Overview of the Cocoa Commodity Sector

Recent Developments in Global Cocoa Commodity

The modern pleasures offered by chocolates and other related products would not be possible without the humble cocoa beans. Based on flavor and other quality factors, there are two main varieties of cocoa beans: the “bulk” beans generally originating from Forastero trees and the “flavor” beans coming from the Criollo or Trinitario trees (ICCO, n.d.a; ICCO, n.d.b).

In 2018/2019, the world produced and ground 4.7 million tonnes of cocoa beans, with around 1.7 million tonnes in stock (ICCO, 2021). These beans are processed into cocoa liquor, butter, cakes, and powders to be used by other sectors. The confectionery industry is the largest consumer, consuming 43% of the world’s cocoa consumption in 2017 (Eghbal, 2018); other notable consumers are food and beverages, cosmetics, and the pharmaceutical industries (Kumar and Sable, 2019). In 2012, overall, the cocoa sector provided revenue for 40 to 50 million people, mostly in developing countries, and generated jobs in cocoa importing countries (Voora, Bermudez and Larrea, 2019).

The cocoa market is expected to grow by 7.3% annually from 2019 to 2025, reaching $16.32 billion. However, it pales to the size of its downstream industries; in 2017, the retail market value of the chocolate industry was $106.2 billion and is expected to grow to $189.89 billion by 2026 (Voora, Bermudez and Larrea, 2019). This disparity is partly due to the industrial structure of the cocoa supply chain. Cocoa trees require a hot and humid climate and plentiful rainfall found in tropical regions to thrive. Most of the world’s supply now comes from West Africa (particularly Côte d’Ivoire and Ghana), with Indonesia being sixth (Figure 1). Around 5-6 million households on small-scale farms in these equatorial countries grow 90% of the world’s cocoa through a labor-intensive process (Voora, Bermudez and Larrea, 2019). To illustrate, the average farm size in West Africa is around 2-4 hectares, with each hectare producing around 300 – 400 kilograms of cocoa beans (Fairtrade, 2016). Productivity is also an issue; cacao farmers generally only produce 10% of the potential yield under best conditions and practices, while corn farmers can reach 60% of this theoretical yield (Mars, n.d.).