Cocoa price surge concerns

Growing demand has pushed up cocoa prices

The growing global demand for chocolate has helped push the price of cocoa up 50% within two months - and led to fears of shortages to come.

Amid mounting concern at the state of the industry, cocoa producers are meeting with importers in Geneva to discuss how to tackle the problem.

The week-long gathering comes as cocoa prices rise steeply - daily average prices increased by more than 50% between December and the middle of last week.

At the same time, global output has dropped, especially in West Africa, where the Ivory Coast is the world's top producer and exporter.

The conference is being held under the umbrella of the United Nations Conference on Trade and Development (UNCTAD) agency.

Too much demand

The International Cocoa Organisation (ICCO) predicts that world production of cocoa is likely to drop by 8% in 2000-2001.

Top cocoa producers*

Ivory Coast: 41%

Indonesia: 15%

Ghana: 14%

Nigeria: 6%

Brazil: 4%

*estimated share of world production in 2000-2001

Source: ICCO

This leaves a shortfall of 205,000 tonnes based on projected demand, compared with a surplus of 91,000 during 1999-2000.

The increase in demand has been partly driven by growing markets for cocoa in former Communist countries and eastern Asia.

World cocoa consumption is expected to rise by more than 2% in the next year, according to ICCO.

But bad weather and pest problems in West Africa, the world's top cocoa-producing area, have caused a decline in output.

A new pact

The countries meeting in Geneva want to negotiate a new pact to stabilise such imbalances between the supply and demand.

An existing agreement from 1993 is set to expire in September. The meeting in Geneva is being attended most of the 39 countries that signed up to the 1993 pact.

This week's talks are a resumption of previous talks held last November, which failed to forge a new pact.

Unresolved

At the crux of the negotiations is a conflict between the countries that produce cocoa and those that consume it.

Producers, including Brazil, Indonesia and African states, want good prices for their output, while consumers, such as the Netherlands and Germany, are more interested in a steady supply at a reasonable cost.

The November talks agreed various mechanisms to monitor the market to control imbalances between supply and demand.

However, the delegates could not settle on the definition of a "sustainable cocoa economy" to balance the interests of both producers and consumers.

Another problem was the unresolved issue of using cocoa substitutes and the promotion of cocoa consumption.