"This conference couldn´t come at a better time in our efforts to bring the Cocoa Agreement into line with today´s reality", said the Executive Director of the International Cocoa Organization (ICCO), Edouard Kouamé, at the opening session of the United Nations Cocoa Conference 2000. The conference, which runs from 13 to 24 November and has been organized by UNCTAD, is renegotiating the 1993 agreement, which expires on 30 September 2001.
The cocoa economy is in the midst of one of its worst crises ever. Prices have been falling steadily for some time but recently plunged to 1973 levels, from about £1,100 per ton in early 1998 to less than £600 today, on the London futures market (£577 per ton on 14 November). The historically weak prices are a real challenge, Mr. Kouamé said.
The impact of the crisis is all the greater given the dramatic upheavals experienced by the cocoa industry in the wake of liberalization. The abolition of stabilization funds and extension services is leaving producers without any safety net.
Any commodity agreement must be able "to offer better living standards to the operators - in other words, to offer remunerative prices guaranteeing consumers a regular supply in terms of both quality and quantity", said the spokesperson for the producer countries, Lambert N´guessan (Côte d´Ivoire). "The sixth agreement must reduce the glaring inequalities between operators in the producer countries and consumers. The producers are not willing to accept an agreement at any price", he stressed.
Hagen Streichert (Germany), spokesperson for the consumer countries, said they would not consider "market interventionist" mechanisms in drafting the new agreement. While the consumer countries shared the concerns of cocoa-producing nations over the current low prices, there were "no quick and easy solutions". Solutions that included..all the major players in the cocoa sector, as well as stronger participation by the private sector, should be sought. In addition, the role of both the Cocoa Council and the Executive Committee should be redefined.
The main issues in the negotiations, as they appear in the draft agreement submitted by the ICCO Council (TD/COCOA.9/R.1), are: objectives of the new agreement; market organization and transparency; activities in support of a sustainable cocoa economy in the mutual interest of producers and consumers; the role of the private sector in the light of economic globalization; and actions to encourage cocoa consumption and to finance promotional activities.
The first two cocoa agreements (1972 and 1975) contained price stabilization schemes which, according to Mr. Kouamé, "gave donors and producing countries a sense of security, paving the way for a rapid expansion of production". The next two agreements (1980 and 1986) did not succeed in maintaining the stipulated prices but "nevertheless enabled the creation of a 250,000-ton buffer stock, which created a reliable supply for those in the industry", he said. However, as a result of the difficulties encountered with price stabilization mechanisms, the international cocoa community decided in its negotiations of the 1993 accord to retain only those activities concerned with the medium term. "The negotiators recognized the need for action not only on prices, but also, and most importantly, on what goes into setting prices: supply, demand, inventory, the marketing chain and the legal and regulatory environment", he added.
Facts and figures
World cocoa bean production was 2.760 million tons in 1998-1999 and was expected to reach 2.950 million tons in 1999-2000, according to UNCTAD estimates(1).
Côte d´Ivoire, which boasted 43% of world production in 1998-1999, remains the number-one producer. It is followed by Ghana (14%), Indonesia (13%), Nigeria (6%), Brazil (5%), Cameroun (5%) and Malaysia (4%). External factors have seriously affected the production of some countries, including Brazil, where cocoa trees were decimated by the "witches´ broom disease", and the Dominican Republic, as a result of Hurricane George (1998).
As to cocoa bean imports, which totalled 2.145 million tons worldwide in 1998-1999, the United States led the way, accounting for 20%. It was followed by the Netherlands (16%), United Kingdom (11%), Germany (10%) and France (6%). Italy, Belgium/Luxembourg, Malaysia, Spain and Brazil each represent some 3% of the import market.
Bureau: President of the Conference is Ransford A. Smith (Jamaica). The two Vice-Presidents are François-Xavier Ngoubeyou (Cameroun) and Tommy Johansson (Sweden). Adriaan Frijlink (Netherlands) is Chairman of the Negotiating Committee.
