Monday, January 18, 2016

Chocopalypse Now, I: The Cocoa Crisis

Late last year it was announced that the venerable Wilbur Chocolate Company in Lititz, Lancaster County, Pennsylvania, would close its factory there at the end of December, although keeping the shop and museum open (and moving the manufacturing elsewhere).  The closing gutted the economic life of the downtown area.  Taking more than a hundred jobs away also took away a lot of other business.

Yeah.  We thought they were kidding, too.
Is this the beginning of the end?  Not if we have anything to say about it — we love the smell of cocoa in the morning.  It smells like . . . victory.

Nevertheless, there is a problem, actually several problems.  As detailed in the Wall Street Journal of Thursday, January 14, 2016 (“Chocolate Makers Fight Melting Supply,” pp. A1, A10), there is a growing crisis in the production of cocoa, one of the few commodities that has experienced rising prices.

It seems that, in common with other aging capital and infrastructure throughout the world, cocoa trees are not being maintained properly, nor are worn-out units (i.e., “trees”) being taken out of production while new ones are planted.  This is serious, because (according to the article) it normally takes a cocoa tree two to four years to start producing, and its top production years are between the ages of ten and twenty.  After that, production goes down until it finally stops altogether.

Food of the gods, okay, but be careful which gods. . . .
Added to that is the fact that there have been some unseasonably dry years, and farmers’ revenue from cocoa has declined, even as the price of cocoa powder goes up.  To cut costs, they scrimp on fertilizer and other things, such as pruning, weeding, and disease control, with the result that production goes down even more.  Some experts think that with improved techniques and adequate water and fertilizer existing trees could increase yields up to 300% . . . in the short to mid-term.

Some farmers have tried grafting young trees on to old, existing rootstock.  This has decreased the time it takes to get a tree producing from two to four years down to nine months.  The drawback is that this seems to make the young trees more susceptible to diseases that were in the old rootstock (which apparently is strong enough to resist it), but that might not show up for a year or more.  Exacerbating the problem is the fact that some farmers got money to plant new trees, but spent the money on other things.

The world must be made safe for cocoa
In short, in order to increase production in the short- to mid-term, it is essential that better techniques be implemented immediately to bring existing trees up to their full potential.  This will require massive education efforts, as well as infusions of capital in a form that cannot be diverted to other purposes.

In order to sustain and increase production in the mid- to long-term, non- and low-producing trees must be replaced as fast as possible.  Given that it takes two to four years to get a tree into production, and ten years for full production, with an estimated useful life of ten years, each year 10% of the total trees that will be needed in ten years — not 10% of current needs, 10% of future needs — should be planted.  Within two to four years there will be a return from the new trees, with full production in ten, and optimized production in twenty . . . if this is done every year, and existing trees are properly maintained.

The question then becomes how best can this be done, where to get the money, and how to ensure as far as humanly possible that the money is used for the intended purposes.


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