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Trends in global cocoa production

02 February 2013

According to summary data contained in a report on the costs and benefits of certification, commissioned from KPMG by the International Cocoa Organization (ICCO) and published in October 2012, Côte d’Ivoire and Ghana account for 60% of global cocoa supplies, with production rapidly expanding in Vietnam, Dominican Republic and Liberia (although from a very small base). Production in medium-sized cocoa producers such as Cameroon, Brazil and Ecuador is expanding at a more modest rate, but their combined production is rising from the equivalent of 22% of the production of Ghana and Côte d’Ivoire in 2006/07 to 25% by 2011/12 (see table).

The report observes that the world cocoa market is volatile, since it is vulnerable to ‘weather-related production fluctuations and price speculation’, as well disease outbreaks, which can affect up to 30 to 40% of the crop.

Differences in market regulation in Côte d’Ivoire and Ghana also influence price formation for Ivorian and Ghanaian cocoa. Both Ghana and Côte d’Ivoire, however, are characterised by ‘low investments on the farmer level, e.g. in planting new trees or in acquiring farm input’. This has been attributed in part to the impact of price volatility on farmers’ investment decisions. This lack of investment ‘has a direct impact on the quality of cocoa beans produced’.

Global market share of the main cocoa producing countries (’000 tonnes)

  2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 Growth rate (%)
Côte d’Ivoire 1,229.3 1,382.4 1,223.2 1,242.3 1,511.3 1,410.0 3
Ghana 614.5 729.0 662.4 632.0 1,024.6 890.0 8
Vietnam 0.2 0.4 0.5 2.0 2.5 5.0 109
Dominican Republic 42.2 45.3 55.0 58.3 54.3 60.0 7
Liberia 1.7 4.0 4.6 6.3 12.0 8.0 38
Cameroon 166.3 181.8 223.6 208.5 228.5 210.0 4
Brazil 126.2 170.5 157.0 161.2 199.8 190.0 7
Indonesia 545.0 485.0 490.0 550.0 440.0 500.0 -1
Ecuador 324.5 118.0 135.0 149.8 160.5 175.0 9
Nigeria 220.0 220.0 250.0 235.0 240.0 220.0 0

Source: ICCO data cited in Figure 1, p. 10 of KPMG report

On the demand side, there are concerns that in future supplies will be inadequate to meet the growing consumer demand for cocoa-based products. This is creating challenges for processors seeking to secure long-term supplies of cocoa.  However, while attention has been focused on the prospect of a return to a cocoa production deficit in 2012/13, at the beginning of December 2012 ICCO revised its production and demand forecasts for 2011/12, indicating the anticipated emergence of a cocoa surplus.  In addition, with growing public concern over social (child labour), environmental (deforestation and climate change) and economic issues (farmers’ welfare) in the cocoa sector, companies in the value chain are increasingly setting ‘ambitious goals’ for sustainable cocoa procurement.

The KPMG report notes that these concerns have been behind the launch of a range of corporate initiatives to secure both basic supplies and to promote sustainable production of cocoa. The initiatives include:

  • commitments by the commodities trader Armajaro to support cocoa farmer organisations;
  • the launch by Barry Callebaut of a US$44-million initiative for sustainable cocoa production;
  • a commitment from Mars and Ferrero to 100% sourcing of certified sustainable cocoa by 2020;
  • a commitment from Ahold (a Dutch retailer) to source 100% sustainable private-label cocoa by 2015;
  • a commitment from Sainsbury’s UK supermarket to make its chocolate sales 100% fair-trade by 2020. 

Editorial comment

While cocoa production beyond Ghana and Côte d’Ivoire is rising, it is likely to be some time before the overall dominant position of these two West African cocoa producers is challenged. Nevertheless, unless investment in sustainable cocoa production in West Africa is stepped up, the expansion of production of certified sustainable cocoa elsewhere could come to constitute a growing threat in this market sub-component where considerable growth in demand is anticipated in the coming years. The December 2012 acquisition of Singapore’s Petra Foods by Barry Callebaut highlights the desire of this major chocolate company to diversify the geographical basis for its cocoa procurement and boost its overall position in the expanding Asian market. This could well hasten the development of Asia as a significant cocoa producing region.

The ability of ACP producers to keep pace with growing demand for certified sustainable cocoa could be crucially affected by the public sector support measures set in place to promote sustainability certification and reduce the unit costs of certification. However, the successful implementation of cocoa reform measures in Côte d’Ivoire and the increased attention being paid to the eradication of child labour may well provide a significant boost to the volume of sustainably produced cocoa. 

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