Venezuela’s cocoa floods market as oil sanctions deepen economic crisis

Venezuela’s current political crisis is impacting its cocoa industry with reports that its high-quality beans are flooding into the US market due to sanctions imposed by the Trump administration on the country’s crude oil.

Reuters have reported that traders and exporters on the commodities market have noticed a number of new cocoa companies entering the fray as Venezuelans turn to cocoa for foreign currency as it is not subject to US sanctions at present.

“Many exporters in the last three years have jumped into the cocoa market as it’s one of the few commodities left to do business in​,” Alejandro Prosperi, the Carupano-based president of the country’s cocoa industry group CAPEC, told Reuters.

At the end of May, nearly 47,000 65-kg bags (3,055 tonnes) of cocoa from Venezuela worth an estimated $7.3 million were sitting in New York-area warehouses certified by commodity exchange ICE, out of 119,000 bags total from all origins, Reuters reported.

Venezuela is a relatively small producer (around 20,000 tons annually compared to Côte d'Ivoire’s 2 million tons), but its cocoa has a reputation for high quality and premiums. Traders claim the beans now flooding the market are lower in quality.

Reasons for the shift are down to exporters compromising quality and rushing their product to market, leaving out the fermentation stage of production, which improves the quality of beans.

Venezuela's economic and humanitarian crisis deepened at the beginning of 2019 when the United States imposed sanctions on the country’s oil industry in its stand-off with socialist president Nicolas Maduro.