Cocoa Story: Cultivation,
trade and transport
The cultivation of cocoa
Cocoa trees grow exclusively in areas that meet certain specific conditions. The cocoa
belt is an area of land around the equator between 20 degrees latitude north and south.
Most cocoa even grows within 10 degrees of the equator.
The soil has to be fairly loose and the climate humid. Temperatures must be between 18
and 30 degrees Celsius, with precipitation fairly constant and minimally 1,000 mms per
annum. Cocoa trees must not receive too much sun, nor too much shade. Cocoa cultivation is
possible up to about 1,000 metres above sea level, but most cocoa is grown below 300
The cocoa producing countries
Cocoa cultivation initially spread into the immediate vicinity of the original habitat
of the cocoa tree: from Brazil and Mexico to Central America and the Caribbean area. In
the sixteenth century the Spanish introduced cocoa to the Indonesian archipelago, as well
as to West Africa, which now accounts for more than half of the yearly world crop. In
Southeast Asia production has also markedly increased.
Cocoa is grown in more than thirty-five countries. The cultivated area covers between
3.5 and 4.5 million hectares. This area yields an annual production of approximately 2.7
million tons of cocoa beans. The most important producing countries of cocoa beans are:
|| (crop year 1996/1997)
Climatic conditions have a strong influence on the size of the crop.
A vulnerable crop
All the conditions mentioned earlier restrict the number of areas where the cocoa tree
thrives. In the past there have been attempts to grow cocoa in other areas, but although
initially appearing to be successful, these attempts proved fruitless. Frost, epidemics
and insect plagues sometimes destroyed entire plantations in a very short time. Apart from
being choosy as regards location, soil conditions and climate, the cocoa tree, as every
product of nature, is susceptible to plant diseases, fungal infections, and infestation by
insects or rodents. This is the reason why modern plantations devote so much attention to
crop protection. An efficient modern plantation is capable of producing around 1,500 kilos
per hectare. This is more than four times the average yield of three hundred years ago.
Three subspecies of nursery stock
As a result of difference in soil, climate and cultivation cocoa beans possess
different properties. The three main nursery subspecies are criollo, forastero and
trinitario. Each of these subspecies has its own characteristics. Criollois lighter and
more delicate, with a fine aroma. Forastero has a high yield, withstands differences in
climate more effectively and therefore has become the most prominent grade. Trinitario is
a hybrid form of criollo and forastero. It is wrong to say that one subspecies of cocoa
tree is superior to another. Each type has its own chemical and physical properties.
Moreover, cocoa, like coffee for example, is far from uniform as a raw material. The
manufacturers art is to blend various types of cocoa beans so as to guarantee
products of a consistent high quality.
What is a good consignment of beans?
A good consignment or lot consists of fully fermented cocoa beans of reasonably uniform
size. Such lots contain few broken beans, insects or husks. Every lot has to be checked
for taste, aroma, colour, size, fat content, mould, husk percentage and other impurities.
All these factors codetermine the market value of a consignment. It goes without saying
that supply and demand on the world market are the main pricing factors.
Supply and demand: the cocoa trade
In the producer countries local traders and central sales organisations prepare cocoa
for export. In these countries traders, buyers, brokers and agents carry out their trade
and together form the marketing parties who agree about quality, the time and place of
delivery, and about quantities. Since supply is extremely vulnerable to climatic changes,
the price of cocoa may rise or fall considerably during the year. Buyers that is,
the cocoa-processing industry and its clients naturally wish to cover themselves
against such price fluctuations. The futures market in cocoa owes its existence to these
The futures market
The world price of cocoa is determined by the futures market. Without having to conduct
personal meetings, buyers and sellers are able to conclude contracts about future
deliveries of cocoa beans on the so called futures market. At the time of negotiation the
cocoa beans in question usually have not even begun to grow, and so this not yet existing
cocoa provides an opportunity for a lively and exciting world-wide trade. The contracts
are registered with the Clearing House. Via this agency a delivery commitment can be
nullified by completion of a sales contract for the same quantity and month of delivery.
The Clearing House settles the differences in price. The most important futures markets
are in London and New York. Price trends can be closely followed anywhere in the world.
Trade as a market factor
Not infrequently cocoa beans travel half the world before being processed. It comes as
no surprise therefore that the international cocoa trade plays an important role in
bridging differences in time, place and price. Producers like to sell when the price is
high, and buyers prefer to buy when the price is low. Between these two there is the
trader, who is prepared to buy at high prices and to sell when prices are falling. This
may seem illogical, but by means of futures market contracts traders cover themselves
against risks. In this way they protect themselves, their suppliers and their buyers
against price fluctuations, while making money into the bargain. Traders provide their
clients with additional services, for example, by financing transactions in advance on
behalf of their suppliers or buyers; or by securing certain types of cocoa for their
clients, which the latter, without interventions, might have bought under less
An important source of income
As a raw material cocoa is an important source of income for many producer countries.
However, yields can vary from year to year. It is not surprising therefore that the
governments in these countries are closely involved in the ups and downs of cocoa
production and its export, and that international treaties have been concluded in support
of these countries, of which the Treaty of Lomé is the best-known example. In this treaty
the European Union commits itself to refrain from levying import duties on cocoa imports
from a number of producer countries. In the past attempts have been made to stabilise the
price of cocoa by including long-range price agreements in treaties between producer and
consumer countries. However, such treaties have proved not to work very well in practice.
In the early 1990s some West African nations privatised their raw materials industry, and
this process is still continuing.
Transport and storage
The safeguarding of cocoa bean quality requires special measures. The hot, humid
climates of the countries of origin are not ideal for storage and processing.
Traditionally cocoa beans were shipped in sacks made of strong jute fabric. In the last
few years bulk transports, in which the cocoa is loosely dumped into containers, have
grown in importance. It is expected that the majority of cocoa transports will eventually
take place in this modern form, with important consequences for the cocoa trade as well as
for the loading and unloading of ships.
An ideal location
The cocoa ports must be favourably situated vis-à-vis the cocoa-processing industry.
Amsterdam is such a location. This is one of the reasons why the Amsterdam region is the
largest cocoa entrepôt in the world. In 1996 600,000 tons of cocoa beans were transhipped
via Amsterdam, a quarter of the worlds production.
On arrival the warehousing companies check the loads for quality and/or weight, by
taking samples of each consignment and separating the damaged parts. These companies also
handle the completion of documents and the settling of possible damages. The sacks or
containers are stored in warehouses or are directly transhipped to the cocoa processing
industry. Also, in the modern silos of today cocoa blends can be produced to the
clients specification. Transport is by road, rail or water.
Apart from the logistical side, warehousing and inspection companies have other
important functions. Their sheds also contain, under rigorously controlled conditions,
stored consignments for the London futures market the London International
Financial Futures and Options Exchange (LIFFE). It is not surprising therefore that the
warehousing companies are well-known for their reliability and knowledge of the logistics,
as well as for their flexibility.