduce reliance on extractive industries, but will leave economies susceptible to external shocks.