Cocoa Industry Comes Together to Boost Yields

(Wall Street Journal) – Major players in the global cocoa and chocolate industry are working together in an effort to drive up cocoa production to meet growing demand.

Eleven of the world’s biggest cocoa and chocolate companies are sharing information about farming practices and crop yields among themselves. It’s the largest ever cooperative effort by the companies and highlights the dire cocoa supply outlook.

The International Cocoa Organization says cocoa production is barely keeping up with global demand, with a 40,000-metric ton supply surplus in the year that ended Sept. 30.

The companies participating in CocoaAction are hoping that cooperation at the farm level and with local governments under one umbrella, rather than as separate entities, will benefit them all, as well as the farmers that supply them with cocoa.

“It’s not a place where we’re going to battle it out for market share,” Christine McGrath, a vice president at Mondelez International Inc.MDLZ -1.74%, said at an industry meeting in Copenhagen this week.

CocoaAction started up in May and aims to increase cocoa yields and farmer incomes through good agricultural practices and the use of new trees and fertilizer. In addition, the program has community development goals that the companies hope will recruit the next-generation of cocoa farmers. The strategy is being coordinated by the World Cocoa Foundation, an industry group.

Chocolate is a ubiquitous treat in Europe and North America, but many people in the developing world have yet to try it. “There are still one to two billion people that haven’t eaten chocolate, and we think they’re going to,” said Barry Parkin, chief sustainability officer at Mars, Inc. “We’re racing to catch up.”

Mr. Parkin estimates that a half billion new cocoa trees need to be planted in the next 10 years to meet that demand.

Cocoa trees exit their peak production period at about 25 years, but many trees in No. 1 growing region West Africa are more than 30 years old, said Darrell High, cocoa manager at Nestlé SANESN.VX +0.54%.

Nestlé has been handing trees out for free, but some farmers refuse to replace the existing trees. “It hurts the farmer to cut a tree,” Mr. High said, citing an emotional attachment many farmers have to the plants that they’ve taken care of for so many years.

Demonstrating the benefits of rejuvenating farms has been a focus point for the companies as they works to increase yields in West Africa.

“It’s a very good initiative as far as we’re concerned,” said Edouard N’guessan, deputy director general at Ivory Coast’s coffee and cocoa board. “It’s the first time the industry is acting together. The producers are going to be the winners in all of this.”

A fair, equitable price for farmers is essential to boosting cocoa yields, said Loke Fong Han, senior economist at the ICCO in London. “Essentially it’s a development issue. To make the cocoa farm a viable business activity — that is the core issue.”