Nestle boosts cocoa buying in Brazil, working with farmers to cut fertilizer use

By Gabriel Araujo

CAÇAPAVA, Brazil, Sept 10 (Reuters) - Global food and chocolate producer Nestle is increasing its cocoa sourcing in Brazil, where production is growing, and it is working with farmers on agricultural techniques that require less fertilizer, according to its CEO, Philipp Navratil.

Brazil was a major global supplier of cocoa in the 1970s, before a devastating fungus disease known as "Witch's Broom" decimated most plantations. Several large-scale farms have in recent years restarted production with more resilient trees, boosting the outlook for future production growth.

Navratil told Reuters in an interview on Wednesday at Nestle's Caçapava plant, the world's largest producing unit for the popular KitKat chocolate candy, that the company has been working on improving its cocoa supply chain to make it more resilient following recent supply shocks that drove cocoa prices to all-time highs.

"That means diversifying sourcing," he said.

"Cocoa would be primarily sourced out of Western Africa. That was the number one source. And we have then decided Brazil is a really good place to go and look for high-quality cocoa," he said.

Navratil said the company established relationships with hundreds of cocoa farms in Brazil to share technical information on regenerative agriculture, looking to increase quality and yields, as well as cutting the use of conventional fertilizers to reduce costs as farming input prices rose with the Middle East conflict.

Cocoa trees, however, take up to five years to reach full production potential, so any significant change in the global supply chain will take time.

Ecuador has been increasing cocoa fields for years and is now approaching a similar volume to that of Ghana, the world's second-largest supplier, with more than 600,000 metric tons of annual bean output.

Ivory Coast leads production with around 2 million tons.

Brazil still only produces enough for its domestic consumption, but the local government sees cocoa output doubling in five years to around 400,000 tons.

(Reporting by Gabriel Araujo; additional reporting and writing by Marcelo Teixeira in New York; Editing by Aurora Ellis)