unctad.org | United Nations Cocoa Conference
Statement by Mr. Petko Draganov, Deputy Secretary-General of UNCTAD
United Nations Cocoa Conference
20 Jun 2010


Mr. President,
Distinguished Delegates,
Ladies and Gentlemen,

It gives me great pleasure to welcome you here in UNCTAD to the United Nations Cocoa Conference, the final stage in the negotiation of a new cocoa agreement after more than 18 months of preparatory meetings.

The importance of cocoa to the world economy and, in particular to developing country producers, cannot be overestimated. Cocoa is a strategic crop, generating income and employment for farming families in rural areas, as well as significant export revenues. Cocoa is typically a crop grown by smallholder farmers, who produce about 95 per cent of the world´s cocoa production. In West Africa alone, cocoa is grown by some two million farmers, and for most of them, it remains their main or only source of cash income. Worldwide, more than three million farmers depend on cocoa for a major part of their income.

As with other commodities, it is important for producers to develop their competitiveness in higher value processing activities. By moving up the value chain into manufacturing, marketing and sales, and into niche markets in organic and fair trade products, countries can capture more income from their participation in the chocolate industry. An increasing percentage of cocoa beans now go through the first stages of processing in the country of origin, before being exported or consumed locally. It is estimated that in the year 2009/10, first grindings of cocoa beans in producer countries will be 41 per cent of total world grindings. This is one way in which producer countries can begin to diversify their production and keep a bigger share of the global profits of the chocolate industry. In UNCTAD´s analysis of the contribution of commodities to development, we have consistently argued not only for producer countries themselves to explore diversification in production and export markets, but to be supported to do so by TNCs and other actors. The new international cocoa agreement will hopefully contribute to this process.

Ladies and gentlemen,

The original International Cocoa Agreement dates back to 1972 when it was negotiated in Geneva at the first United Nations Cocoa Conference, held under the auspices of UNCTAD. Since then, the role and functioning of the international commodity organizations has changed considerably. In the 1970s and 1980s they typically administered price stabilization mechanisms, such as buffer stocks and export quotas. Unfortunately, price stabilization policies and compensatory finance schemes have had mixed results, and are no longer a component of the current International Cocoa Agreement. In more recent times, commodity agreements in general aim at improving the functioning of commodity economies, at enhancing cooperation between producers and consumers and at improving the living standards of commodity producers. The two most important breakthroughs of the present International Cocoa Agreement were the establishment of an explicit mandate on a Sustainable World Cocoa Economy and the founding of the International Cocoa Organisation (ICCO) Consultative Board on the World Cocoa Economy.

Whilst the role and objectives of international commodity agreements may have evolved, UNCTAD´s support for them has never wavered. I am, therefore, proud that all six consecutive International Cocoa Agreements were negotiated under the auspices of UNCTAD and that you are here this week to negotiate the seventh one. It is encouraging that the membership of the present International Cocoa Agreement is representative of the world cocoa economy as a whole, which bodes well for the success and impact of such agreements. Currently, 14 exporting member countries -- accounting for almost 85 per cent of world cocoa production -- and 29 importing member countries -- making up more than 60 per cent of world cocoa consumption -- are represented by the Agreement.

I was informed that the Working Group for a future International Cocoa Agreement, to replace the current agreement when it expires in 2012, has done an excellent job in preparing a draft text for a new Agreement. The new text includes proposals for a thorough streamlining of the organizational structure of the ICCO, with explicit and detailed mandates for the different governing and advisory bodies. There are also more precise articles on market transparency, through the collection and dissemination of data, and significantly improved articles on the role of the organization in developing new markets and cocoa-related projects. The text also includes reference to the important area of quality and food safety standards, which are so critical for competitiveness in today´s trading environment. And lastly, I would like to highlight the role given, in the text, to financial tools and services that can help producers deal with risks in production and price fluctuations.

It is gratifying to note that thanks to the efforts of the Working Group, the International Cocoa Council is in a position to present an almost complete text to this Conference. I understand that there are only a limited number of issues left that might require further discussions and negotiations, including the important subject of sustainability. Indeed, in a world in which demand for commodities is increasing through new market opportunities and population growth, we must be vigilant that today´s conditions for production -- including for example, water and soil resources -- are used in a way that ensures the continuation of cocoa production for tomorrow. However, sustainability also refers to prices, which impact poverty, and the investment decisions of poor farmers. Price stability is as important as decent prices, if farmers are to sustain their livelihoods from cocoa production and be able to invest in more efficient production techniques. By addressing issues of sustainability now, we hope that cocoa, and commodity economies in general, will make a long-term and valuable contribution to growth and development in producing and exporting countries.

Against this background, I wish you all fruitful deliberations and a sweet conclusion to the negotiation of the 7th International Cocoa Agreement.

Thank you.

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