United Cacao Limited SEZC is a pure-play cacao producer and currently the only publicly listed permanent crop estate in Latin America. The Company trades with the ticker symbol CHOC on the AIM market of the London Stock Exchange and also on the Lima Stock Exchange. All of the Company's estate staff are employed under Peruvian labor contracts in accordance with the Peruvian Ministry of Labour and paid above national standards via electronic direct deposit to their personal bank accounts. We believe this sets the global labour standard for large-scale, ethically produced cacao. All of the Company's estates are on freehold land that is zoned for full agricultural development by the Peruvian authorities under Legislative Decree 838 in 1997 and further confirmed by the Peruvian courts in detailed rulings on 30 September 2014 on 26 March 2015. Every land title currently owned by the Company was purchased via a notary process from Peruvian citizens who had secured the land in 1997 by demonstrating existing agricultural activities. As per the law, these original owners demonstrated evidence of on-going agricultural activities which then had to be certified by the local authorities. A sample of such agricultural certification documentation can be found here. Furthermore, it is illegal for the Peruvian authorities to allocate land title to citizens on areas of bosque primario (i.e. primary rainforest); furthermore, there are no native communities within proximity of the estates.
Through its wholly owned Peruvian operating subsidiary, Cacao del Peru Norte SAC (CDPN), the Group seeks to become the world’s largest and lowest cost corporate grower of cacao when it completes the planting of its existing 3,250 hectare estate in 2017. In addition, the Group has initiated an adjacent 3,250 hectare small farmer out-grower initiative, Programa Alianza Producción Estratégica Cacao (“PAPEC”), with local communities that it intends to complete planting by 2021, thereby taking the total project to 6,500 hectares. Under PAPEC, the Group extends micro-financing to select small growers to plant cacao and then purchase their "wet" beans for processing and drying at the Group's fermentation facilities. At present, there are 200 hectares land planted under the PAPEC program; we expect to reach a total of 500 hectares of PAPEC plantings by 31 December 2016 involving over 300 families. Our community team also provides free legal assistance for these families to secure formal title on their lands.
The Company, via its subsidiary CDPN, owns approximately 3,523 hectares of freehold agriculture land near the city of Iquitos, the state capital of Loreto, Peru’s northern region. Iquitos, a city of over 450,000 inhabitants, is at the headwaters of the Amazon River and is serviced by scheduled ocean-going freighters to the Atlantic, via Manaus (Brazil), and onwards to the United States. Iquitos also has regular domestic and international flight connectivity by several regional airlines and is less than two hours flight time from Lima.
The Group is proud to be a member of the World Cocoa Foundation, based in Washington D.C., which works to promote a sustainable cacao economy through economic and social development and environmental stewardship in growing communities.
The Directors believe that the Group has the potential to be a global low-cost producer of cacao for the following reasons:
- cacao is an indigenous tree species to the Iquitos area;
- the high recorded yields and low disease incidence of its IMC-67 and CCN-51 variety planting material;
- the ample availability of cost-effective agricultural labour in the Peruvian Amazon region;
- the Peruvian Amazon is a zero corporate income tax zone until 2048 pursuant to the Law 27037 – Promotion of Investment in the Amazon and there are no agricultural export taxes in Peru;
- the excellent climatic conditions and rainfall of between 2,500 mm – 3,000 mm per annum with no dry season;
- the strategic location in the Amazon Basin in an area well-served by river barge and ocean-going freighters; and
- the freehold title of its estates which allows for vastly improved government and community relations in a developing market environment when compared to leased, concession or communal rights land common in Asia or Africa.
The above factors are expected to provide the Group with a significant and sustainable competitive advantage over the traditional cacao growing zones in West Africa, Southeast Asia and other parts of Latin America. This, combined with a more general move by the global confectionary market towards purchasing from reliable, ethical, long-term sources of cacao beans and from suppliers in stable macro-economic regions, is expected to present the Group with the opportunity to become, by the end of 2016, the world’s largest and lowest-cost cacao producer.