London, 21 November 2014–The International Cocoa Organization (ICCO) has noted numerous press reports this week identifying potential deficits in the supply of cocoa in the years to come, possibly reaching a level of one million tonnes in the year 2020, and would like to emphasize that its projections in no way bear out this fear, which it finds to be overstated in the extreme.
The ICCO would like to recall the following facts to ensure, as far as possible, an informed assessment of the current situation and future prospects for the supply of cocoa to the chocolate confectionery market and to other cocoa ingredient applications:
- In the past ten years, the cocoa market experienced five years with production surplus and five years with production deficit. The last cocoa season (2013/2014), just ended in September 2014, experienced a production surplus, with the two leading producing countries, Côte d’Ivoire and Ghana, each posting record production;
- The price for cocoa beans has varied widely over the years and is currently below the historical (1850 – 2014) median level in real terms (adjusted for inflation);
- Cocoa production responds to changing price and therefore it cannot be assumed that, in the medium term (taking into consideration the lag between planting new trees and harvesting beans), demand will continue to grow and supply will either remain flat or decline. Cocoa, like any other agricultural commodity, is a renewable resource, so, when the cocoa price goes up, farmers will be incentivised to produce more cocoa beans by increasing their use of inputs and investing in new plantations.
As far as the ICCO’s current projections are concerned, there is no immediate cause for concern about the supply of cocoa for the next five years. There has been a tight relationship between supply and demand over the years and, while our projections show that supply deficits are likely to occur during the next several years, stocks of cocoa beans should cushion this development before production growth accelerates. There is no threat to the supply of cocoa for chocolate manufacture.
A number of the media reports highlighted many of the problems – sustainability, pests and diseases and especially the disadvantaged situation in which many cocoa farmers find themselves – which are at the heart of the work of the ICCO, its member countries and its partners worldwide. The ICCO’s ongoing process, identified in the Global Cocoa Agenda, seeks to deal with these serious issues. The Organization and its partners most recently reviewed progress in these areas at its World Cocoa Conference in Amsterdam in June. (A report of the Conference and many of the presentations made there can be found here).
The ICCO continues to make projections and forecasts based on the actual supply situation in the cocoa producing countries and the ongoing demand from the cocoa consuming nations, and will report on any significant change if and when it occurs. In the meantime, it believes that there is no cause for alarm regarding the availability of chocolate for consumers to enjoy.