yellow cacao

THE THAI CACAO STRUGGLE

Last Updated on April 20, 2021 by Nick Baskett

Thailand has never been a major grower of cacao. It produced a decent 1,400 metric tonnes. But over the past twenty years, cacao production has been in a downward spiral. One of the reasons was the closure of the Barry Callebaut cacao grinder in 2016 due to extremely high import taxes on cacao.

Another reason was the farmers themselves. They either switched completely to other crops, or they decided to not only rely on cacao but intercrop it with other crops so they could rely on different income sources.

At the same time, the number of Thai chocolate makers has exploded over the past decade. They all derive their identity to a large extent from the cacao produced in their beloved country, and are also willing to pay Thai cacao farmers very high premiums for their cacao.

Yet there still has not been a crucial turnaround in Thai cacao production, and the big question is of course why not – what’s happening with cacao production in Thailand? This is the story of creative bean-to-bar makers, of courageous initiatives to revive Thai cacao farming, and of cunning businessmen fooling farmers.

The Thai bean-to-bar revolution

You can confidently speak of a revolution when it comes to the rise of bean-to-bar chocolate makers in Thailand. Bangkok and Chiang Mai are the epicentres of this beautiful development.

But elsewhere in the country too, chocolate makers have responded to the rapidly growing consumer demand for good, sustainable, and tasty chocolate products. The list is impressive: Kad Kokoa, Xoconat, PARADAi, Sarath N. Chocolatier, Shabar Chocolate, Siamaya, Mark Rin, Böhnchen Chocolate, Clean Chocolate, Pridi Cacao, Aimmika, Matchima Chocolate, and Kan Vela Chocolate, All established in the past 6 years.

Tree-to-Bar

Many Thai chocolate makers do not realize that Thai cacao growth is in a decline. They started out very small, and for them, it seemed that Thai cacao beans were normally available. But once they will become successful and need to expand, they will notice that scarcity has become a critical issue.

Photo courtesy of Chumphon Collective @chumphon.collective (Instagram)

A few of these chocolate makers didn’t wait for the danger of a faltering supply and have taken initiatives to stimulate cacao farming. One of them is Kad Kokoa, the company of the ex-lawyer couple Nuttaya and Paniti Chunhasawatikul.

They acquired a plot of land in Mae Taeng, Chiang Mai, where they grow cacao organically. They were the first tree-to-bar chocolate maker in Thailand, but their award-winning chocolate became so popular that they also needed to buy cacao from third-party farms in the provinces of Chanthaburi, Prachuap Khiri Khan, and Chumphon.

IM.1

Professor Sanh La-Ongsri and his wife founded their chocolate company Mark Rin in Chiang Mai. Sanh is a well-known professor at the Department of Horticulture of Maejo University. He created his own hybrid IM.1, a cross between a criollo variety from Peru and a Forastero variety from the Philippines. Quite a few farmers in Chiang Mai are growing now his hybrid and guaranteeing Mark Rin a continuous supply of cacao beans.

Changing climate

The Chumphon Hybrid 1 is Thailand’s own, unique cacao variety. It was Dr Pon of the Chumphon Horticultural Research Centre who crossed varieties PA7 and NA32 from Trinidad and introduced the new hybrid a few decades ago. Chumphon Hybrid 1 is now dominating the Thai cacao landscape, easily recognizable by its signature yellow colour. The variety is sought-after by a handful of internationally established chocolate makers. For them, the Chumphon Hybrid 1 is a synonym for Thai cacao.

Farmers in the South of Thailand, in Nakhon Si Thammarat and Chumphon, who grew this variety gathered in the Chumphon Collective. However, they are beginning to feel the impact of a changing climate in this region. Excessive rainfall and floods are threatening their cacao growth.

In 2016, the Chumphon Collective decided to include also farmers from other regions: in the East in (Chanthaburi, Rayong, and Trat); and in the hilly north of Thailand, in the province of Chiang Ra, where weather conditions are almost ideal.

Huge premium

The two brands, Kad Kokoa, and Mark Rin can assure themselves of an influx of cacao beans for the time being. But the other brands – including some real gems – are feeling the impact of the scarcity of Thai-origin cacao. And because the import tax on cacao is unreasonably high, it was for them a logical step to start paying a premium to Thai farmers. In most cases, they pay a price of two to three times the London Cocoa Price. You would assume that these premiums will be a great incentive for Thai farmers, yet the production of Thai cacao beans still fails to increase. What is going on? To answer this question we first have to go next door, to Cambodia.

Cambodia

Kamkav Farm has introduced cacao in Cambodia. In the neighbouring countries, Vietnam and Thailand cacao was already well-known but for Cambodians, it was something they had never seen before. Even chocolate itself was relatively unknown outside the main cities Phnom Penh and Siem Reap. But the new crop sparked quite an interest amongst other farmers.

Kamkav Farm decided to support and guide other farmers in their provinces who also were eager to start with the ‘brown gold’. At the end of 2020, there were already 51 new cacao farmers in the two provinces of Mondulkiri and Ratanakiri. Kamkav Farm also decided to supply cacao seedlings for free to Bunong tribal families who want to start cacao in the hills of Mondulkiri.

Photo courtesy of Chumphon Collective @chumphon.collective (Instagram)

Before the staff of Kamkav Farm decides whether they can guide the farmer, they first look at the conditions of the land and water, as well as the motivation of the farmer himself. Everything is done to prevent the farmer from making the same mistakes Kamkav Farm made in the beginning.

Cacao Mafia

But why are Cambodia and Kamkav Farm of any importance in this story of Thai cacao? It started with a visit of the staff of Kamkav Farm to an interested farmer in the neighbouring province Ratanakiri. His father had bought 1,000 cacao seedlings three months earlier from a company called FCC (Family CaCao). They had sold the seedlings to the unwitting father for an astronomical cost of $3 each!

Great stories were told about large Chinese customers desperate for cacao. But they didn’t tell the father that the cacao tree is a shade tree; they also didn’t inform him about installing an irrigation system for the dry season. Even the fact that cacao beans have to be fermented after harvesting, remained untold. All they promised was that FCC would come back in two years to buy the cacao pods, which in their fantastic marketing story, would grow in masses on the trees. And gone was FCC.

Three months later – and $ 3,000 poorer – the father faced dying cacao plants in his field which could not withstand the hot sun without shade and water.

Pyramid game

It appears to be an increasingly recurring phenomenon. Companies like FCC and Mekong Agri Tech link up with Thai companies like K.U.N. These Thai colleagues have cacao farmers in Thailand growing seedlings for them instead of fermenting cacao beans. It is a pyramid game in which chocolate makers will ultimately draw the short straw.

Even a premium price of $ 8 for a kilo of fermented cacao beans pales in comparison to the prices that cacao seedlings can bring. Farmers don’t even have to graft the seedlings. Just think of it: a kilo of cacao consists of 300 to 600 beans.

Not all cacao beans develop into cacao plants. But for the sake of convenience, let’s assume 300 that do. Unknowing farmers in Cambodia are willing to pay $3 for a non-grafted seedling. $900 for 300 cacao beans grown into seedlings is insanely lucrative, compared to the $8 for a kilo fermented cacao beans. All goes well as long as there are farmers who fall into the trap. And unfortunately, this is still the case.

Still Hope

But there is hope. The trick of the cacao mafia in Thailand itself seems to have come to a halt, and it may be another year or two before the “stock” of naive farmers in Cambodia also dries up. Hopefully, farmers in Myanmar will not be the next victim, and with current political developments, the cunning Thai businessmen will avoid Myanmar for the time being.

Ultimately, farmers in Thailand will again focus solely on fermenting Thai cacao. Let’s just hope that this will be in time for most of the creative bean-to-bar makers in Thailand.

Written by Stefan Struik, and Chanthol Chean, founders of Kamkav Farm in Cambodia, and Mr. Sha, Thai coffee and cacao consultant.”

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