The United Nations Cocoa Conference 2000 concluded its 10-day session in Geneva on Friday, 24 November, agreeing on two thirds of the draft articles for a new international cocoa agreement but leaving several issues to be hammered out at a renewed session early next year.
In a statement to the final plenary meeting that evening, Conference President Ransford Smith (Jamaica) said that "considerable progress" had been made at the meeting, but that "delegates required more time to complete the necessary work. The negotiating climate was very positive, and participants were convinced they will be able to finalize the successor agreement at the reconvened session".
The draft agreement under discussion was submitted to the Conference by the Council of the London-based International Cocoa Organization (ICCO), which administers the 1993 agreement, expiring on 30 September 2001. According to Mr. Smith, the articles adopted on Friday "include some very important issues, such as market transparency and market monitoring mechanisms, stocks, scientific research and development, and private sector participation. The final status of some of these provisions will depend on the outcome of negotiations on articles still pending. Among the articles still under discussion are those relating to cocoa substitutes, cocoa promotion and the sustainable cocoa economy."
In a resolution adopted Friday evening, the Conference noted the progress made towards a new agreement; reaffirmed its desire to continue to negotiate a successor agreement to the International Cocoa Agreement, 1993; and requested the Secretary-General of UNCTAD to make arrangements to reconvene the Conference from 26 February to 2 March 2001 to enable it to complete its work.
On the last day of its 2000 session the Conference agreed on arrangements to institutionalize the participation of the private sector in the work of ICCO. It established a Consultative Board on the World Cocoa Economy, composed of experts from all market sectors, such as trade and industry associations; national and regional cocoa producer and exporter organizations; cocoa research institutes; and other private sector associations or institutions "having an interest in the cocoa economy". Acting in an advisory capacity as a subsidiary of the ICCO Council, the Board will identify threats to supply and demand, propose actions to meet the challenges, and facilitate the exchange of information on production, consumption and stocks. The Board will comprise seven members from exporting countries and seven members from importing countries, to be appointed by the Council every two cocoa years.
The Conference also established a Market Committee of the Council "in order to contribute to the greatest possible growth of the cocoa economy and the balanced development of production and consumption so as to secure a sustainable equilibrium between supply and demand". The Committee, composed of all exporting and importing members, will review trends and prospects of cocoa production and consumption, stocks and prices, and identify market imbalances "at an early stage" as well as obstacles to the expansion of cocoa consumption. It will examine annual forecasts of production and consumption, on the basis of which "exporting members may undertake to coordinate their national production policies".
Also under the articles agreed on Friday, all members undertake to endeavour to remove or substantially reduce domestic obstacles to the expansion of cocoa consumption and to provide information on relevant domestic taxes and customs tariffs.
Outstanding issues
Articles of the draft agreement on which negotiations will resume next February include those on the "sustainable cocoa economy". At issue is what constitutes the appropriate management of cocoa production - appropriate both for exporters, who want a reasonable return on their investment, and for importers, who want to ensure cocoa stocks do not fall so low as to drive up prices. Security for both sides was provided by the four previous agreements, although to varying extents and using different mechanisms, some of which have been dropped from the present accord.
Some 70% of the world´s cocoa plantations are currently located in West Africa, where the political environment as well as soil depletion have in some cases prompted fears of overdependence on a single region and subsequent moves to "diversify" cocoa production to new locations, according to an African delegate. Negotiators are seeking language that would balance the principles and objectives of sustainable development as contained in Agenda 21 (adopted by the United Nations Conference on Environment and Development in 1992) with the desire to improve the socio-economic situation of farmers and to make the marketing chain more efficient. Quality control is another aspect of cocoa management which negotiators want to include in the agreement.
Not unrelated is the matter of cocoa substitutes, which some producers fear are undermining the quality of chocolate and the expansion of cocoa consumption. Some members of the 1993 Agreement are seeking regulations that would authorize the use of cocoa substitutes, which would harm cocoa producers. The European Union, for example, which formerly required that chocolate could be produced only from a combination of cocoa butter, cocoa powder, sugar, powdered milk and lactic lipids, last August lowered those requirements to allow the use of up to 5% vegetable fats. The new regulations make it possible for processors in importing countries to produce more chocolate using less cocoa imports.
The total value of chocolate beans is US$ 2.4 billion, whereas the value of processed chocolate is US$ 60 billion.
"We have been renegotiating the basic elements of the current agreement", ICCO Executive Director Edouard Kaoumé told a press conference on 22 November. He said the tasks of the conference included ensuring a new form of participation for the private sector, which had previously played a merely advisory role but which, with globalization, needed "a much stronger role". Secondly, the conference set out to ensure the sustainable production of cocoa, both for environmental protection and to provide for the socio-economic welfare of farmers. "If nothing is done, and prices continue to fall, farmers will abandon cocoa, prices will rise, and then the consumers will have a problem", he warned.
Better production systems were another goal, as was promotion aimed at a substantial improvement in demand for cocoa consumption. Promotion, in turn, was linked to the problem of arriving at an equilibrium between supply and demand, Adriaan Frijlink (Netherlands), Chairman of the Negotiating Committee, told journalists. Sustainability also had an impact on the chain of production and processing, he said.
Members of present Agreement
Some 35 countries and the European Community participated in the meeting; there are 39 members of the 1993 Agreement, together accounting for 82% of world production and 70% of world grindings of cocoa beans. The world´s top producer and exporter is Côte d´Ivoire (44% of world volume), followed by Ghana (15%). Most of the leading cocoa-exporting and importing countries are members of the Agreement and attended the conference, with the exceptions of Indonesia (number-three exporter) and the United States (number-one importer). Exporting members are Benin, Brazil, Cameroun, Côte d´Ivoire, Dominican Republic, Ecuador, Gabon, Ghana, Grenada, Jamaica, Malaysia, Nigeria, Papua New Guinea, Sao Tome and Principe, Sierra Leone, Togo, Trinidad and Tobago, and Venezuela. Importing members are Austria, Belgium/Luxembourg, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Netherlands, Norway, Portugal, Russian Federation, Slovak Republic, Spain, Sweden, Switzerland and United Kingdom.
Cocoa production for 1999-2000 is estimated at 3.003 million tons; world grindings - which represent the amount of beans processed either in exporting or importing countries - at 2.948 million tons. The ICCO is projecting a production surplus of about 65,000 tons for this year, with a similar amount likely next year. At the same time, daily prices of cocoa beans have plummeted to an average £625.90 per ton this year on the London futures market, their lowest in 27 years.
"Overproduction is a profound problem, one that extends beyond cocoa and touches on relations between developed and developing countries in general", Lambert N´Guessan (Côte d´Ivoire), spokesperson at the Conference for the producer countries, told the 22 November press conference. An agreement that led to reasonable prices for the commodity would ultimately benefit all parties, he said.
UNCTAD has been closely involved with commodities and their role in development since its establishment, seeking to stabilize world commodity markets by promoting the negotiation of international commodity agreements. Other commodity agreements negotiated or renegotiated under UNCTAD auspices concern sugar, tin, rubber, jute, olive oil and tropical timber.
The United Nations Cocoa Conference, 2000 met in Geneva from 13 to 24 November to negotiate a successor to the 1993 agreement. (For background, see press releases TAD/INF/070, 071 and Corr. and 072.)
