Financial Times filed a rather dour report recently on the sorry state of the Ivory Coast’s cocoa industry, which accounts for roughly 40% of global supply. Prices in London rose by nearly 70% last year to reach 23-year highs last month, trading at £1,820 a ton (though that also reflects sterling’s fall). Prices in New York, denominated in dollars, rose by more than 30%.
Today, the industry’s prospects appear decidedly sickly. Political turmoil that followed the outbreak of a civil war in 2002 has hindered the investment needed to replace ageing trees. Cocoa-growing, formerly a source of pride, has lost its prestige. The cloud hanging over Ivory Coast’s cocoa industry has fuelled a gravity defying rally in cocoa prices even as the global slowdown has caused prices for other commodities to slump.
With some care, experts say activity in Ivory Coast’s cocoa belt could rebound. But unless a rescue effort is mounted soon, analysts argue this year’s poor harvest could mark the start of a drawn-out decline that will boost cocoa prices for years to come. “If the status quo continues, then the cocoa sector is likely to die a slow death,” said Daniel Sellen, lead agricultural economist with the World Bank in Abidjan. “A complete collapse of the sector cannot be ruled out if there is no action.”
With large numbers of cocoa trees on the cusp of the 25-year mark at which productivity falls sharply, some fear Ivory Coast could be on the edge of a structural shift towards years of declining production, leaving the world’s market more dependent on supplies from Ghana, Nigeria and Cameroon, and from Indonesia.