Cocoa

Cacao production crashes… chocolate lovers panic or should

It hasn’t hit home yet, but next year, prices for a sinful indulgence will be considerably more expensive. I refer to the the shortage of cocoa powder the base ingredient for chocolate production. Chocolate products on the shelf today were produced from cacao harvested last year – even years ago – so retail prices haven’t skyrocketed yet. I suspect the chocolate industry expected this shortage for years, as they would have known that cacao production back on the farm was severely declining. Chocolate manufacturers protect themselves from price increases by hedging through the cocoa futures market. But that only slows the inevitable price increases to come from the shortage. Cocoa futures are traded through exchanges in London, New York and Singapore. Cocoa futures contracts are similar to those for wheat, canola, etc. Interestingly, the Netherlands is the world hub of the cocoa trade, controlling 24% of the business, and it’s the largest grinder of cacao beans. Most of their cocoa powder is then exported worldwide. It all started with the Dutch having the most industrial windmills used in cacao grinding in the 18th and 19th centuries.
There are different spellings of cocoa and cacao. It’s widely believed that the term ‘cocoa’ originates from a spelling mistake when the English translated it from Spanish. This is why cacao is the only word used in Hispanic languages, while cocoa is more common in English. What has evolved is that “cacao” refers to the pod and beans derived from the chocolate(?) tree, Theobroma Cacao. The term cocoa is used once the beans have been roasted and turned into nibs and powder, which are then used to manufacture chocolate products. The entire chocolate industry generates over $100 billion annually in business worldwide- unfortunately, the smallholder cacao farmer gets less than 6% of the final value of the consumer chocolate product. Therein lies part of the problem.
So what has caused the world shortage of cocoa and caused chocolate lovers panic terrors? The mainstream urban media tends to blame it on – you guessed it – climate change. Sure, but weather (that’s what climate change used to be called) has been a challenge to any crop production since humans began practicing agriculture. For cacao production in the major West African production area, most of the cacao crop losses have been due to ever-increasing cacao tree diseases like swollen shoot, black pod rot, and witches’ broom. Those diseases have caused 40% of the losses in production.
Other losses are due to illegal surface gold mining, which sees countless hectares of cacao trees being uprooted by criminal entities that corrupt local governments overlook. Perhaps the more significant issue contributing to lower cacao production is that primary production is very labour-intensive and that small growers (2-4 hectares) who produce virtually the entire crop can not make a living growing cacao trees. They also do not have the financial ability, economies of scale, expertise or skills to apply fungicides, pesticides and other agronomic practices to deal with crop-destroying diseases.
Interestingly, the Mayans and Aztecs in Central America, where the cacao tree originated, knew how to deal with disease outbreaks. They just destroyed the sick trees and moved to a new location, cleared out a chunk of the rainforest and planted new trees. That’s a practice now frowned upon by save-the-rainforest zealots. Plant scientists and agronomists have developed new cacao tree genetics and chemical control practices that could deal with disease impact and spread. But as mentioned, that is not possible under existing small-scale production practices.
The answer to increasing production is not just massive disease control measures but commercializing the cacao growing industry to plantation size with corporate investment and professional management. Such an approach has worked rather well in coffee, tea, banana, rubber, pineapple etc production. However, it would take tremendous investment as the cacao tree is less conducive to row crop production and requires shading to maximize production. With present cocoa prices in the $10,000 per ton range up from $1,500 a ton – that might make cacao production more viable.
Perhaps with consistently high prices, commercial cacao production could be started in other growing areas like Papao New Guinea, northern Australia, Ecuador and Colombia. Those areas presently have limited cacao production but seem more open to modern cacao agronomics, plant genetics, and large-scale commercialization than West African production, which has existing intractable problems. In the meantime, expect chocolate products to get much more expensive. Buy Alberta potato chips instead – no shortage there.

Will Verboven is an ag opinion writer.

 

 


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