I question peoples assertions here that there is more supply than demand for chocolate. If that was true a block of dairy milk would not cost upwards of $4. I wonder if it is more a case of nestle mars etc using their power to manipulate/force the price they want. The discrepancy between cocoa growers profits and the processors profits lend some weight to such a theory.

examinator
How is your relasion with the mass media? You can create new needs for cocoa and keep the prices high.
wait! you can use a compination of technologies-sciencies to promote cocoa as ...a magic product! You can do it.
What is your primary goal? Farmers benefits, fair international trade of cocoa or simply your profit?
If your goal is the profit give few dollars to some hungry locals to destroy big part of cocoa trees and your profit will jump to the sky! Come on! all capitalists do the same thing. They are good when they have no other choise, but if they can pay mersinaries they will put a friendly government, just to be sure they will destroy the most of cocoa trees!
Ah! I forgot, give some money for the new church, god bless you, you are generous man!
examinator, do you know the trick? You can be good and bad progresive and conservative, fair and not fair simultaneously!
It depends on the place you are, you do business, even you can be good in different places if you can delete temporary your memory from the other places! Come on morality is for the weaks not for capitalists!
Be smart! use your relations with farmers to control the minerals from their country!
Haha, a military base in this country could be helpful to fight the socialist movement from the region!
examinator
do not you know how to steal the wealth from poor countries? use the cocoa to enter in a poor country and later do your job AS USUAL!, NO UNIONS, NO RIGHTS, NO LIMITS!
EVIVA CAPITALISM!
EVIVA BANANA DEMOCRACIES!
You are genious!
Antonis Symeonakis
Adelaide

An interesting observation, mikk.

>>I question peoples assertions here that there is more supply than demand for chocolate. If that was true a block of dairy milk would not cost upwards of $4<<

A useful exercise would be to work out how much of the raw material goes into the end-product, which will give you an idea how much the price paid to the grower impacts the price on the shelf.

At my local supermarket, $4 buys you around 100g of chocolate.

The current price of cocoa is around $2250 a tonne, so the raw material content is around 22c. If a glut on the market reduced the "unimpeded" price to $800, the entire impact on the $4 bar would be 14c.

This can be an argument in favour of "fair trade" pricing, of course. If the consumer doesn't notice the difference, why not pay $2250 all the time?

To answer that, you would need to go back to the laws of supply and demand, and examine the longterm impact of maintaining high price levels in the value chain.

For a start, you make cocoa production financially viable for a larger number of people, which encourages new market entrants. Meanwhile, if you have done nothing to stimulate demand at the consumer end, sales volumes will not increase at the same rate. And you end up with a whole load of cocoa beans that you cannot on-sell.

Since you have already asked the consumer to support your high prices, a manufacturer will be reluctant to add more market-expanding marketing costs into the mix, since this will tend to dampen demand even further. Exactly what you don't want.

The other twist is that as more producers enter the supply chain, the fairtrade cooperatives themselves will need financial support, as they will be unable to shift their cocoa mountain. Either that, or they will start to limit - or even discourage - farmer participation.

Altogether, a highly risky business.

Agronomist,
I think you are talking cross purposes on this post. You may have missed my reference to ‘from a solution context’.
I am well aware of economics and the associated dogma/argument around current orthodoxies. I am also aware of the wool corps attempts at floor pricing and its consequences.
Two points you seemed to have missed are that it is almost the diametric reverse.
• That was an (arrogant) unilateral attempt by one SUPPLIER nation.
• The idea I am positing was based on the almost cartel PURCHASING nature of 90% of product therefore would have more of a chance of success.

This practice has been used before and for a time was successful…The failing aspects BROADLY SPEAKING were twofold.
• It didn’t cover all the supplier countries
• Nor did it have adequate farming diversification follow up internally.
All these could be fixed with appropriate effort.
Given it is in the interests of the supplier countries I can’t see that the issue is beyond arrangement in fact is a win/win with a potential win for the world (previous post to article on population control), Pollution etc.

The problem many readers have with browsing my responses is that it’s easy to miss the context in which I write. Many simply dismiss me as an anti-capitalist, an ill informed left loony. But there is method behind my madness

Many of the arguments are spun/biased full of, labels/jargon all of which tend to confuse and/or limit the possibilities for adjustment. To me the world, the capitalist system as practiced is demonstrably in need of a new paradigm.
The solutions (plural) need to be internalized and supported by the people not imposed from above if they are to succeed. Inherent in that is my humanistic philosophy that in practical term is threefold.
• The current level of Collateral damage is unacceptable
• Circumstances are such that we need solutions to a myriad of indivisible issues. See previous posts.
• While I DON’T have all the answers I do believe I should stir up conversation for alternative solutions. All input appreciated.

Pericles,
Thanks for your observations. As you may remember this topic is a spin off to the Sara Murdoch topic. I refer all reader to the web link posted by you.
http://www.foodfirst.org/en/node/2371. The efforts by Gates etc will end in the ultimate glut of cocoa (supply and demand).
This rattled the memories of the coffee wars in which a similar plan to mine, if half baked solution was used.
As I pointed out to agronomist my plan is reverse of the Wool corp.’s debacle addressing the DEMAND end of the equation.

Do you really believe having spent billions on setting the price of a Chocky bar at $4 the manufactures/retailers will reduce the end price because the raw product is cheaper?
Look up the retail prices of the big instant Coffee players at the time when that raw product price crashed. They simply kept rising.

Having spent billions to set market expectation// building a brand(s) they did four things.
• Split the EXTRA profit between dividends and exec bonuses. This is well documented.
• Increased their advertising against the cheaper brands of instant (as being inferior).
• Created lesser versions and brands (lesser quality of bean) of instant (“to maximize the market”). Paying for extra shelf space to preclude smaller manufactures access to mass markets
• Then raised the prices to offset the advertising (common marketing practice).
Contrary to Yabby’s self correcting view of capitalism the reality is that the larger players distort this function to their advantage and to hell with the farmer and the consumer.

Mikk
There currently isn't a glut but it is likely see the site in the this post..it has all happened before.

*Contrary to Yabby’s self correcting view of capitalism the reality is that the larger players distort this function to their advantage and to hell with the farmer and the consumer.*

Ah Examinator, but that is exactly why we need global competition,
not just local competition, as you suggest with your theory.

Believe me, if you can produce chocolate of the quality of say
Lindt, at a cheaper price, consumers will flock to your door
and knock it down, to buy your product. Lindt is not exactly produced
under low wage conditions.

We have this interessting story unfolding in the WA meat industry.
For years, local processors were in the position to screw farmers,
pay them far less then other Australian farmers for their sheep/lambs,
due to the relative isolation of the WA market. Frankly it was
a total rippoff.

Now WA farmers have cut another 7 million sheep from their herd
and switched production to crops, leaving processors with a shortage
of stock and perhaps not such a bright future.

Eventually the wheel turns, but of course patience is a virtue!