The Group began on-site operations in the project area in May 2013.
As part of the future development, the Directors intend to plant a total of 2,000 hectares by the end of Q4 2015 and, subject to the availability of future equity and/or debt funding, a total of 1,250 hectares in 2016.
The Development Process
The development process to bring a cacao plantation project to full maturity includes a number of stages and processes which are set out below:
Environmental Impact Assessment (“EIA”)
The first stage involves initiating an EIA or similar on the land acquired; in case of the Group’s land, the appropriate environmental reporting tool is the PAMA. All of the Group’s estates were titled in the nineties under Legislative Decree 838 and previously owned by individual title holders who had already undertaken agricultural activities since 1997. As such, the Group qualified for an expedited environmental approval process known as a “PAMA” which allows agricultural activities to continue whilst the PAMA is underway. There was no “change of use” involved in the Group’s land zoning as all of the Group’s purchased lands were zoned for agriculture by the state authorities in 1997.
Clearing and infrastructure
The land subsequently needs to be cleared for plantation, whether by hand or mechanically, and requires road infrastructure, construction of worker accommodation and the clearance of drainage ditches. Extensive use of survey and topographical equipment is essential for the design and planning of the estate. At present, the Group has 27 pieces of heavy equipment (dozers and excavators) leased from third party contractors operating at the project area; the Group has purchased additional heavy equipment for on-going road maintenance such as a road grader, a front loader, a roller, an excavator and two heavy dump trucks.
Germinated seeds suitable for the particular geographic area are planted in polythene bags in a nursery, where they are left to grow for approximately two months after which point cacao “budwoods” (living material from another variety of cacao such as CCN-51) are grafted on top of, or to the side of, the small seedling, known as the “patron”, and left for a further two months to grow in the nursery. This practice is regarded as the best way to grow cacao on an agricultural scale resulting in a hardy tree that has the root system of an indigenous cacao breed but the flavour or productivity characteristics of another cacao species.
Interior and exterior tree planting
These trees are designed to provide shade for the cacao plants throughout their expected 30 year lifetime.
There are two types of trees planted in the cacao estate. The first type are the ‘exterior’ perimeter trees totalling approximately 20 trees per hectare and the second set are the ‘interior’ trees totalling 25 per hectare. The perimeter trees will consist of Bolaina and Capirona varieties and are expected to be harvested and sold during or around years 10 – 13.
The ‘interior’ trees are expected to consist of a range of Cedro, Tornillo, Almendra, Palisangre, or Moena varieties and are expected to be sold in year 30 of the cacao plantation’s development, which is generally when it is considered that cacao plant peak yields start to decline. The end market for this sawn timber is expected to be Lima, Peru.
The sale of both the perimeter trees in year 10 and the interior trees in year 30 are therefore expected to deliver further cash flow over and above that generated by the sale of the cacao and plantain.
Once the young cacao plants have been planted in the fields, the crop should yield its first harvest within twenty months and achieve peak productivity by year 6.
Well-fertilised cacao estates managed by small farmers typically achieve yields of approximately 3 to 4 tonnes per hectare in Peru. The Sacha Gold varieties for which the Group is the exclusive distributor (subject to minimum orders being placed) are currently yielding over 4 tonnes in Ecuador.
Once the cacao is harvested, it is processed in a series of fermentation boxes over several days to optimise results.
The Group has, to date, completed a number of the key development stages set out above, having received approval for its PAMA environmental terms of reference on 9 October 2013. The Group’s finalised PAMA is expected to be submitted prior to year-end. The Group commenced clearing and infrastructure work in May 2013 and in-field planting in November 2013.
The Directors intend to plant a total of 2,000 hectares by the end of Q4 2015 and, subject to the availability of future equity and/or debt funding, a total of 1,250 hectares in 2016.