Economics

All about the Cocoa Industry

With production from nearly 4 million hectares of cacao trees yearly, what was once a Mayan delicacy in now a global industry.

5. Description

Everyone loves chocolate, or at least this assumption would seem evident from the increase in global cocoa production over the past several years. Global production of cocoa beans increased by 13% in the four years following 2008, reaching 4.8 million metric tons in 2012. Alongside production, global demand is sharply increasing as well. One of the main reasons for this is an emerging middle class in China. However, the rate of increase in production may soon slow, as cocoa trees are highly sensitive to changing weather. Heat waves, droughts, and excessive rainfall caused by climate change will likely make it harder for cocoa trees to keep up their current production levels.

4. Location

Cocoa beans grow best in hot, tropical, climates near the equator. The world’s highest producers of cocoa are found in western Africa, southern Asia, and South America. The Ivory Coast in Africa accounts for 33% of world cocoa production alone. Other big producers include Indonesia, Malaysia, Ghana, Brazil, and Ecuador. Around 85% of all cocoa beans come from small, family-owned farms. Though cocoa beans are grown and harvested in the tropics, European countries play a larger role in the actual processing of the beans into consumer products. The Netherlands, for example, processes 13% of the world’s cocoa. The European Union and the United States are the biggest importers of post-processing chocolate.

3. Process

Cocoa beans grow in pods on trees, and each of these pods contains anywhere from 20 to 50 beans (for reference, it takes about 400 beans to make one pound of chocolate). Farmers use a long, steel harvester to collect the pods from the trees, then split the pods open using a knife or hammer in order to extract the beans. Cocoa beans are left to ferment for up to a week, which is when they develop their familiar chocolaty flavor. After fermenting and drying, the beans are then processed. During processing, the inside of the bean, known as a “nib,” melts into “cocoa liquor” (which is not alcoholic). Cocoa liquor is the product sent to factories to be made into chocolate candy, cocoa powder, and other favorite consumer products.

2. History

The pre-Colombian Mayans were the first people to discover the tasty properties of the cocoa bean. Their method of choice for consuming cocoa was in a highly-prized traditional drink. Cocoa beans quickly became popular among many people groups in South America. When Spanish explorers landed in the Americas in the 1600s, they also grew fond of the drink, and they spread a love for chocolate into Europe, where it became, and has remained, extremely popular. Spaniards planted cocoa trees in their other tropical colonies as well, but global production remained concentrated in South America through the beginning of the Twentieth Century. At that time, West African cacao growers soon took over a larger proportion of the global share of cocoa bean production.

1. Regulations

Most countries that import cocoa products and beans have quality and sanitary standards, as they do for most other food products. In the United States, beans from certain countries or certain farms are automatically held for inspection, to make sure the beans are not infested with insects or chemicals. For example, Brazilian beans are always inspected. Importers also regulate what kinds of pesticides may be used by supplying growers on their beans. Exporting countries have regulations of their own in order to protect their interests in the industry. For example, the Ivory Coast tightened its regulations of the industry in late 2014, as it restricted production in an effort to keep prices high, and set a guaranteed minimum price as a means to protect its small cacao farmers.

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