Cover Image
close this bookThe Courier N° 126 - March - April 1991 - Dossier: AIDS - The Big Threat / Country Report: Burkina Faso (EC Courier, 1991, 96 p.)
View the document(introduction...)
close this folderMeeting point
View the documentBerhane Ghebray Secretary-General of the ACP Group
close this folderACP - EEC
View the documentFood aid for Liberian refugees - tailored to the environment
View the documentCooperation small-scale energy projects in the ACP States
close this folderCountry report
close this folderBurkina Faso
View the document‘Develop the economy’, says the Popular Front
View the documentUntitled
View the documentA decade to get the better of under-development
View the documentState finances
View the documentEEC-Burkina cooperation
View the documentProfile
close this folderACP
View the documentStructural adjustment and food security in the Sahel: the example of Senegal
View the documentGuarded optimism for African cocoa
View the documentRitual, religion and development in Madagascar
close this folderACP - Regional cooperation
View the document(introduction...)
View the documentCulture and rural development projects in Central Africa
close this folderEurope
View the documentConferences on Economic and Monetary Union, and on Political Union
close this folderDossier: AIDS - The big threat
View the documentAIDS - The big threat
View the documentThe current situation
View the documentThe cost of AIDS food for thought
View the documentAn interview with Dr Michael H. Merson, Director of WHO Global Programme on AIDS
View the documentThe social implications of AIDS
View the documentReflections on the AIDS orphans problem in Uganda
View the documentAIDS in the Caribbean
View the documentThe STD/AIDS control programme in Papua New Guinea
View the documentWhere is the overseas aid for AIDS?
View the documentAIDS control the EEC
View the documentIn search of the magic bullet
View the documentAIDS and blood transfusion in Africa
View the documentAddressing AIDS from a woman’s perspective
close this folderClose-up
View the documentIn spite of regional deficits, good harvest in Ethiopia, EDF projects make an impact
View the documentEEC aid helps Togolese villagers plant forests
close this folderDeveloping world
View the documentThe 1990 DAC Report - Focus on ecology and democracy
close this folderCulture and the arts
View the documentExhibition of contemporary Senegalese art
View the documentThe market men of Northern Ghana
View the documentA Mozambican painter in Brussels: Iņacio Matsinhe
View the documentAfrican literature as seen through some African authors
View the documentFilm industry takes off in Southern Africa
close this folderCTA
View the documentSmallholder poultry development in Africa
View the documentThe courier’s mailbag
View the documentBooks
close this folderNews round-up
View the documentSADCC - Facing the new dawn
View the documentThe convention at work - EDF
View the documentEIB
View the documentVisits
View the documentFisheries
View the documentEmergency aid
View the documentSysmin
View the documentHuman rights
View the documentGeneral information
View the documentSouth Africa
View the documentColloquium
View the documentThe gulf war
View the documentEastern Europe
View the documentEarthquake
View the documentCholera
View the documentEuropean community
View the documentSugar
View the documentECU
View the documentSingle market
View the documentCAP
View the documentEPC
View the documentAcknowledgements

Guarded optimism for African cocoa

Take it easy, take it easy. The future of the African cocoa industry is not as gloomy as the current situation would suggest. This observation is what emerges reading the report entitled ‘La compvitu cacao africain’ carried out by experts of CIRAD (Centre de cooption internationals en recherche agronomique pour le dloppement) for the French Ministry of Cooperation .

Based largely on the comparative advantages the African cocoa producets vis-a-vis their competitors in South America and South East Asia, the authors, in their analysis of trends in supply and demand, lay particular emphasis on the cost of production. They take into consideration issues as wide ranging as the scale of plantation, availability of virgin forests, soil fertility and water retention, and the cost of labour. ‘The game’, they say, ‘is not up’ for African producers. Indeed, in the coming years, cocoa ‘will be one of the rare exportable products of the countries of the Gulf of Guinea’ (Cd’lvoire, Ghana, Nigeria, Cameroon, Sao Tomamp; Principe, and Equatorial Guinea).

That is, at least, good news for a region that is increasingly being marginalised in international trade and for which forecasts speak of increased national or regional use of the traditional agricultural exports (palm oil, coffee, cotton, etc) m the coming years.

If cocoa is men as an exception it is because the factors militating against its domestic transformation are considerable: world over-supply of ground cocoa (about 500 000 tonnes at present), a product with high technological demands, minimum value-added, heavy transport costs from points of production to points of consumption, and difficulty of storage in the tropics, particularly for chocolates.

A vital source of foreign exchange for the economic development of the West African producers (less so for Nigeria), cocoa has not earned much foreign exchange in the past decade because of the over-supply in the world market which has led to falls in prices. At the end of 1989, prices fell to their lowest level in over 40 years. They have sinœ recovered slightly and are hovering between UK £ 650 and £ 750 per tonne.

The over-supply is the direct result of the overproduction caused by the revolution that has taken place in the industry in recent years. At the turn of this century, the West African producers and Brazil accounted for 98 % of the world market. Indonesia entered the scene as recently as the 1960s. It was followed by Malaysia, in a most dynamic way, only 8 years ago. Thus in less than three decades, these South East Asian nations have become the ‘new pole’ in production to which West Africa has lost a big share of the market, about 13 %.

The West African producers themselves have had varying fortunes over these years: Ivory Coast has emerged from virtually nowhere in the 1940s to be the biggest producer with 34 % of the world market, while the hitherto leading cocoa nations of Ghana and Nigeria hold no more than 13 % and 8 % respectively.

Although no major upsets are expected in this pecking order in the coming years, the CIRAD report forecasts a significant fall in Brazil’s production, a less significant fall in Cameroon’s, and stagnation in that of Malaysia, Nigeria and Ghana. Only Indonesia, whose production has consistently been up in recent times, is expected to maintain this in the short term at least.

The Report could not predict Ivory Coast’s production, unable to gauge the effects the reduction in the prices paid to farmers will have on output. Ivory Coast’s potential is put at around one million tonnes per annum (about two-fifths of the world’s total). It currently produces 820 000 tonnes annually of’ which it exports 600 000 tonnes.

The Report notes that although world cocoa consumption has increased substantially, neither the successful launching in 1972 of the International Cocoa Agreement nor Ivory Coast’s desperate attempts to influence prices single-handedly in the late 1980s, have succeeded in controlling supply: the quota system and regulatory stocks foreseen under the Agreement have never actually operated let alone been effective.

A new accord has been difficult to secure, and it was in view of the disarray among members, that the International Cocoa Council, in March 1990, was obliged to suspend the Agreement’s economic clauses and to extend its conditions for a period of two years, with effect from October 1990. The hope is for a new and more effective Agreement to he concluded by October 1992.

The experience of the last 20 years shows clearly that market forces are powerful factors in price determination. The report nevertheless places considerable hope in an international agreement making a significant contribution to the stabilisation of prices. Compiled before last November’s news of an official acceptance by Malaysia to join the Agreement, the chances of such an agreement being eventually effective have been enhanced. Malaysia, it should be noted, accounts for 10 % of the world market.

Stocks during the 1989/90 season were estimated at around 1300000 tonnes. ‘Expressed in months of consumption’, says the report, ‘they hardly exceed those of 1965 which did not prevent a rapid recovery’ in the 1970s. But each recovery or boom in the industry has always been followed, a couple of years later, by a slump. Any recovery this time will be of short duration, according to the report, as this would give a new lease of life to the industrial plantations in Malaysia and Brazil which would, in turn, lead to overproduction and to another fall in price.

Although the threat posed by substitute materials remains as research continues, the Report is optimistic as to a realistic increase in world consumption of chocolates (the increases of recent years being more as a result of manufacturers increasing the proportion of cocoa in chocolates rather than an increase in the number of the consumers of the final products-a growth that is obviously fragile).

It forecasts increases in consumption in the southern countries of Western Europe-Spain, Greece, Italy and Portugal-where it is currently low-in Eastern Europe where the potential is great, in the medium-term, and in Japan where it will accelerate.

Cost of production

The global picture therefore appears encouraging, but this in itself does not guarantee the West African producers a future in a competitive world. The authors of the Report think that although climatic conditions no longer have the importance they once had (frosts in Brazil, for example, which not only influenced prices but gave African producers opportunities to sell more of their cocoa on the world market) because of the appearance of a new centre of production in South-East Asia, the cost of production will be crucial.

And in this regard, they pinpoint phytosanitary problems as being a determining factor: in times of depression in prices, they say, the big, rigid plantation structures of Brazil and Malaysia incur higher costs than the relatively flexible system, close to gathering that the Ivorians, for example, have, which can adapt the level of phytosanitary protection to the prices in force. This, in spite of the West African producers being handicapped in a variety of ways -state control (in most cases) compared to the free, private system in operation in Malaysia and Brazil, high cost of transport, difficult ecological adaptation of certain varieties and the presence of diseases, etc.

The West African producers, furthermore, appear less vulnerable during long periods of low prices, and they have an additional advantage in their extensive system of production, which is due largely to the existence of ‘pioneering fronts’ and of wet, fertile and virgin forests (open to more peasant plantations and offering such plantations protection against dry winds).

The importance of policy

The extent to which the West African producers derive the benefits of these comparative advantages will depend on the kind of policies they pursue: As the world’s biggest producer of good quality cocoa, Ivory Coast is in a position not only to influence prices but also to compete effectively with the potential rival that Indonesia represents. It must, for example, reduce the marketing costs of its cocoa; Ghana and Nigeria, which along with Indonesia, have the lowest cost of production and which have begun to recover their erstwhile vitality thanks to better economic policies, have yet to prove they can regenerate their plantations.


Cacao production by principal production region 1975-2000 (in millions of tonnes)

The authors of this report recognise, however, that the optimism they have expressed is dependent on the current situation not taking a turn for the worse, for example a sudden increase in investment in Malaysia, its cocoa becoming more viable and its production rising to more than 400 000 tonnes per annum or alternatively a sudden fall in world consumption.

A.O.