* Farmers will pay back future fertilizer deliveries with beans
* Cocoa industry companies to distribute fertilizer to farmers
By Marcy Nicholson
April 9 (Reuters) - Chocolate conglomerates are handing out 20,000 tonnes of special cocoa fertilizer for free to farmers in Ivory Coast to help boost yields and secure bean supplies in the world's No. 1 grower.
The shipment is small, but it is the first time chocolate makers and merchants, including Barry Callebaut, Cargill and Mars Inc, have gotten together to jump-start fertilizer use in the impoverished West African nation.
"The idea is that cocoa companies in the future will pre-finance fertilizer for the farmers and the farmers will pay back with cocoa beans, which they can, through their increased yields," said Daan de Wit, spokesman for IDH, the Sustainable Trade Initiative, a not-for-profit organization based in Utrecht, Netherlands.
"In a few years time the farmers will have enough money to buy the fertilizer themselves."
Chocolate makers have been trying to secure long-term cocoa bean supplies to meet rising demand. Production growth has been hampered by crop disease, poor farming practices and competition from other crops such as rubber.
Fertilizer is not widely used by rural farmers in Ivory Coast. The shipment is less than 5 percent of the country's potential usage. The organization estimates that cocoa farms in Ivory Coast could potentially use around 450,000 tonnes of fertilizer annually.
"The shipment is a drop in the ocean ... but it is a very important drop," de Wit said.
IDH, primarily funded by the Dutch government, organized the partners in the joint initiative in 2012.
The fertilizer is being distributed to smallholder farmers as well as to cooperatives by the program's partners and cocoa giants, including Cargill, Archer Daniels Midland, Mars, Mondelez, Barry Callebaut, Continaf and ECOM Agroindustrial Corp Ltd, as well as some smaller partners. The shipment arrived in Abidjan last week, de Wit said.
This is the first such program to bring together cocoa companies, governments and non-governmental organizations to distribute fertilizer, which has been developed specifically for West African soil and climatic conditions, de Wit said. It was purchased from Morocco-based producer OCP.
When used properly with other farming techniques, the fertilizer has the potential to help double cocoa harvest yields in West Africa, IDH stated in a release.
In the 2011/12 crop year, Ivory Coast produced an estimated 1.476 million tonnes of cocoa, International Cocoa Organization data showed.
Only 40,000 tonnes of fertilizer were used at that time, IDH stated. More than 70 percent of the world's cocoa, the key ingredient in chocolate, is grown in West Africa.
"A lot of farmers choose rubber over cocoa because rubber is ... an easier crop and it gets you easier money," de Wit said.