Thursday, August 16, 2012

Coca vs. Cocoa

The challenges of crop substitution remain serious. What do you do when cocoa prices fall and coca prices hold steady?

“It’s not easy to convince farmers now to plant cocoa since we are coming out of a price situation that’s difficult,” Pinzon said. “But if you’ve lived through it, you know this is cyclical.” 
Not for all commodities. According to Colombian police, concern about global economic growth hasn’t dented international demand for cocaine and domestic prices for coca leaves have held steady in the past 12 months -- making it a better bet than cocoa, coffee, orange juice and cotton.

But try telling a poor farmer that all he or she has to do is sit tight and wait it out because it's cyclical. Your best bet is to grow both legal and illegal crops. Coca is hearty, relatively light, and prices are less volatile. As a result, no one has figured out a way to make crop substitution viable over the long term.


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