On 19 June 2010, a major meeting of cocoa-exporting and -importing countries was convened under the auspices of the UN Conference on Trade and Development (UNCTAD) to ‘finalise details of a new agreement designed to make trade in the commodity fairer and sustainable.’ The aim of the agreement is to ‘provide a mechanism to reconcile the sometimes conflicting interests of cocoa farmers, exporters, importing countries and the multinational firms that process the cocoa beans.’ The current International Cocoa Agreement expires on 30 September 2012.

The new agreement, which is based on consensus among all parties, moves away from ‘regulatory mechanisms, such as production quotas, buffer stocks, and other price-support measures’. However the ‘low incomes of smallholder cocoa farmers’ is widely acknowledged to be ‘the single most important challenge for the world cocoa economy.’ UNCTAD argues that ‘prices must be sufficiently remunerative for farmers, and production more efficient, to ensure decent incomes for them.’

Negotiations over the week resulted in a new agreement being signed on 25 June by 14 exporting countries and 29 importing countries, plus the EU, representing more than 80% of world cocoa production and 60% of world consumption.

The new agreement, according to UNCTAD, is ‘intended to secure greater market transparency, fairer prices and more sustainable production,’ and addresses a number of key issues where consensus emerged from preparatory working group meetings. These include:

• the establishment of ‘a new structure to further improve the efficiency of the International Cocoa Organisation’;
• a ‘reinforcement of a mandate for development of projects’;
• a commitment to ‘strive towards fair cocoa prices, leading to equitable returns for both producers and consumers’;
• ‘promotion of the quality of cocoa and the need to develop appropriate food-safety procedures’;
• promoting the benefits of cocoa production in local communities and among small-scale farmers;
• the ‘dissemination of information on financial tools and services that could assist cocoa producers, including access to credit and the managing of price risk’;
• ‘enhancement of market transparency by collecting, processing, and distributing data from both private and public sources.’

The agreement is set to come into effect in 2012, and lasts for 10 years, with the potential for revisions at the mid-term point. According to Ambassador Guy Alain Gauze of Côte d’Ivoire, who was elected president of the UN conference, the new agreement ‘is a North-South tool for international development that reflects the will of the contracting parties to join together to deal with the issues and challenges of the new world cocoa economy.’

A recent study provides an evaluation of the impact of the directive allowing the use of 5% of vegetable fats in chocolate. It found that ‘net imports of cocoa beans and cocoa products in bean-equivalent terms from outside of the EU15 countries have increased from around 1.2 million tonnes in 1996 to over 1.4 million tonnes in 2005, recording an average annual growth rate of 2.1% over the last 10 years … This is somewhat higher than the growth of chocolate production and consumption which has grown by 0.6% per annum over the period.’ Since the adoption of the directive ‘the rate of growth of net cocoa imports has accelerated to 3.5% despite a flat chocolate-product market. This points towards the increased cocoa-solids content of chocolate as well as the increased use of cocoa products for other food applications’. The report notes that ‘exotic fat imports have increase from 8,000 tonnes in 1996 to 24,500 tonnes in 2005’, with imports increasing by 25% since the adoption of the directive. The report notes divergent trends: ‘in countries permitting the use of CBEs in chocolate prior to 2000, CBE use as a proportion of chocolate weight has fallen by 3%; … in countries previously not permitting the use of CBEs in chocolate, there has been no increase in demand from branded and artisanal chocolate manufactures. There has been an increase of some 1,000 tonnes amongst the industrial chocolate manufacturers producing products for the biscuit and ice-cream industries’. Overall there has been ‘a 400-tonne increase in CBE demand since the adoption of the directive. The report concludes ‘the directive has had very little impact on the global cocoa market’, although a further review in five to ten years was recommended, given the limited time which has elapsed for recipes for chocolate manufacturing to change.