ADM Closes Ecuador Cocoa Facility

U.S. food processing giant, Archer Daniels Midland Co., Decatur, IL, has closed a cocoa-processing factory in Ecuador. ADM is transferring capacity from the closed plant to other facilities in its system.

ADM acquired the facility in Guayaquil—which converts cocoa beans to cocoa butter, chocolate liquor and cocoa powder—in its 1997 purchase of W.R. Grace & Co.'s cocoa business.

"The facility in Ecuador was part of our W.R. Grace acquisition and we have been reassessing all those facilities from the acquisition," said a company representative. "This facility was deemed not viable and we have transferred its capacity to other operations in our group."

ADM will maintain a presence in Ecuador, procuring and grading cocoa beans, the representative said.

While ADM did not elaborate on the cause of the facility shutdown or why the plant was deemed not viable, industry sources noted that the past year has been disastrous for the cocoa business in Ecuador. El Nino-related rains and flooding have sharply reduced Ecuador's 1997-1998 cocoa production and cocoa exports.

"Ecuador's poor crop was probably the last straw," said one industry source, referring to the ADM plant's shutdown. "Most other plants are running idle or at about 10% capacity."

In March, the USDA released its "Tropical Products: World Markets and Trade" report, which said 1997-1998 cocoa production in Ecuador was forecast to fall to 70,000 tons from 86,000 tons in 1996-1997. However, a report in September from a U.S. agricultural attache cut the crop to 35,000 tons. The USDA is slated to release updated figures at the end of the month.