Abidjan, June 10 - World cocoa production is expected to grow faster than demand in the coming few years, and prices will decline, International Cocoa Organisation (ICCO) Executive Director Jan Vingerhoets said on Tuesday.
World cocoa grindings have grown an average of more than four percent a year for the past six years, but production had also been growing at well over 4 percent a year, Vingerhoets said.
"We do not expect that demand will collapse, but we do expect that the growth rate will come down to more usual levels, declining from over 4 percent in recent years to just under 3 percent on average in the coming five years," he said.
"We expect that the growth rate of the production of cocoa beans will remain quite high: over 3.5 percent per year, stimulated by the relatively high prices of last year and this year," he told a workshop in Abidjan, the commercial capital of the world's top cocoa grower Ivory Coast.
"This means that production is expected to grow faster than consumption, that cocoa bean stocks in the world will increase and that prices will decline," Vingerhoets said.
World cocoa futures prices have risen in recent weeks and New York July cocoa shot up more than 4 percent to an 11-week high of $2,906 per tonne in intraday trade on Friday, partly due to concerns over Ivorian bean quality this year.
But last week merchant bank Fortis projected a narrowing global cocoa deficit of 21,000 tonnes in the coming 2008/09 season, down from 29,000 tonnes in the current 2007/08 season and a much bigger 284,000-tonne shortfall in the 2006/07 season.
"SUSTAINABLE COCOA" TO FIGHT POVERTY, CHILD LABOUR
Many cocoa farming families in West Africa, which produces the overwhelming majority of the world's cocoa, live below the poverty line, Vingerhoets told Tuesday's workshop, which was focusing on the use of child labour on cocoa farms.
"Poverty is ... the root cause of the worst forms of child labour," he said, adding cocoa farmers were often poor due to the relatively small plots they farmed and low yields.
Average cocoa yields worldwide are around 600 kg per hectare, higher than the 500 kg/ha average of the 1970s but a fraction of the 1,000-1,500 kg/ha levels researchers had found were possible with good extension services, Vingerhoets said.
"It should be possible to produce much more cocoa on a much smaller area of land. However, if successful, that could easily result in a considerable overproduction, with a disastrous effect on prices and thus on the incomes of the cocoa farmers."
"Diversification could prevent overproduction of cocoa and diversify the income sources of the farm families. In the case of Cote d'Ivoire, I would, for example, think of products such as rice, rubber and palm oil as options for diversification," he said.