Destruction by Chocolate

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Description

New Research from Hardman Agribusiness Highlights Major Concerns for future of Cocoa Production

Ground breaking new research entitled “Destruction by Chocolate” from Hardman Agribusiness has been published today focusing on the faltering supply of cocoa and its sustainability.
The report details the starkly contrasting state of cocoa production across three continents and concludes that the future of cocoa production is being designed in Latin America where the crop is being re-imagined.

Its author and Managing Director of Hardman Agribusiness Doug Hawkins commented:
“Cocoa is a fragmented sector, and not well documented – barely documented at all. With the commodity in shortening supply and now being a $12bn plus annually traded segment in the softs market, there is a swell of developing interest in its production and capital flows are increasing to support that production. Our research report lays bare a spiral of decline in Asia and the unpalatable truth about African production whilst shining a spotlight on the exciting developments in Latin America.”

Key findings from the research include:

  • A billion or more new consumers of chocolate confectionery have entered the market across countries such as China, Indonesia, India, Brazil and the FSU.
  • The demand generated from these consumers has exposed the critical weaknesses of a cocoa supply sector, dependent for 95% of the global crop on the world’s poorest farmers, using agri-techniques that would not have looked out of place in the 17th century.
  • Unless cocoa yields increase or consumers eat fewer chocolate bars, more tropical forest will be planted for cocoa. This is not sustainable.
  • In the first 12 years of this century alone, 1.275m new hectares of African land were planted with cacao trees, an increase of 25% in harvested area, but over the same period African cocoa yields expressed as metric tonnes per hectare, have expanded by less than 7%.
  • A typical Western consumer is likely to munch his or her way through 5.5 bars (35g) or their equivalent, of chocolate per week: 286 bars annually and many more if that consumer resides in Belgium.
  • Ten cacao trees somewhere in the world will have to be planted to produce the raw cocoa products (powder and butter) that make these 286 bars equivalent so appealing.
  • Despite rising consumption levels amongst Emerging Market consumers (principally China, India and Indonesia) they still only consume a fraction of western levels (100g-200g per capita).
  • Unlike other tree crops that have benefitted from the development of modern high yielding cultivars and agronomy techniques to realise their genetic potential, Cocoa methodologies have not changed in hundreds of years.
  • Whereas yields (metric tonnes) of oil palm fruit harvested per hectare across the world have increased by 33% in the first 13 years of this century, global cocoa yields have flat lined at circa 0.4mt/ha.
  • Reports suggest that the increased focus on cocoa production in the world’s top producer country Ivory Coast (40% of the global crop), has led to wide scale illegal farming of its protected forest areas: leading to the destruction of the environment by chocolate.
  • The leading names in the global chocolate confectionery, cocoa processing and cocoa trading sectors have invested hundreds of millions of US$, in projects to improve the outcomes for African cocoa farmers, but despite this the African cocoa sector is structurally blighted.
  • Numerous initiatives have been launched in the name of sustainability: CocoaAction and Cocoa Horizons Foundation being just the most recent.
  • However judging by past performances, these initiatives, while worthy in their aims, appear to have their greater impact on social welfare issues and brand projection, than in the drive for sustainable cocoa production.
  • According to Mr Hawkins, behind the debate about the likely size of an apparently inevitable supply deficit, and through the fog of sometimes doubtful data for harvested areas, there emerge stark regional messages.
    “Asian cocoa production is in a spiral of decline, African cocoa production cannot be described as sustainable and only in the Americas is a vibrant, progressive cocoa culture developing which offers the hope of a sustainable, reliable supply of high quality cocoa.
    “Demand is growing faster than supply and for the downstream sector the possibility of a supply shortfall is a looming nightmare. In no other important commodity or business sector is there such a fragile balance between security of commodity supply and downstream brand performance. This fragility has increased with the emergence of the big new economies in Asia, Latin America and FSU.”
    “Despite these challenges, the price of traded cocoa in the international commodity markets has trekked firmly upwards, counter to the trend in soft commodities more generally, especially noting growth in downstream consumption.”

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    For further information or to access a copy of the full report visit: www.hardmanagribusiness.com or contact Doug Hawkins (dh@hardmanagribusiness.com) or Yingheng Chen (yc@hardmanagribusiness.com)
    Press Enquiries:
    Belvedere Communications
    John West / Kim van Beeck: Tel: +44 20 3567 0510
    World Chocolate Sales Volume