Pacific Commerce and Produce

Sharp Fall In Cocoa Prices Hits Islands Economies

By a Staff Writer

A sharp fall in world cocoa prices since January is ad versely affecting the economy of several Pacific territories where cocoa is grown commercially.

CAUSED through over-production in the world’s main cocoa-produc ing countries, the drop in prices is particularly unfortunate for the BSIP which, this year, had hoped to reap its first substantial rewards from the crop.

Papua-New Guinea and Western Samoa, where the industry is well established, are two other territories where cocoa planters must expect a much smaller return than last year.

Cocoa dropped £Stg,4o a ton on the UK-Continent market in Feb ruary, and there was a further re cession of £Stg.s to £Stg.6 a ton, but no substantial further improvement is likely for some months.

The February-March drop in prices brought the world price to its lowest level since marketing recommenced after World War 11.

The BSIP Financial Secretary, Mr.

L. M. Davies, said recently that disease-control and expanding produc tion in the main world producing countries, chiefly Ghana and Nigeria, had led to the excess production.

The price being paid to BSIP pro ducers was closely related Jo the price that BSIP cocoa could bring on the world market, he said.

In 1964, the average price was £lBB a ton, but the last sale, made in March, was at only £124 a ton. If prices persisted at the same level, some reduction in the local price might have to be made.

A Sydney cocoa buyer, commenting on the fall in, prices, told PIM that the latest West African crop was a record.

World production for the first time in history was very close to H million tons, which was an increase of about 250,000 tons over last year.

The principal world producers had made strenuous efforts to keep the prices up at the expense of sales, but

the weight of sales finally “carried the day”, he said.

The buyer thought the low prices would stimulate demand, and he was not pessimistic about the future.

He said that high profitability of a crop sooner or later led to a surplus over demand, and that had happened v/ith cocoa.

An analagous situation was the sudden rush of most sugar-producing countries in the world to raise pro duction spectacularly after the record prices of 1963.

Agreement

Another Sydney cocoa marketing authority said that an agreement by the leading cocoa producers to hold prices at a certain level had led to a number of “under-the-counter” c(eals, which naturally forced those holding cocoa to unload.

The producing countries had in creased their output by about 25 per cent, and had ignored the fact that the natural annual increase in demand was only 5 per cent.

New Guinea was increasing pro duction quite considerably—a rise of 3,000 tons next year being on the cards.

The marketing authority warned against holding stocks, as manufac turers were mainly interested in regular supplies, provided the quality was good.

New Guinea produced a good quality cocoa, he said, and growers, to ensure that they had a fairly stable market, had to make it available in regu la r shipments to UK-Europe buyers.

In November-December, buyers were receiving £196 a ton for top quality cocoa delivered into store at Rabaul. But in April the price had fallen to £l3O.