The cocoa global supply chain and looming issues

An article in Bloombergbusinessweek (February 11, 2013) describes cocoa manufacturing projected shortfalls of 50,000 tons compared to demand in 2012-13, while prices dropped 74% from 2011 to 2012. Production shortfalls were provided by a global stockpile of 1.5 years of demand. Volatile prices for cocoa have caused small farmers in Ivory Coast and Ghana to shift to other crops like rubber and palm oil. But yields for cocoa have also not improved in 50 years unlike the 5 to 10 factor yield improvements for other agricultural products. Chocolate manufacturers have compensated by substituting vegetable oil for cocoa butter, shrinking bar size or adding air bubbles to chocolate to decrease their cocoa needs. How should this supply chain be righted to synchronize supply with demand ? Is the small farm production model the issue and, if so, should be be replaced by larger cooperatives that can stabilize cocoa prices ? Is the problem lack of yield improvement and, if so, how should yield improvements be implemented in this context ?

About aviyer2010

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