The new Executive Director of the International Cocoa Organization (ICCO) says the time has come to bring about change in the cocoa sector.
In his first major interview, Michel Arrion told C&CI he would like to make the organization “more relevant” in the global discussion of the cocoa sector and commodity markets as a whole, and tackle longstanding issues such as a living income for farmers.
“The cocoa price affects everyone in the supply chain,” he told C&CI. “Chocolate manufacturers, processors and traders are all affected, but all make a good income out of being in the value chain. None of them are as directly affected by the price of cocoa as farmers who, for the most, part exist below the poverty line. A bar of chocolate is affordable, it’s not expensive and the other parties do well out of the supply chain. Farmers do not, so their income has to top the ICCO’s list of priorities.”
However, Mr Arrion doesn’t see a higher price for cocoa as the only way to improve cocoa farmers’ incomes. It is a part of it, he said, but diversification, making sure farmers are not wholly dependent on the cocoa price is also important. When we look at a farmers’ overall income, we also need to look at other opportunities to increase household incomes, he said.
Mr Arrion agreed that since the Global Cocoa Agenda first adopted by the ICCO in 2012 and subsequent declarations of the need for change, little has actually changed in farmers’ lives. With this in mind he is working on a five-year plan for the ICCO, a plan that was originally due to have been updated 2017, as set out in the ICA 2012. That it was not is partly due to the long drawn out nature of the move of the organisation to Abidjan, Côte d’Ivoire’s capital, and the need to appoint a new Executive Director to replace Dr Jean-Marc Anga, an Ivorian national who stepped down late last year.
“Producing a five-year strategic plan is a legal obligation for the ICCO,” he told C&CI. He expects to be able to share a draft of the five-year plan at the next Council meeting of the ICCO in April 2019. “I want to be pragmatic and identify what our strategic objectives are and how we will go about achieving them,” he said.
In addition to priorities such as a living income for cocoa farmers, Mr Arrion said data – better data – is high on his list of priorities. “We need in future to have much more accurate data about stocks in producing countries and consuming countries – even about how much of the worldwide cocoa stock is afloat, in ships transporting it around the world – at any time,” Mr Arrion told C&CI.
He noted that the cocoa price is particularly sensitive to data about stocks that the ICCO releases, so it is essential that the data it obtains is as accurate as possible.
“We need to know with a much greater level of accuracy whether we are in surplus or deficit,” he explained. “This is important for a number of reasons, not least that production and the perception of the size of a surplus or a deficit has such a significant knock-on effect on prices.
“Production might increase or fall by 10 per cent from year to year, but the effect of a 10 per cent increase in production can easily result in a much larger swing in prices and give the wrong signals to the market. Equally, if production falls and the price increases and farmers are encouraged to increase production that will inevitably result in loss of forests and potentially in over-production. What we really need is greater productivity and reduced use of land.”
In order to address the many issues facing the cocoa sector Mr Arrion wants to make better use of the ICCO’s Consultative Board, which was one of the major innovations in the International Cocoa Agreement, 2001 (ICA 2001).
The board consists of private sector representatives of exporting and importing member countries. Its mandate is to act in an advisory capacity to the International Cocoa Council on an extensive range of subjects. In 2013, it was decided to greatly expand the board from its previous 16 members, although it still includes experts from exporting and importing countries, who are appointed by the Council every two years.
In accordance with the International Cocoa Agreement, 2001, the mandate of the Consultative Board is to contribute to the development of a sustainable cocoa economy; identify and find appropriate solutions to any threats to supply and demand; facilitate the exchange of information on production, consumption and stocks; and advise on other cocoa-related matters within the scope of the agreement.
Mr Arrion clearly believes that the board’s potential has not been fully exploited. “It is a structure for all of the stakeholders in the supply chain to bring forwards solutions to the ICCO Council, where they can be discussed and acted upon. I see great potential for the Consultative Board to feed into the ICCO’s agenda to a much greater extent than it has,” he concluded.
For more information and the interview in full see the upcoming March 2019 issue of Coffee & Cocoa International.