Talk of world running out of cocoa ‘overstated in the extreme’

(Agrimoney) – It’s official. The world is not going to run out of cocoa.

The International Cocoa Organization has dismissed as “overstated in the extreme” ideas of a cocoa deficit of 1m tonnes by 2020, with some talk of 2m tonnes (equivalent to more than 40% of current annual consumption) by 2030.

The US, in particular, has been fed a rich diet of headlines such as “Chocolate makers warn that the world is running out of chocolate”, from Time, “The world’s biggest chocolate maker says we’re running out of chocolate”, from the Washington Post, or “The world is running out of cocoa”, from the International Business Times.

The UK’s Independent warned of “Chocolate chip cookies in crisis”, while wesbite Entrepreneur advised readers to “Get ready for the achocolypse”.

“It got so bad that there was some call to ban plain chocolate, because it uses so much cocoa,” the ICCO spokesman told Agrimoney.com.

“We have seen a lot of spurious material.”

‘No cause for alarm’

The truth is much more prosaic, if reassuring for chocaholics, that “there is no cause for alarm regarding the availability of chocolate for consumers to enjoy”, the ICCO said.

Sure, there has been a “tight relationship between supply and demand over the years”, the organisation said, adding that “our projections show that supply deficits are likely to occur during the next several years”.

However, “stocks of cocoa beans should cushion this development before production growth accelerates.

“Cocoa, like any other agricultural commodity, is a renewable resource, so, when the cocoa price goes up, farmers will be incentivised to produce more cocoa beans by increasing their use of inputs and investing in new plantation.”

In short, there is “no threat to the supply of cocoa for chocolate manufacture”.

Other threats

That said, the ICCO’s own forecasts are not totally comforting, foreseeing production falling behind grindings in 2014-15, and for the next five seasons at least, if by nominal amounts of perhaps 50,000 tonnes.

That would take a bite, if not a chunk, out of the world inventories which are estimated to have ended 2013-14 at 1.7m tonnes.

And of course there are other factors to be put into the equation, such as the threat of upsets in West Africa, the top producing region, which is still beset by ebola, if not in the key countries of Ivory Coast and Ghana, but where political upset remains a worry.

Just this week, cocoa prices rose temporarily this week on a protest by soldiers in Ivory Coast over not being paid.

‘Great time to buy’

“Ivory Coast is only just recovering from a decade long civil war which started when the government last failed to pay its soldiers,” John Clemmow at Barclays said.

“Any repetition of the events that led up to that disaster would have profound consequences for the country and its future cocoa supply.

“The fundamentals of the cocoa market are already excellent. But if you are worried about political stability in the main producing country then going long cocoa makes even more sense,” Mr Clemmow said rating this a “great time to buy” the bean,

Maybe supplies of plain chocolate are not so secure after all.