By Luc Cohen and Ivan Castro
NEW YORK / JINOTEGA, NICARAGUA, Jan. 18 (Reuters) - Brimming with shade trees and bounded by the Tuma river, the lower climes of Roger Castellon's farm in Nicaragua's mountainous Jinotega department were long ideal for growing coffee.
But with temperatures on the rise, the veteran coffee farmer is shifting his lower-lying land to a crop that, although new for him, enjoys a rich legacy in the region: Cocoa.
"Coffee is no longer viable due to climate change," said Castellon, who calls his 420-hectare (1,038-acre) farm Los Nogales.
Soaring temperatures in Central America, linked to climate change, are forcing many farmers like Castellon to replace coffee trees with cocoa - a crop once so essential to the region's economy it was used as currency.
Farmers across the region, known for high-quality arabica beans, are still recovering from a coffee leaf rust disease known as roya, which devastated crops over the past four years.
Now, lower-altitude areas are becoming unsuitable for growing coffee as temperatures heat up. Cocoa thrives in the warmer weather.
Castellon maintains coffee plants on the higher portions of his farm, at about 1,200 meters (3,937 feet). But two years ago he replaced coffee with cocoa on 84 hectares (208 acres) of land at about 700 meters (2,297 feet) in altitude, protected by the shade of fig and banana trees.
He expects to produce his first cocoa crop this April and said planting the cocoa trees cost about a third of what it would have cost to renew coffee plants.
The quiet shift across the region shows up in export data: This crop year, coffee bean exports from six countries in the region excluding Honduras will fall for the third straight year, to 8.14 million 60-kg (132-pound) bags - the lowest level since the 1973/1974 cycle, according to the U.S. Department of Agriculture.
Cocoa production and exports have steadily risen. In Nicaragua, cocoa exports totaled 3,839 tons (8.5 million pounds) in 2015, up more than 80 percent from 2014, and in El Salvador, a coalition is working to expand cocoa acreage hundredfold.
Even in Honduras, which has seen a successful recovery from roya, the government is requiring growers to substitute 8 percent of coffee land to cocoa.
To be sure, some new cocoa acreage has come from abandonment of other crops, and high-altitude coffee production is strong in many parts of the region. Central America also will not supplant West Africa as the leading supplier of the main ingredient in chocolate anytime soon.
But high cocoa prices are providing an incentive to farmers to switch. The region's cocoa rebirth could ease concerns about supply stability amid growing emerging market demand, weather scares and the potential for civil strife in Ivory Coast and Ghana, which produce 60 percent of world output.
COPING WITH COCOA
In Nicaragua, the ideal coffee zone is between 700 and 1,700 meters (2,297-5,577 feet) above sea level, but rising temperatures and lower rainfall will shift the range to 1,000 to 1,700 meters (3,281-5,577 feet) by 2050, according to a 2012 study by the International Center for Tropical Agriculture.
Temperatures have increased between 0.5 and 3 degrees Celsius (0.9-5.4 degrees Fahrenheit) in the region in the past century, and temperatures in coffee zones are expected to rise another 2.1 degrees Celsius (3.8 Fahrenheit) by 2050.
Roya has long plagued coffee production, but scientists say warmer weather will cause more harm because the disease thrives in high temperatures.
"Coffee is not for this region anymore - the yields are no good, and it's more investment," said Roberto Mairena, 51, who eight years ago planted 8.4 hectares (21 acres) of cocoa on his 300-500-meter (984-1650 feet) San Miguel farm in La Dalia, in the mountainous Nicaraguan department of Matagalpa.
The devastating impacts of roya forced many affected farmers to reconsider the wisdom of re-investing in coffee. Many decided on cocoa, calculating that rising temperatures would only make coffee in those areas more vulnerable.
"Leaf rust was an effect of climate change," said Ryan Bathrick, the Nicaragua country director for TechnoServe, a U.S. nonprofit organization that helps coffee and cocoa producers with farming techniques and business practices. "There's a lot of optimism around cacao."
In El Salvador, a coalition including USAID and Catholic Relief Services hopes to help plant cocoa on 10,000 hectares (24,711 acres) by 2019, up from 100 hectares (247 acres) when the project began in September 2014. The group is specifically targeting roya-ravaged coffee growers.
The coalition's efforts helped Andres Menjivar, who planted cocoa trees on one-third of his farm's 8.4 hectares (21 acres)this August, after roya wiped out coffee production on his La Libertad, El Salvador farm four years ago.
"Studying history, we always learned about how cocoa was part of the way of life in Central America, but it gradually lost out to other crops," said Menjivar, who expects to cultivate his first cocoa crop in 2018 and is considering planting more.
CHASING THE PREMIUM
Current price levels are also sending a signal to producers to transition to cocoa. Coffee futures fell 24 percent in 2015 to around $1.20 a lb, while cocoa futures have risen for four consecutive years to trade around $3,000 a tonne, or $1.36 a lb.
Growing consumer demand for higher-quality products in both markets is also driving the shift, and coffee premiums tend to increase with altitude.
"The lower-altitude coffee does not have the quality level that is now being demanded by the market, so the income these farmers are getting is lower," said Gilberto Amaya of Catholic Relief Services in El Salvador.
But those altitudes are suitable for higher-quality criollo cocoa, which is sought after by craft chocolate makers.
Efforts in the region are focused on promoting quality rather than volume, so while Hershey and Nestle may not be using the beans any time soon, Central America may soon supplement the Dominican Republic and Madagascar as a source of beans for the burgeoning craft chocolate industry.
(Editing by Lisa Girion)