13th October 2010

Fairtrade cocoa prices are to rise

Good news for Fairtrade cocoa farmers.

FLO (Fairtrade Labelling Organisations International), the standards setting body for the Fairtrade Mark, have announced new, higher prices for Fairtrade cocoa, which will kick in on 1st January 2011.

The Fairtrade minimum price for cocoa will increase from $1,600 a tonne to $2,000 a tonne. The Fairtrade premium will increase from $150 a tonne to $200 a tonne.

The new Fairtrade minimum price is not immediately relevant, as cocoa prices are well above it, currently at around $2,800 a tonne, although prices are starting to fall again as experts predict an end to the production deficits of recent years.

But FLO expects cocoa farmer organisations to reap at least $10m in Fairtrade premium payments in 2011.

The new standards for cocoa prices are long overdue. The last review took place thirteen years ago. It is a fairly predictable and conservative increase though, roughly corresponding to inflation. $1,600 in 1997 would be worth $2,176 now.

23rd July 2010

The Return of ‘Choc Finger’

There was lots of excitement in the media over the last week, with cocoa prices briefly hitting a 33-year high after a single buyer cornered the market, purchasing and taking delivery of 240,100 tonnes of cocoa.

That’s £658 million worth of cocoa beans, representing around 7% of the world’s annual production of cocoa, or 15% of current global stocks.

The buyer is a hedge fund called Armajaro Holdings, headed up by multi-millionaire Anthony Ward. The fact that Mr Ward has actually taken delivery of the beans suggests that he is stockpiling them, betting on future cocoa shortages with the hope of selling them on for a whopping profit.

28th September 2009

Cocoa prices rise, shortfalls predicted

Cocoa prices hit a 24-year high last week, reaching $3,183 per tonne on the New York futures market, now well above the Fairtrade minimum price floor of $1,600 a tonne. Meanwhile the International Cocoa Organisation (ICCO) revised down its forecasted surplus for next year’s harvest from 100,000 tonnes to 25,000-50,000 tonnes.

It seems that demand for cocoa – which took a hit because of the global recession – is picking up again more quickly than expected, even as production is predicted to fall.