INTEIDTATIONAL J3Al\jK FOR RECOi~STF.UOTION ./UID DE'T3LOP~t3:;"rT 66855 / Prepared by: I~urice F. Perkins Agricul ture Sect~o'n December 16, 1948 TABLE OF CONTENTg; Summary Preface 1 Production and Exports 1 - 8 Conditions of Product!on Products of Cacao History of Production Imports and Consumption 8 - 12 Imports Consumption Prices 12 14 Present ana Future Prospects 15 - 17 Tables: Exports of Cacao Beans from Principal Pro(lucing Countries Het Im:norts of Cacao Beans into Pr5_ncipal Importing Countries World Production of Cacao Beans CACAO- fRODUCTIOli, CONS1J1:WTIOl'T .Al\lD TRADE 5m1MA.RY 0 Climatic requirements restrict cacao cultivation to an area wi thin 20 l,-crtl and south of the equator. Cacao beans are classified as "be.se" or "flavor" grades, the former of which constitutes about 90 percent of total produ.otien. About two-thirds of world production is located in West Afrioa, p~rticularly in the Gold Coe.st, Nigeria and the Ivory Coast; most of the remainder is pro(h_~.ced in Central and South America, -particularly in Brazil. The four above-mentioned areas produced ~,pproximately 75 nercent of total \-lOrld production pre~"ar. The demand for the products of the cacao bean is located largely in the temperate zones, particularly the Un! ted States C'_ud E>.:trope (Great Bri taillt Germany, the Netherlands, and France). The high standard of living in these c,,~~tries is an important factor, as cocoa and chocolate are largely huury goods The constantly increasing demand for chocolate and its products largely account for the ability of world markets to absorb an increased world production over the past 50 years. The phenomenon of the cacao trade prior to World War II has been the rapid expansion in African and Brazilian exports between the t\,lO World liars. This factor :;>lu9 the decline in demand caused by the Great De'l)ressioll created a P'3riO( of over-supply during the 1930' S lemd prices declined to 10\'1 levels. During World War II. the situation changed comJletely. Marketing diffi- culties, lack of consumers' goods in procucing areas, emphasis on the liroo.uction of more strategic Goods and the inroads of the s't!Ollen shoot disease in West Africa resulted in a, considerable shrink"age in prod:tlction. Follovdng the termina- tion of the war and the removal of controls, a greatly expanded demand in the face of a restricted supplY forced New York cacao bean prices over 800 nercent above 1939 levels. - 2 - The presence of a nu.rnber of diseases and insect }Jests I and the lengtl~y IJerio' required to bring new pla.nting into procluction is he.mpering any- sUbstantial in- crease in production. It is unlikely, for these reasons, that 'tmrld out~Jut i"ill expeml at the same rate as occurred prior to \'lorld War II. As the long-run tre:"iO in dema.nd is upward., a nariod of relatively high prices compared. vli th pre\·:ar is in prospect und.er normal economic conditions. PREFACE This re:oort attempts to cover briefly the important long-range factors ',,,;d.c>. have affected the cacao industry in the past ancl to present a short ap::?raise.l of their operation in the future. It does not attempt to cover all aspects o~ the cacao market, the characteristics of production, trade and consumption ill ir.di- vidual countries (except insofar as they may be significant in tIle develo-"nent of the industry) nor the short-run market position. (a) Condi tiQns of Production The climatic requirements of the cacao tree are much more importe.l1t t~1£:n soiJ conditions. It gro'llls best in a hot. humid. atmosphere along streams in locations ha." ;..ng a mean shade teMperature of e,bout 80°F. uith a varigtion of not nore than o 15 above or belol//. A well-distributed rainfall of not leas than 50 ind.as a yeal is required, the emphasis being more on the even distribution than the absolute amount. It grows gener!'tlly in 8, renge of altitude from a few hunclred to 1000 feet above sea level. The most favorable conditions are found in a belt 20° north end. south of the equator, but most production is now wi thin 10° of the equator. The ])riacipHl ar;:e are West Africa and Northern Brazil, bu.t an apprec:i.able quantity still comes from the older areas in northern South America and the Caribbean. Cocoa is nroduced from cacno beans 1'/'hich are the seeds of the tree "TheobroInr cacao L." Pods 6 to 10 i11ches long, or about the size of a, small c~~ntaloupet gro\'.' along the trunk and major branches and contain from 25 to 40 seeds eMbeo.ded in a soft pulp. These seeds when cured are the caCao beans of commerce .. The tree r,roQuces cacao beans in commercial quantities from the 4th or 5th year after planting. The maximum yield occurs from the 8th to the 15th year; if given adeq'l.w.te care the tree ,,,ill continue to bear until the 50th year or even - :2 - longer. Yields vary considerebly depending on clioatic conditions, the soil. v2,rieties grot'ln, age, health of the tree, and cultivation metho<'!.s. The 8Vel'age yielc. of cured beans is between one and h!o pounds per tree. The forme.tion of tee pod from the time of flo\·:ering to the ripe!ling stage requires 6 months. The beans are harvested the year round, but in most cou:r:t:c:'es there are two principal harvest periods designated as the main and intermedi8.te crops. The pods are C'llt from the tree and ~re then opened and the seeds rer"o-ved vi tl: a wooden spatula. Thereafter, the beans are processed before Shipment in order tc remove the attached -culpy material. Under the most primitive netllods this usuall~ consists of drying in the sun. As the flavor and aroma is fixe'd largely in this 'Processing stage, good quality beaus are fermented. for about a "leek. This results in the separation of the seed from the pulp 1rlh:\.ch gradually decomposes and <".i8- solves. The beans are then 'lrlashed and "dried. Shipment is in jute bags. DJ.e to the development of mold in tile humict atmosphere and v!GrID inies:;2tion, storage in the tropics is not feasible. Shipment from e:>:porting c01..u'ltries. there- fore, is carried out as soon as :possible after harvesting and Tlrocessing; the beans are then stored in the im:9orting countries. In the temperate zone be2ns may be stored up to a maximu...'U of 5 years but in normt'tl T'ra.ctice stocks are not held longer than :2 years. The flavor quality imparted into the cacaO bean is affect.ed by l"L'ilost every step in the production and marketing process-cli:nate, soil, Variety gro"m, methods of cultivation and curing, proper transportation and storage. The caCaO beans of vlOrld trade are classified as "base" and "flavor" grades or as "ordinary" and "fine n. These stande,rds are based largely on the t1J10 main varieties pf tree gro1rm: Criollo vhich produces the fine cacao and Forastero, the ordinary cacao. All African colonies I Brazil and the DominicRn Re-oubl1c are base-grade produc- ing areas, their narticular products being given the names of the chief ports - 3 - such as Accra. Lagos, Eahia, and Sanchez. Venezuela. Ecuador and the 3ritish \lest Indies produce the bulk of the fine cacao in "'hich category B.re inclucled Jav, and the Samoa types. The production of Haiti, Costa Rica a::::d Penema falls Dicl\-i['.y between the base and flavor types. Most of the base-grade cacao beans, which form about 90 percent of wo~~d production, is grown on a ve17 large number of small fams. In the Gold OOP.at a..YH Uigeria, sme.n plantings are the rule; sizeable plantings, the exce:ption. In French Africa (Ivory Coast), the industry is largely in the hands of the natives but about 5 nercent of the acrce.ge is in Europe.r:.n-owned pIA,utations. Nati-ve- ovmed farms (some community farms) are tb.e rule in t::-te French CamE-roons. In Ferr.ando Po, S~tO Thome and Principe, about 90 percent of the crop is plnxitation. In Erazil, most of the crop is nrodt:.ced on small holdings (fazendas). Small-scale peasant farming is the rule in Rei ti and the Dominicn.n 3epublic. Most of the flavor grades are :prod~~ced on a plantation scale. In EC1.:2.dor, a plantation of 300.000 trees is of ordinB.ry size; in Venezuela, the unit is usually smaller than this; some scale a.own to a.n almost neasant type fam:.. Pro- duction in Trinidad, Grenada and Jamaica is on sste.tea. Local labor supplies are insufficiel1t in mar..y of the larger producing areas and migratory '"orkers assist 'l'r:i.th the harvesting. In the Gold Coe,st, ernplo~1'nerJ.t of lecbor, even when the ll/',ttive o"ms his ferm, is a regulc.r practice. (b) Products of Cacao Cacao and cocoa products are trad.ed at various sta.ges of manufactu.rej at each. differing technical terms are used to describe the yl'oduct. "Oacao" refers to the dried bean as i t leaves the exporting country. The bean contRins t1:!O main se-parable substances--a pO'lllder and a fat (cocoa butter). lIOocoa massif refers to the nroduct produced "'hen the caca,o bean is first processed c011te.ining a full fat content. "Cocoa 't denotes cocoa mfl.SS from which tl1e fat has been partly extracted, 'ltlhilst IIchocolatefl denotes cocoa mass to "rl'dch fat has been added. In adell tion to - 4 - the two chief ,,!'oducts--cocoa and ch.ooolate--the cacao bean also 1)!,oauces theo- bromine, fl.n ingredient of coca-cola a:ld similar 'beverages; it is a.lso used for medicine,1 purposes. In the production urocess, the cocoa "nib" (1. e., tte Gj".c:ll,)' and broken up bean) is entirely consumed. The shell is used as a. cattle fe0d (!:l.fter being detheobromized) and. as a fertilizer. (0) History: of Production The o&.cao-producing areas export fl.1most all their output so that the follol/{- iug table of exports from 1898 to 1938 ShOt-IS the ra,pid. expansion in production: World Cacqo E~orts 000 metric t0r.t.e. Index 1898 86.8 100 1908 192.5 222 1918 274.2 3 16 1928 514.4 592 1938 706.9 815 Source: Bulletin of the Imperia.l Institute. This development of the cacao industry 118.8 been e.ccoID!,a.nied by some remarka- ble swi tC:1es in the leading centers of pro auction. Soon after the Spanish ~ " .' invasion of l,le:tico. cacao was introduced into Spain from tl1at COfu"1try. During the next hu.ndred years or so, Venezuela. became the 9rlncipal exporter a.nd con- tinued in this role up to about 1860 whelt she we,s surpassed by EC11ador. By 1910, Ecuador was in turn surpassed by Brazil 'vhich held the lead for 10 years "Until nroduction on the Gold Coast expanded rauidl;v. At that time, the west coast of Africa beCAme the center of world :production. Prior to i10rld vlar II, the colonial areas of West Africa accounted for 67 percent of world ~roduction and Brazil, almost 17 percent. - 5 - There has thus been a ste;:,Cly shift from the Americas to Africa: World Exnorts of Cacao Beans from Proaucing Countries Average 000 metric tons perce~t of tot~l index l1ux\1bc~~s Period Total Afric g Americas Total Africa Ame:~icl'!,s Total AfricC'. Am C' ,:' 'c c ?l'i. 1910/14 244.7 88.1 150.1 100 3 6.0 61.4 100 100 100 1915/19 338 •4 155·3 176.4 100 45.9 52.1 138 176 113 1920/24 428.5 23 8 • 2 183.8 100 55.7 42.9 175 271 I?? 1925/29 511.0 3 25.9 177.4 100 63·8 34.7 208 370 118 1930/34 560.5 370.0 182.3 100 66.0 )2.5 229 420 121 1935/)9 711.5 489.3 214.5 100 68.8 30.2 291 C;::;,5 ~../ lLV~ 1940/44 526.6 344 • 1 173.5 100 65.4 33·9 215 391 119 Source: U.S. Department of Co~~erce The shift would have been even greater in recent yea.rs, if it 1f.!ere not for the in- creasing production of Brazil. For the past 35 yea.rs, production in Centrel America has remained. fairly constant \'lhile that of Ec~dor nnd Venezuela has d.o- cUned.· • \vorld Cacao Produ.ction 000 metric tons uercent of total 1924/25- 1929/30- 1934/35- 19 24/25- 1929/30- 1934/35- Country 1928[29 1213[34 123 8 /39 1928L22 ;1.21 1[34 191 8 /'3.9 Brazil 68.1 21.6 129.2 1~.2 15·8 .1".6 ~ Other Americ!? 82·8 21:-.3 24 .2 12.4 12.2 10.2 DominicBl1 Hep. 22.1 21.3 24.5 4.3 3·7 3·3 :Beue,dor 23.9 16.0 19.2 4.6 2.7 2.6 Venezuela 19.2 16.0 16.8 3·7 2.7 ') ;J ,~. '" Trinidad 24.6 21.0 14·.4 4!8 1. 6 ;:2.0 Africa 113·3 362.6 47,2.6 60.6 62·5 . 6~:3 Gold Cce,at (inc!. Togo) 229.7 2/H.4 282.2 44.4 Li.1.5 38.2 1ae-eria 42.4 59.2 94.8 18.2 10.2 l~ .8 Fr. \V. Africa 10·5 27.7 49.0 2.0 4 .0 Q 6.6 Fr. Ca'lleroons 7.0 14.4 27.0 1.4 2.5 3.7 Sp. Guinea 7.0(a) 12.1 9.0 1.4 1.6 1.6 SeW Toma- Principe 16.2 10·2 10.5 1·2 1.9 1!4 Other(b) 42·2 ,22.1 . :2'Z!2 8.8 2·0 Z·2 TOTAL 212.1 :280.6 ,3 8.3 100.0 100.0 100.0 (a) Less than 5-yea,r avera.ge. (b) Includes some smaller producers in America B.nd Africa. Source: International Institute of Agriculture The shift in the c9Dter of nrorr~etion to West Africa and Bra~i1 has been ac- companied by the ~redominance of base or ordinary grades of cacao over fine or flavor grades. Fine cacaos now constitute about 10 percent of total production - 6 - compared with 65 percent in 1900. The principa.l cause of this decline was the planting of Fora.stero types instead of Oriollo tJ~es. The former have been nre- ferred bec!:mse they are hardier and have larger yields than the Or1011os. C:,oco- late manufacturers, in the absence of larger supplies of fine cacao, have oevelo~€r processes enabling them to use increased quantities of ordinary cacao. Also, ordinary cacaos are used for the extraction of COCO(:1, butter. large quanti ties of which are used in the IDf\,nufacture of chocolate confE'ctions. ' Up to the nresent time, the relative ease of :?roducing Cl:lCaO 8,:rd the existencE' of readily available land hcts led to a system of extractive (:1,griculture and loose methods of production . ./here s, system of na,tive agriculture exists. In many coun- tries, a large :oroportion of the trees a,re now' re1'.ching an advanced age ui til con- sequent declining yields. Moreover, the development of sreci8.lized cpcao areas has led to the growth and spread of disease for "'inicn inefficient management 1')l'ec- tices are nartially responsible. For exa.llple. today, 90 :?ercent of the trees in some areas of Bcue,dor are heavily diseased. lergely because close :9l<:mting [md im- 'Oroper :oruning years ago favored the snread of the t,,!O destructive disea.ses-- witchbroom and monilia. 1J This situation has led, in the older areas of Central and South Arrleric~, to the stable or declining outnut at levels below peaks reached prior to \vorld. ihr :r:. If these trends are to be reversed. the old extractive method.s must gi va 'Ii'ay to more scient:i.fic processes and better ma.nagement iJractiees. !/l'litcn Broom - This is a parasitic mushroom 1:<,h1ch attacks the ti·.'igs ca'J.sing a pro- liferation of small extensions, producing a broom-like effect at the ends of branches. The spores a~lso infect the pods cauting a form of rot. i:o ver~rprac­ tical methods of control have been found. Oonsiderab18 progress has been made in developing cassase-resistant strt'd.ns. The disease appeared in S1.1.rirw;rJ in 189.5 in Ecuador. about 1922; and in Trinid8.d, in 1928. Since then. it has become genert'll in Venezuela. l'1herever the disease has ap:oeared, it has resulted in a decline in ~roduction on a considerable scale. Monilia - This fungus disease attacks the nod ca"J.sing it to rot. It 'lJlaS first noted in Ecuador in 1917 and so fe,r has been limited to that country. It is most severe in the eastern part of the country. where rainfall is high. but not so mud in the drier area.s ,,;here most of the high-quality "Arriba" is grown. - 7 - But a simil""r sitwtiol1 may be developing in established :nrodu.ction regions i: Africa, where, once a native farm is stated, little care is given tr.e trees beyond a pe,riodic cutting of undergrovJth. During Korld i'{ar II, the ce.cao situetion Was denressed by the r..ati ve r s atti- tude to the disappearance of cons'U.'ilers' goods and, in most areas, greater Cl"t:entic: Was given to increasing the supply of more strategic foods and i'Jar materi[~ls. In some cases, this meant the migration of labor. The cOllsequer;,ces \'Jore a cessation of planting of new trees and a cumulative deterioration of these in :production. This latter factor, no doubt, fac:i.1i tated the spreacl of disease. The worst instance is the Gold Coast where a disease known as s\vollen shootY is wideSl)read and current levels of nroduction are 1I1e11 bolO\'I !lreitlar. It is claimed by some thr>t unless the dlsee,se is halted tee industry faces extinction within the next 20 years. :Before the war. it was estime"ted to be ki1J5ng around one million trees a year; by 1945, this figure amounted to 5 million and one esti- mate places 1947 losses at 15 million trees. Unfortunately, the only method yet known of combatting the disease is to cut out the infected stock an(l replant. It is difficult to get the native planter to do this, as it takes two years or more for the disease to kill the tree and he is reluctant to sacrifice it i'Tlmedte.tely and lose a nrofi t of one or t . . JO years t yield, even though a reduced one. To some of t.i1e countries. where cacao is 1'Jrot~uced. the position of the in- oust!"'; is of considerable importe.nce, ~oarticularly in '''lest AfriCa: YSwollen Shoot - This (liseaee is e. virus complex W111Ch freq-'lently kills trees ¥lithin two years after infection occurs. T11e young shoots 8\"Je11 and tl1e leaves fall. The virus has been found to be transmitted to the trees by mealy bugs, the cacao Psyllid and the caCM A1)lus. It has become general in ''lest Africa. and haS been very destructive in the Gold Coa.st and the Ivory Coast. Another destructive AfricC'.n "pest is Cansid Bugs. These suc:dng insects :puncture the leaves a.n6 small stems and enli t a toxic subst2.nce that destroys adjacent tissues. In case of heavy infection the tree may (lie in t,,!O or three years. These bugs are prevalent both in Nigeria and the Gold Coast. - 8 - Relative Value of Cacao to Total Exoorts (nercent) ~ 191.J.6 French CaMeroons 34 34 Fren~~ West Africa 13 6 Gold Coast 41 47 lJigeria 17 22 Brazil 4 4 Costa Rica Dominican Re~ublic 8(a) 13 .. 7 Ecuador 23 15 Grenada 47 26 Panama 16.2(a) •• Trinidad 7 2 Venezuela 1 2 (a) 1934/38 average. Source~ COJ!l.monwealth Economic COln.'11:l ttee U.S. Department of Com;::erce 1I.. n·U'Oft~"U) CON~.!!.Q! (a) Imports The concentrattn of export trade from Africa and tropical Central and South America is paralleled on the import side by a relatively feltl large ir;:oorters in Western Europe and North America. Imports, however, are not a g~ide to COnsTh~ption as exports are to production, since there is a further tra(le in processed products. 'World Net Innorts of Cacao Beans Average.. 000 metric tons percent of tote.l incle:x: nUlUbers Period Tota.l Europe !l§! Total Eurone 1L§A Total, E}1:lr~ VSA 1910/14 242.7 169.1 6).6 100 69.7 26.4 100 100 lao 1915/19 328.4 177.0 135·3 100 5).9 41.2 135 le5 213 1920/24 422.7 249.3 153.1 100 59.0 36.2 174 147 241 1925/29 492.5 277.1 185.6 100 56.3 37.7 203 164 292 1930134 539.3 314.8 194.1 100 58.5 36 .0 222 186 106 1935139 681.7 375.2 261.6 100 55.0 38.3 231 222 411 1940/44 529.0 219.8 254.4 100 41.5 . 48.0 218 130 400 Source: U. S. DeT)art.ment. of COJnl'1.erce The largest pronortion of ::Urorean imports are concentrated in 4 countries: the United Kingdom. Germany, Netherlands, and France. Over the 40 years prior to W'orld War II, the proportion of total imports of t~lese five countries reme.ined fairly stable at about 80 percent. though the nroportion going to the United States in- creased considerably whilst that of Germany, the netherlands and France tended to - 9 - lmoorts of Cacs:to Bean,!;! (percent of vTorld total) 1898 12Q.a ma 1228 lq~8 Great :Britain 16.2 12.7 19.4 11.8 1.5 .2 Germany 17.8 20.6 15.7 12 •.5 Hetherlf'.nds 15.6 9.5 0.7 9.6 11.8 France 12·~ 12.] 1'3. 0 2. 1 6·2 Total 62. 1 .22. 1 J.:h.1 44.2 _.!±6.2_ United States 13·1 25·2 . 48.9 '24.0 J1JL Total 82.2 81~O 82.0 28.2 28 ·L Source: Bulletin of the Imperial Institute decline relatively, thouCh the absolute qUlmti ties increased. About 15 perco,lt of tots.l world imnorts 1t,ere absorbed nrev!ar by Czechoslovakia. Switzerlalld, BelGium, Sweden, end Cana.da, leaving .5 percent for the res:t of the '\:;orld. Although the pattern of prewar trade 'V!as dominated by the large ')l'oducers-- Africa and Brazil--and the need for quanti ties of fine cocoa for blendi:::g nurposes, there are incHes,tions of trade pattsrns 0:.1 colcnial lines. '2he Un: ted Kingdom ob- tained most of her imports from her Afric~~ colonies, ciliefly the Gold Coast and Nigeria; France, from her colonial possessions--Ivory Coast, Fro~eh C~T!eroons and Togol~~d; 1:rathor1ands supnlies came largely from the :British colonies 8.nd. secondarilY', from the French possessions. German import sources fluctu8.ted; in the early 1930 I s, the Gold Coast and i'Hgeria shil):ped the bun: of her surrplies, but in the latter 1930 I s these sources declir:ed in importance and im:r)orts :;"ron 3re.zil, Ecuad.or, Venezuela, and some Centre~l Arof'rican cO".ll1tries, increased.. The vni ted States d.rew henvily upon sources of su:p"ly in the Western Remi sphere t?';.i -::{; eJ.most all of the Dominict:111 Renublic's exports, the mz_jority of :Brazilian sUJl;;lies· and a good -proportion of exports from such countries as Trinidad, ECUEtclor a.nd Venezuela.• The bulk of the remfdning imports came from the Gold Coe.st and lUgeria. Canada obtaine~_ her imnorts from 3ri tish possessions in the 'wIest Indies. The shortage of cacao in rel?tion to demRnd t\Thich has existed sj.nce the lattel nart of the war has resulted in \'iOrld a.l1ocCl.tion of surpluses since July 1941~,. The Interna.tiona1 Emergency Food Conuni ttee thus controls e:::.:portable surpluses up tc Se~tember 30t 1949. '\'" 10 - (b) Consumution Cocoa :products are generally more appreciated in the cooler latitudes than in areas of high temperatures. The manufacture of chocolate and goods conte,inlng chocolate is by far the most important line of :production in which cacao is used as a raw materie"l. There are a number of other \lses. however, such as tIle fficnu- facture of cosmetics. :Before the large increl'1se in the cOl1sumntion of eatil16 c.b.ocolate took ulace. cocoa powder was the main end product; nc..·'! it is cocoa butteI 0-. c. Although cocoa as a beverage has competing substitutes in the form of tea, coffee. etc •• there is as yet no commercial substitute capable of taking the :::>lace of chocolate. The absolute world consumption of cacao, as iudicated by production auf trade data, has increased at a considerable rate over the past 50 years, The standard of living in consuming countries is a factor of considerable im- portance in the demand for cacao; most cocoa products are consumec in countries having a high standard. Even in the most advanced countries chocolate and cocoa have become foodstuffs for the masses only in the inter-1tlar period. Cocoa ar~d chocolate are still luxury foods for peopleS 1I.,hose ste,ndard of livi:ng is low com- pared lIJith that of the countries of Western ciVilization; moreover, they 1t!ould not be classified as necessaries even in countries where consumption is relatively h1g1 Accurate ner canita data on cocoa consumption are difficult to obtain, as the cocoa content of imported or exported ID?nufactured goods are not knmm. This difficulty becomes of paramount inportance in the case of the Netherlands ?nd Swi tzerle,nd, the only two countries \'\There the cocoa-consuming industries have been primarily developed with an eye to export, and 'r/here countries al'e large importers of cocoa preparations, e.g •• Ca.nada and Belgium. -11- Per Capita Consumntion of Cacao Deans (kg. per head) 1925 193 2 Crude COl"n!SC ted Crudt} CorrectQp United States Data 1.42 ~ 1.40 - Data 1.71 Data 1.52 Netherlands 6.42 1.60 4.98 1047 Belgium 0.90 1.28 1.11 1.47 Swi tzerla,nd 1. 75 0.89 1.32 1.43 Great Britain 1.27 1.25 1.47 1.3 6 Denmark 0.61 1.01 1.01 1,36 Germa~ 1.26 1.23 1.24 1.22 France 1.09 1.17 1.08 1.04 Canada 0.77 1.14 0.77 1.10 Austria 0.72 0.80 1.00 0.99 Czechoslovakia 0.54 0.59 0.70 0.80 Sweden 0.61 0.68 0.71 0.78 Norway 0.76 0.71 0.70 0.70 Spain 0.44 0.44 0.41 0.43 Argentina 0.12 •• .... 0·37 .. Hungary .:t. 0.27 0·30 Italy 0.20 0.22 0.16 0.18 Poland 0.04 0.17 .. Source: Bulletin of the Imperial Institute The moverjent in "Del' ca'Oita su:?:olies for three countries over recent years are given below: Per Ca")! ta Consum1)tion of Cacao :Beans (kg. per heeit) United States United Kingdom Canada 1935/39 a.v, 2.0 2.1 1.7 1940/44 aVo 1.8 2.1 1.8 1945 1.6 1.9 1.4 1946 1.9 2.5 •• Source: U. S. De-partment of Agriculture The decline in consumntion belmi nrewar in the c~.se of tl19 United States and OHnada has been due entirely to inadequacies of supply. A co~narison of these data for the late 1930's ''lith those:fur 1925 and 1932 reveal the increase in per c8''''Panded. Such an e:xplana- tioD, however, does not fit the exnansion in output in Brazil. Here one probable explanation is a movement of the population from the relatively unfavora.ble norther area into the cacao zone of Bahia. With the advent of World War II, the price trend in relation to the supply factors were reversed. Demand, under the pressure of increased incomes resulting from the war, rose at fl. considerably faster rs.te than the supply avail~ble ir! con- suming countries; price controls and various forms of rationing ~reTe instituted. For these reasons, plus the disruption of transporta.tion, the price pressure Was not translated into increased retu.rns to the producer; the problem was to moye sup- plies out of the nrooucing regions. The inevitable result of wartime neglect, plue the effects of lo\"l urices during the De'lJression, '''as the failure of pJ.·od.uction to expand or even to recover its pre\var levels at a time when demand was exceedingly strong. The result, there- fore. has been a nrecipitous rise in prices. Present ~.S. prices for cacao beans are some 800 to 8.50 percent over 1939 prices, whereas the general rise in other foc products r<'1.nged from 200 to 350 uercent higher at their peaks. This review of recent price history in the cacao industry highlights the need for some institutional methods of eliminating the \-lide fluctuations "'hich have take~ - 14 - place in recent years. As in the case of coffee. which is subject to the same wea,knees. international coo:oert0.tion has been largely absent. There is no i:1.te:rna- tional organization, apart from the temporary International E~ergency $OOC Cornmi ttee, established to deal with the economic 11roblems of the Cacao il'lcLl:str~1'. National organizations exist, however. The West African Cocoa Control Board Was established in 1940 to purclw.se at fixed prices and to dispose of Bri Ush West African CaCgo during the ''fer. X:"e :Soard continued in operation until September 1947, when i t turned over its re- sponsibili ties to the Cocoa M~,rketing 30e,rds. one for Nigeria, and one for tl1e Gold Coast. The functions of these Bo.?rds are to fix the :orice to the producer at local buying stations, to appoint licensed agents to buy warehouse, grade and deliver cacao to port or shipside. The :Boards take delivery of the cacao at the port. The buying stfltion price plus transnort and other costs is c:)nsiclerably less th:.",n the selling price of the Marketing Boards at the ports which is determined largely on the basis of the New York price. Any profi tEl which a.ccrue to the Boards e,re used nrinci~a11y to build up a flUld, during ~eriods of high ?rices, which may be used to stabilize ~rices to producers by means of subsidies. Alrea~y, by t~e e~d of the' 1946/47 crop year, over ~25 million had been acc~~ulated. In :Brazil, the "Instituto de Ca,cau" 'ltJas created in 1931 as p coo~)ere,tive so- ciety. In Hay 1943, the Government made it compulsory to deliver all cacr'o to the rnsti tute v/hich became the sole buyer and seller to the s.,ring of 1946, \'lhen :nri- vate agencies again came into the market. On October 1946, hOl'J9ver. a certain me8.sure of control over exports \"as again given to the Institu.te and, in Auril 1947, the Institute vias charged with the responsibility for the alloce~tioll of came to foreign countries. Export orders were received by the Institute and allocated among the registered eigJorters. Although the Institute is not charged ,"1th price control or other regulatory functions at the present time, it exists as a potentfuJ, organization for such pUrDoses should the occasion arise. - 15 - 1~. PBESElfT AND ~ PIroSPECTS The present relatively low levels of proctuction ar..d trade are lareely ex- :olained by the factors outlined above--neglect of the iniiustry due to low 1'jre'.'mr prices, poor agricu.ltural 'l')ractices, disru,.,ted ~mrtime production condi tiona, and the ravages of oisease and insect pests. The short-run position, moreover, has been adversely affected by weather conditions. :British West Africa has ha.d three ?ears of prolonged drought during tl1e gro\'Ting season and excessive rains at harvest time. General weather condi- tions throughout the industry for the 194'7/48 sea.son were u.nfavorable. Some in- crease in -production, therefore, may be eAl")ected wi th a return of more nO:""mAcl growing conditions. The decline in production and trade in the absence of stocks he.s also re- su1 ted in a reduction in conSu.rnptioll at a time \'1hen v!Or Id demand is 'Pro bal)ly e.t a record peak. The statistics on trade reveal some interesting developments. The almost total absence of Germa~ from the market has helped to compensate for the decline in total production and exports. The strel1gth of demand has bean S11011, ~loli'ever. that the resulting high prices have not 8.11ov!ed. a number of countries to abscl'o even their allocated quanti ties. This has enabled the Un! ted States 1'.,'1 th her strong buying power to obtain imports at above prewar levels. Britain, Frr.~:}.ce and Spain, which he.ve colonial sources of sUPT:11y, have also fared well in rela- tion to :ore\,lar imports. Countries 'loTi th strong :post"'er finances. such ~.S Canada. Australia, Argentina. and S,,1i tzerlsmd, he.ve also increBsed their i.:nnorts, though in the ca.se of the three first countries the growth of the domestic industry and the resulting fall in imnorts of cocoa products no doubt offsets some of the in- crease. Recent e:;:cessively higb prices in the United States ,>"ould apI'e.;:"r to indicate however, th.at considere.bly gree.ter quantities could be absorbed at prices far a.bove prewa.r levels. The proba,bili ty is that "normal" consumption levels in - 16 - importing c014~tries is considerably higher than ~rewar. i.e., that ~rese~t high prices are not only a function of inflationary conditions existing at the ~resent time. Should this prove true. then the long-term outlook for the cacao in0ustry would appear extremely bright a.i.1d a considerable increase in 'Jror1uction would. be called for. Present high urices for cacao beans are u.ndou-bteclly encouraging l~ei'J nlcuting. It is to be doubted. hot-lever, that future iucreevses in outuut will be at as great a rate a.s was the OB,se during the 15 years :orior to World \'inr II. SllOUld ]3ri tish and French Africa recover from the setbacks resulting from the War, it is highly unlikely that future expansion 'I.',ill be at pl'elt1ar rates, as ne.., plantings must offset the effects of diseese end Dests in older pro(1uction areas before shot-ring a net increase. The failure of Brazil to reach prel"ar levels of :production have led one observer to conclude that new lalld for plar..ting in established nroduction areas is limited. Others have claimed, hO\\fever, that the If!>bor and lemd supply is adequate for a considerable e.xpp,nsion in output and thot the run-dO'lm condition of the industry is largely responsible for its failure to revive. In view of the stationary or declining trend in production in most of the Centra.l and South American producers. tile likelihood for any considerable e;x:oHnsion in outyY'u.t in the relatively near future under present cO!1ditions of cultivation is not to be exyected. The history of cO.cao production has been such. ho\<.rever, that 14'1uouoted- ly new areas of production will come into being. The available are8,g \'!here caCao trees can be grown are such that. given a nrolonged period of rel~tively favor- able nrices. many of the obstacles to production, such as labor supply and inac- cessibility to markets. 'lIJill undoubtedly be overcome. Should the above conclusions as to supply and demand prove correct, the long-run outlook for nrices \'lould be one of relatively higher levels to those pre- vailing prior to World War II. The inherent difficulties in maintaining a steady - 17 - supply in relation to market conditions in such crops as cacao and coffee, where decisions a,s to pla,nting programs must be made in relation to a prospective (!,er:mn l five yee"rs hence, are being tackled only in British West Africa on a co:w.:;ensr,tor~' basis. In the absence of the institution of more extensive controls over t~e inccustry f therefore, the prospects for a stable price level are rather romote; future 1)rice movements, as at present, l11i11 probably fluctuate \'ddely in re::'e.tion to the degree of disequilibrium between supply and delnand.. ExPorts of Cacao Beans from Principal Producing Countries (000 metric tons) Exporting Average Average Country 123~/39 1240/44 1945 1246 19h7_ Gold Coast 276.4 194.5 219.7 2JJ.O.l 180.0 Erazil 119.7 105.7 83. 4 130.5 99.0 Nigeria 98.1 83.7 78.2 101.8 1l?6 Ivory Coast 49.9 26.5 26.9 28.4 27.7 French Oameroons 26 •.5 25 •.5 38.4 33. 6 37.2 Dominican Republic 24 •.5 22.7 18.8 25~2 30.0 Ecuador 19.2 14.3 16.8 16.1 19.7 Venezuela 15.8 14.3 12.6 13. 1 10.4 Other Z4!.2 .52s3 6::h2 L~8·1 ..5.b.9 Total 205·6 232.,2 53 8.5 632·1 562.2 Source: u. S. Dep?.rtment of Agriculture Net Imports of Cacso Bea,ns into Princi ::lB,l Im-'iortin Countrtes 000 metric tons) , Importing Average Average Count:rx 1235/32 1940/44 1945 19L}6 1942 Uni ted Ste,tea Z€'I.6 254.4 281.3 269.2 271.5 United Kingdom 108 •.5 142.4 87.6 119.8 lOI~. 9 Germany Ne the rle,nc1s 77.1 20.2 22.0 •• 1.8 .. 8 8 .. L~O .1 66·3 3 • France 44.6 35.2 21.5 40.0 40.8 Oanada 12.5 19.1 23.2 30.8 17.4 Spain 10.4 13.4 14.7 13·4 7.8 Switzerland 8.8 7.2 6.3 14.2 Italy Australia. 8.7 6,8 4,2 9.6 ~ 12.7 . 4.7 22.5 9·3 .. 7·3 . Source: , U.S. Department of Agriculture World Production of CaCl'l,p Beans (000 metric tons) Average 1915-32(p,), 12/-1-5-46 Africa; Be 19ia,n Congo 1·3 1.2 1.1 1.6 1.6 French Cameroons 27·3 35.0 38 . 6 44.0 i~5 .1..l- Ivory Coast 8.: Dahomey 49.9 3 6 .0 36 .0 34 .0 36 .3 Gold Coast & Togo 276.4 212.7 195.0 215·5 226.8 Nigeria. & Cem~roons 98.1 103·9 111.6 77.1 90.7 San Thome and Principe 10.2 10.4 9.1 8.2 7·3 Spanish Guinea. 11·3 17.2 13.2 16.8 15.9 Others(c) 4.0 4.1 3 eLI- 3. 8 3.12 Total 420.6 407.2 fkQQ.9 The Americas: Costa Rica 6.5 4.6 3. 8 5.4 5.9 Mexico 1.1 2.7 5.4 6.8 7.0 Panama Repub l i c 4.7 2.2 2.9 3·0 2.9 Cuba 3.2 2·3 2.7 3·2 3·2 Dominican Republic 24.5 25.0 31.5 28.1 29.5 Haiti 1.5 1.4 1.8 2.0 2.0 Jamaica 2.2 1.5 1.9 1;.8 2.0 Grenada 3·9 2.4 2.6 2.7 2.7 Trinid.ad &; Tobago 14.3 4.1 3.8 5.0 5.2 Brazil 119.7 100.1 145.6 102.0 98.9 Colombia 11·3 7.5 11.0 11.0 11.3 Ecuador 19.2 16.9 15.9 15.9 16.S Venezuela 16.8 17.2 17.2 18.1 18.1 Others(d) .6 .6 .6 . , ,6 Qt7 ...Tot~1 188.L~ 205,8 206.1 Asia & Oceania; Ceylon 3.6 2.0 2.1 2.5 Netherlands Indies 1.5 .4 .5 .6 Uew Guinettt .2 .2 .2 .2 New Hebrides 1.8 1.5 1.LJ- 1.4 \'1estern Samoa 1,1 1.5 2.1 2.,2 Total 8.1 6.4 Z·2 GRAl'ID TOTAL I 716.~ ',' ,614.6 61).0 641.0 (a) Export data have been used for all countries with the exce1"Jtion of Mexico, Cuba and Colombia,. (b) Preliminary. (c) Includes Sierra Leone, French Togoland, French Equatorial Africa. Np"dagasca.r. and Angola. (d) Includes El Salvador, xricaragua and Dominica. Source: U.S. Dena.rtment of Agriculture