I. Coast world cocoa talks to address supply concerns

by Thomas MORFIN
November 20, 2012
The World Cocoa Conference is of particular interest to Ivory Coast, which is the world's biggest producer of cocoa
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<p>Ivory Coast on Tuesday hosts world players in the cocoa business for a conference on how to face up to the challenges posed by soaring demand.</p>

Ivory Coast on Tuesday hosts world players in the cocoa business for a conference on how to face up to the challenges posed by soaring demand.

The London-based International Cocoa Organisation (ICCO) organised what it says is the first World Cocoa Conference to discuss a sustainable future for the industry in the face of growing demand.

"There is real concern in the industry," ICCO executive director Jean-Marc Anga told AFP, referring to what he said was a structural deficit in supply.

He said demand remained strong in Europe and North America and was exploding in emerging countries such as China or India, but "supply isn't following."

More than 1,000 delegates including government representatives, industry executives, traders and producers will gather at the country's economic capital, Abidjan, for the four-day gathering.

The conference is of particular interest to Ivory Coast, which is the world's biggest producer of cocoa.

It also marks the country's return to the international stage, as the west African nation slowly picks itself up after a decade of turmoil under former president Laurent Gbagbo, who was forced from power last year after a disputed election escalated into clashes and left some 3,000 people dead.

Anga said Africa in particular was a key area for the cocoa industry, with countries there expected to produce 70 percent of the world cocoa output for 2011-2012 that the ICCO estimates at nearly four million tonnes.

But in Africa, "there is a certain loss of interest on the part of producers," Anga warned.

Ageing orchards are not being replaced as quickly as needed, and neither is the ageing workforce, he said. And the younger generation is turning its back on a job that is tedious and whose practices have not been updated in decades.

Instead, they are opting for crops that provide a steadier income, such as rubber and palm oil.

"In 50 years or a century we may not have any more cocoa," said June Naga Coulibaly, secretary general of the Cocoa Producers' Alliance (COPAL).

To some, however, the prediction is too gloom and doom, particularly as global prices remain "relatively low" despite this "anguished cry," according to cocoa expert Francois Ruf from France's Centre for International Cooperation in Agronomic Research for Development (CIRAD).

World cocoa prices hit three-month lows a couple weeks ago, with cocoa for December falling to $2,340 (1,830 euros) a tonne from $2,435 a week earlier on New York's NYBOT-ICE exchange, for example.

And despite an uptick in prices last week after Ivory Coast President Alassane Ouattara dissolved the government, analysts said the rise was not indicative of a trend.

"We regard the price rise to be merely temporary in nature" and "view fears of supply shortfalls as unfounded," said Commerzbank analyst Carsten Fritsch.

Still, Ruf applauds the initiatives launched by the industry, programmes that have proliferated in the last decade and include farmer training and lessons in better agricultural practices.

Efficiency aside, quality is also a growing concern for the industry at a time when consumers are more predisposed than ever to "organic" and "fair trade" labels and other certifications.

Anga, the ICCO head, said there is a need to coordinate all the industry initiatives, hence the conference. He hopes that at its outset the private sector and government representatives will sign on to industry reforms.

Key issues to be addressed include sustainability, farmer wages, certification and child labour -- areas the Ivory Coast has some experience in, after the International Monetary Fund and the World Bank set reform of the cocoa sector as a condition for the country's debt relief.

Ivory Coast has about 35 percent of the world cocoa market, and cocoa and coffee account for 40 percent of its export revenue and 20 percent of its gross national product.

The second-biggest cocoa producer is neighbouring Ghana, followed by Indonesia.