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Presentation by:

Sona Ebai

Secretary General

Cocoa Producers’ Alliance

Cocoa is a major source of livelihood for millions of people and economies (both directly and indirectly) as a major source of income for most of the economic and social activities such as infrastructural development, education, health and entertainment.

Global cocoa trade has grown since the early 1900s where a few hundred tonnes of cocoa were traded until now where millions of tonnes of cocoa is traded.

Production and consumption (grindings) have been the major determinants of global cocoa trade.

Cocoa trade involves trade in cocoa beans, semi-finished products (grindings) and final products (mainly confectioneries)

• This presentation provides; • an overview of the world cocoa trade• new frontiers of endeavour• factors that can open new prospects in trade 2

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The cocoa trade consists of the futures or terminal markets, the physical market (forward market, the spot market or the cash market) and several niche or specialised markets such as fair-trade and organic cocoa. The niche markets are usually certified.

There is also a difference in prices for spot markets and futures/terminal markets. Prices on the spot market are always higher than the terminal markets. Cocoa for the spot market are classified by origin.

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Main futures markets

London -

New York -

Some other futures markets

Paris

Kuala Lumpur

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Federation of Cocoa Commerce (FCC)

Cocoa Merchants Association (CMA)

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Production

End‐of‐season Stock

Grindings

Average price

Some indicators of productivity attained or attainable cocoa cultivation. 

‐Large yield gaps (3 to 30 folds) indicated excellent potential for yield improvement in cocoa  cultivation.

‐The available agricultural practices can be effectively used to increase productivity to a more  desirable level in cocoa cultivation.

Indicators Productivity (t/ha) ReferencesAverage national productivity

- West African countries- Brazil and Indonesia

- Malaysia

Theoretical potential yield

Highest yields recorded

Average yields of well-managed cocoa farms

0.2-0.30.5-0.6

0.8-1.0

11.0

5.0-6.8

2.0-4.6

ICCO (2006)ICCO (2006),Sulhafi Sikumbang (2006)MCB (2006)

Corley (1983)

Lee and Chong (1987)

Mohd. Yusuf et al., (1998)

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Potential for Productivity ImprovementPotential for Productivity Improvement

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Asia<400,000North AmericaNorth America

<400,000<400,000

South AmericaSouth America<94,000<94,000

Central America &Central America &CaribbeanCaribbean<8,000<8,000

AfricaAfrica<40,000<40,000

EuropeEurope<1,800,00<1,800,00

AustralasiaAustralasia<1,000<1,000

Middle Middle EastEast

<5,000<5,000

Africa accounted for 76.4% of world total trade in cocoa beans, with the Americas and Asia and Oceania accounts for 6.2% and 17.4% respectively (2006/07).

Europe accounted for 60.6 percent of net imports in 2006/07. Americas’ share of net imports was 26.3 percent.

The largest trade in cocoa beans is between Africa and the European Community.

The European market is the world's largest consuming region accounting for 49.5 percent of total world consumption in 2006/07, followed by the Americas accounting for 34 percent, Asia and Oceania, 13.9 percent and lastly, Africa, 2.6 percent.

Though chocolate has reached all regions of the world, 60% of all chocolate is still consumed in the mature chocolate markets of the USA and European Union (EU) – representing only 20% of the world population. 10

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Once the beans have been fermented and dried they can be processed to produce a variety of products. These products include:

Cocoa butterCocoa powderCocoa liquor

Chocolate

Many different sorts of products can be derived from cocoa. The husks of cocoa pods and the pulp, or sweatings, surrounding the beans and the cocoa bean shells can be used. Some examples of these uses are: Animal feed from cocoa huskProduction of soft drinks and alcoholPotash from cocoa pod huskJam and MarmaladeMulch 11

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2006/07

Cocoa beansExportsRe‐exportsImports

Cocoa butterExportsImports

Cocoa powder/cakeExportsImports

Cocoa paste/liquorExportsImports

Chocolate/chocolate productsExportsImports

2,559,575396,7433,049137

699,548697,529

817,542807,620

462,256464,015

4,106,4754,025,003

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Quality aspectsProducts

BeansGrindings

Quality Control

Barriers to tradeTariffsNon-tariffs

LogisticsTransportationsWarehousing

Markets

Consumer trends

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New marketsIntra-regional tradeSouth-south cooperationSpecialty/niche productsHealth and nutritional benefitsNewly Industrialized nations of SE Asia

Quality aspectsWhat consumers and industry want?What is quality? (Total quality)Factors affecting qualityBest agricultural practices

Health and nutritional aspectsHealth benefits of cocoa consumptionProspective uses of cocoa

IPM strategies

Global risk assessment

Preventive breeding

Capacity buildingHumanInstitutionalInfrastructural

Innovations

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New product development

Specialty/niche productsOrganic cocoaFair-tradeGourmetEthical products

Sustainable World Cocoa Economy

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Physical /technological quality of beans (homogeneity)

Food safety beans

Residues and contaminants

Quality control systems

Traceability

Ethical aspects

Social responsibility

Labour issues

Environmental issues

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Traditional Quality

Measures the percentage of;

Slaty beans

Mould

Humidity

Free fatty acids (FFA)

Total Quality

Physical

Technological

Bean size

Sensorial

MRL

PAH

Traceability

Social responsibility

Labour issues

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Physical and Bean Colour

Bean sizeFlat, broken beansMoth-eaten beansDebrisSlaty beansMouldy beansBrown/purple/slaty beans

Product Related to Quality

FlavourFat contentFree Fatty Acids

Safety requirements of Cocoa products

ContaminantsMycotoxins (e.g.Ochratoxin A ) Polycyclic Aromatic Hydrocarbons (PAH)Heavy metals ( pending threats)Mineral oil contamination in Jute Sacks

Pesticide Residues MRLsEU New regulationBanned pesticides

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Environmental

Soils

Climate

Biological

Planting material

Pests and diseases

Technical

Agricultural practices

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The world contains a huge range of edible items which we could eat. Our food choices are limited by a complex interplay of different factors. These can be summarized as follows :

Attitudes and beliefsPhysical, economic and political limitationsHabits and customsPhysiological needsEmotional, psychological needsPersonal tastes and values.

Our attitudes and beliefs determine how acceptable we find certain foods as well as various physical, economic and political limitations which govern whether or not we can afford particular foods.

Food choices are also influenced by our habits and customs.

Our perceived physiological needs influence our views on what is good for us.20

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Background Information on the healthful benefits of cocoa in not new, as there is documentary evidence that about two hundred years ago physicians prescribed cocoa for a variety of ailments. Presently, there is ample scientific evidence that cocoa is the "health food of the 21st century”.

Four main nutrient components of cocoa, and numerous minor nutrients help to explain why it can help to prevent or treat several health problems, and markedly improve general wellbeing.

The main nutrients are:AntioxidantsCocoa butterMagnesiumTheobromine

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With the emerging mountain of research supporting the health benefits of

cocoa, it is becoming increasingly clear that cocoa producers in the

developing world have been endowed with the opportunity to increase both

the wealth and the health of their nations.

This they can do by increasing local production/processing of cocoa beans

as well as inculcating a cocoa consumption culture in their nationals.

The possibility exists to make cocoa part of a health food. Traditional

caterers, food scientist, nutritionists, hotel chefs etc should be brought on

board to develop new and exciting ways of incorporating cocoa into existing

dishes or formulate new foods with cocoa.

22Source: Genevieve D. Pawar : Ag. Marketing Manager‐Cocoa Processing Company Limited

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National policy for technology/ knowledge transfer

Such a policy should include a clear matrix of the various players, their

respective tasks and degree of interaction;

Institutional framework to allow for consultation and dialogue between

national and international players concerned;

Efficient coordination of activities;

Countries and investors in development should commit to long-term financial

undertakings;

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* Remunerative Cocoa Price

ENVIRONMENTAL ENVIRONMENTAL SUSTAINABILITYSUSTAINABILITY

* Sustainment of the* Sustainment of theEnvironmentEnvironment

SUSTAINABLE COCOA ECONOMYSUSTAINABLE COCOA ECONOMY(International Cocoa Agreement, 2001)(International Cocoa Agreement, 2001)

EFFECTIVE ADOPTION OF BEST AGRICULTURAL PRACTICES IN CROP 

MANAGEMENT EFFECTIVE TECHNOLOGYEFFECTIVE TECHNOLOGYDELIVERY SYSTEMDELIVERY SYSTEM

* Transfer of Technology* Transfer of Technology* Credit Facility* Credit Facility* Supply of Input* Supply of Input

ECONOMIC SUSTAINABILITYECONOMIC SUSTAINABILITY

* Increase Income of Cocoa * Increase Income of Cocoa FarmersFarmers

TECHNOLOGY DEVELOPMENTTECHNOLOGY DEVELOPMENT

* R&D* R&D

SOCIAL SUSTAINABILITYSOCIAL SUSTAINABILITY

* Sustainment of Social * Sustainment of Social ObligationObligation

INTERNATIONAL INTERNATIONAL COOPERATION IN ENSURING COOPERATION IN ENSURING

BALANCED GROWTH IN BALANCED GROWTH IN WORLD SUPPLY AND WORLD SUPPLY AND

DEMAND OF COCOA BEANSDEMAND OF COCOA BEANS

* Production Regulation* Production Regulation* Promotion for Consumption* Promotion for Consumption

* Increase Productivity, Efficiency and Quality (PEQ) in Cocoa Bean Production

* Minimised Negative Impactto the Environment* Enhanced Soil Fertility

M.T. LEE, Malaysian Cocoa Board, Agricultural Practices Towards A Sustainable Cocoa Economy, 15TH International Cocoa Research Conference, October 2006, San Jose, Costa Rica 

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Applying best known practices in cocoa production can attain the highest physical quality standards and meet prevailing food safety legislative standards.

Also, the standards when followed can ensure economic, social and environmental sustainability and ultimately, alleviate poverty and hunger (MDG’s).

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Choice of Planting Materials

Spacing/Planting Density

Shade Management

Fertilizer Application

Pruning

Crop Protection

Rehabilitation Technology

Harvesting and Post-Harvesting

Practices

Farm Management System

Record Keeping

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Quality & Quality Control

Food safety

Environmental and social

responsibility

Barriers to trade and market assess

Food choices and consumer trends

Traceability

Information (assess and flow)

Logistics and infrastructure

Policies (domestic and international)

Industrialisation

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Oligopolistic market

Processors

Manufacturers

New markets

Research and development

New product development

Sustainability

Productivity and efficiency

Production

Marketing

World trade

Capacity building

Human

Institutional

Improve the internal marketing structures in cocoa producing countries

Improve productivity and quality of to make cocoa farming more profitable

Increase the promotion of cocoa consumption, especially in origin and other

developing countries

Improve logistics , notably, handling, storage and transportation.

Improving capacity in the supply chain (human, financing, research &

development, etc.)

Enhancing financing across the value chain

Development of downstream sector in origin countries

Develop appropriate means of disseminating market information. 30

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Provision of timely information for decision making (cocoa resources,

markets).

Enhance both domestic and international polices, rules and regulations

governing the world cocoa trade as well as market accessibility.

International and regional cooperation as well as the successful

implementation of South-South and intra-regional Trade are important in

terms of determining the prospects of marketing.

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Long live the World Cocoa Economy