Conflict in Ivory Coast, the world's largest cocoa-producing nation, is causing serious concern among Swiss and international chocolate makers.This content was published on October 23, 2002 - 19:13
The fighting is threatening the cocoa harvest and disrupting supplies, causing price fluctuations and unsettling the market.
Although a ceasefire agreement between the government and rebels appears to be holding, analysts say peace is still far from assured.
"It's a serious concern if you think that cocoa is the main raw material for our industry," said Franz Schmid, director of Chocosuisse, the association of Swiss chocolate manufacturers.
"Prices have doubled in the last 12 months and reached the levels they were 17 years ago."
Ivory Coast produces one million tons of cocoa annually, or about 40 per cent of the world's supplies. About 300,000 tons come every year from the town of Daloa and the surrounding western region.
Cocoa prices soared when the uprising began on September 19 and have fluctuated depending on the fortunes of the civil war.
Last week, the price rose when rebels captured Daloa but fell again when government forces retook the town and again after both sides agreed to a truce.
Last year in London, cocoa was dealing at £700 (SFr1,627) a ton. It rose to a 17-year high of £1,649 (SFr3,833) per ton last week and is currently trading at about £1,400 (SFr3,254).
Tens of thousands of people - many of them cocoa plantation workers - have fled from ethnic violence unleashed by the conflict.
Even if fighting does not resume, some fear that what should have been a bumper crop this year has been irreparably damaged or will go unharvested.
Meanwhile, transporting the beans from plantation to port is also proving tricky.
"It's the chain of supply, the logistics which have been disrupted," Schmid told swissinfo.
"Only small quantities of poor quality beans are arriving at the ports of San Pedro and Abidjan at the time of the year when arrivals at these main export ports should start peaking - and this is a worrying sign."
Demand and supply
The civil war came at a time when cocoa prices were already extremely high due to two years of demand outstripping supply as well as ongoing market speculation.
"Last July, one day in London, one guy bought 148,000 tons of cocoa beans," said Schmid. "That is one-twentieth of the whole world crop and this has really pushed up prices."
"Now we are at the beginning of the next crop and it's always a difficult period of speculation because you are not certain how the crop will be."
In 2001, Switzerland imported nearly 25 per cent of its cocoa beans or 6,000 tons from Ivory Coast. The biggest supplier was Ghana with about 35 per cent or 8,450 tons.
"All the chocolate manufacturers have individual contracts to buy cocoa beans," said Schmid.
"There are companies which have long-term contracts and companies which have short-term supply.
"Those with long-term contracts are a little bit concerned, but those with short-term business are worried, and they have to think about calculation and the price and how to pass it on to the consumer."
Effect on consumer
Switzerland's big six producers are Chocolat Frey (part of the Migros group), Nestlé Suisse, Kraft Foods, Lindt and Sprüngli, Chocolat Alprose and Halba.
It will be some time before consumers feel the effects, as supplies are often bought up months in advance.
The food multinational, Nestlé, has already raised chocolate prices in several countries - including Switzerland - by between four and eight per cent, while Swiss retail chain, Migros, has just announced a price increase of around ten per cent on about 30 chocolate products.
"Figures are different from company to company and some have had to act already," said Schmid.
"It's not possible to make a general statement. Then we have the competitors from abroad and that's another element to consider."
The immediate cause of the war in Ivory Coast was a mutiny by about 750 troops who were due to be demobilised.
The five-week uprising has received support from Ivorians in the north, who complain of discrimination from Ivory Coast's southern-based government.
Ethnic bitterness between a largely Christian south and a Muslim north has exacerbated the conflict.
swissinfo, Vincent Landon
Switzerland imported 24,000 tons of cocoa beans in 2001.
The biggest supplier was Ghana (35%) followed by Ivory Coast (25%).
Sales of Swiss chocolate last year were worth SFr1,281 million.
Biggest producers are Chocolat Frey, Nestlé Suisse, Kraft Foods, Lindt & Sprüngli, Chocolat Alprose and Halba.
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