[?]msumer Buyer-Resistance Starts

Chain-Reaction In Cocoa Industry

An address given in Tasmania by Mr. I. P. D. Lloyd, chairman of rectors of Cadbury-Pascall-Fry, has been published as a monograph by e Economic Society of Australia and New Zealand. It gives an excellent rvey of the cocoa industry. Mr. Lloyd recently visited New Guinea, d his remarks are of interest to all actual and intending Pacific cocoa inters. A summary of the monograph follows.

has been found from surveys made overseas and in Australia that the consumption of con ionery varies closely with the I of national income—in the past years in Australia it has been it 1.2 per cent, of income, which pproximately the same as it was ire the war. This figure includes i chocolate confectionery and i made of ingredients other than ia-beans. jwever, in the 1953-55 period, ;her factor entered into con ionery statistics: the steadily in sing price of chocolate which re *d in an overall fall in the con ption of confectionery, and, as , a switch from chocolate to r confectionery which had risen >rice in the pre-war period by 85 per cent, in comparison with date’s 130 per cent. (Ice cream cordials have risen in the ten s, 1945-55, by only 65 per cent.; cco, beer and cinema seats by 40 ) per cent. The Australian basic j has risen 150 per cent.). le rise in the price of chocolate >f course, directly linked with phenomenal rise in the price icoa-beans in 1954 and 1955.

L LLOYD went on; The main end-products of the cocoa bean are cocoa powder and eating olate. The most important form he latter at present is milk olate. -day, to make cocoa powder h is used in the home, we ex lome of the cocoa butter in the in order to reduce the richness ae drink, and in another part le process we add back the ex d cocoa butter to other cocoa s and to sugar in order to make ; plain chocolate.

Ik and other ingredients are in jrated at different stages in the ess to give the variety and 3 of eating chocolate which are :eted. [stralia, with a raw cocoa con ation of about 10,000 tons a year of a total world production of t 700,000 tons a year, is a com tively small user, istralia cannot of itself greatly t the fortunes of the cocoa in ry as a whole and has to accept economic position of the world , which is controlled on the one by supply and on the other end

by demand which comes in the main from the United States of America, the United Kingdom and the countries of north-west Europe.

Because in Australia over the last

few years, there has been a swing away from the chocolate product to cheaper forms of confectionery, the output from chocolate manu facturers has been reduced from about 35,000 tons in 1950 to an annual rate of about 23,000 tons in the first half of 1955.

One of the main factors con tributing to the restricted supply of cocoa—and therefore to its high price—is the spread of pests and disease, especially in some provinces of the Gold Coast, where the cut ting out of trees is the only effective remedy found so far.

Raw cocoa is an important com modity in world trade. The crop is essentially tropical and almost the

hole output finds its way to the insuming countries in the more mperate zones.

If you put a value on cocoa of 1tg.300 a ton, world trade in the mmodity is of the order of 1tg.200 million.

As so much cocoa is grown in jmmonwealth countries and sold the United States, it is a valu ile dollar earner, providing the jrling area with nearly 100 million liars a year.

However, during World War II tput dropped by nearly 30 p.c., e mainly to the spread of pests d disesases, of. which swollen Dot, black pod and capsid are the >st important. ro-day it is estimated that pests d diseases account for about ),000 tons of cocoa a year through b the world, so that if this effect lid be eliminated, total produc n would rise immediately from j present level of 700,000 tons fear to 900,000 tons.

Because of the world shortage of v cocoa and buoyant demand for ; end-products, supply and de nd have equated at a high price.

Phe Sterling price of cocoa fell m about £llO a ton in 1918 to i a ton in 1940, but by mid-1954 i increased to over £5OO a ton. ule raw material prices generally re about four times the pre-war el, cocoa prices were, in mid 4, about 18 times higher.

It became clear that these high prices could not be maintained, and it was found, particularly in the United States and indeed in Aus tralia, that consumers would not pay the necessarily high price for choco late, and use in the United States dropped considerably in the first six months of 1955.

We have already seen what has happened to chocolate output in Australia.

The effect of a decrease in con sumption because of the high price is already having its effect on the price of cocoa beans. The manufac turer reduces his stock of cocoa, and buys on a hand-to-mouth basis, and as a result the price is now below £Stg.3oo a ton.

It may be asked why the relatively high prices being obtained for raw cocoa since the war—and at the present level they are approxim ately ten times the pre-war level— did not encourage quicker expansion of production.

One reason is that the cocoa tree does not come into full bearing until about six years after the seed has been planted, so that supply is to some extent inelastic.

The great problem which faces the cocoa industry to-day is how we are to stimulate supplies to bridge the gap between the present production of 700,000 tons a year and an estimated demand of 1 million tons a year.

One result of inadequate produc tion is that it gives rise to the use of substitutes or alternatives which have some attributes akin to those of raw cocoa or of cocoa butter.

THERE are three ways in which cocoa production could be in creased: firstly, by the control of pests and diseases in those countries which now produce; secondly, by more intensive cultiva tion and by the improvement of stock in these countries; and, thirdly, by the development of raw

cocoa as a crop in tropical countries such as Malaya and New Guinea, from which considerable contribu tions may be made.

Papua-New Guinea, is a suitable land for cocoa.

Many parts of the country have the required climatic conditions and the rich volcanic soil in which the cocoa tree flourishes.

The territory now produces about 1,000 tons of bean a year, and it has been estimated that there is a potential for 20,000 tons a year eventually—about twice Australia’s present requirements.

There are, of course, difficulties— the planter himself, if he opens up new land, is faced with substantial capital outlay, and it has recently been estimated by the P-NG De partment of Agriculture that for a cocoa plantation of 150 acres, total indebtedness at the end of the fourth year will be something of the order of £23,000.

When an area of this size is in full bearing, the running costs, in cluding repayment of capital and interest thereon, are estimated at about £2OO a ton for cocoa on the basis that the crop will be 50 tons a year from the 150 acres.

If the price received for cocoa beans is £3OO a ton in plantation

store, the planter’s return will be £5,000 a year.

A planter developing new land

faces risks, and even if he can ras the necessary money to give It financial security while he is getti

d crop from his trees, he must be man of many attributes.

He must be able to recruit and anage his labour, to cut his timber, it up his building, and maintain is machinery. Above all, he must ive the courage which will make im face an area of virgin jungle id subdue it.