By all means, get your date a box of chocolates for Valentine’s Day. In my opinion, dark chocolate is far superior to other traditional Valentine’s Day trinkets. What good is a stuffed bear (unless it’s holding a box of truffles)?
To really leave an impression, however, you want to give them something new and exciting, such as current insights into the rollercoaster chocolate market.
“Did you know that a series of cocoa bean export contract defaults could seriously disrupt the economy in Ivory Coast?”
“No, but I could talk to you all night!”
See how easy that is? Keep reading to learn how to drop the word “déblocage” into your romantic evening.
Chocolate is made from cocoa beans, and the West African nation of Ivory Coast produces over a third of the world’s cocoa. During the colonial period, governments tightly controlled the cocoa economy, and the markets are still regulated today.
Like any economy that exports a commodity, Ivory Coast is affected when world cocoa prices drop. To try to insulate farmers from fluctuating world prices, a marketing board called the Coffee and Cocoa Council (CCC) made this rule in 2012:
Farmers get paid a minimum price for their cocoa crops. Exporters agree to price contracts with the CCC months before they can ship the cocoa out of Ivory Coast.”]
The CCC auctions contracts for export permits called déblocage. This policy, even when it was working, likely resulted in lower prices paid to farmers. Today, it is a disaster.
Many exporters wrongly predicted that cocoa prices in February 2017 would be high. In fact, the price just hit a 3-year low!
Purchasers in Europe will not pay high prices for cocoa right now. So, the exporters do not want to go through with the deals they had made with the CCC to pay the farmers a high price. The ports are literally filling up with boats loaded with raw cocoa, but no one wants to ship it out. Instead of getting a guaranteed minimum price, some farmers are getting no sales at all. The CCC will likely need to break their rules and allow people to buy the beans at lower prices that reflect current world market demand.
The ports are literally filling up with boats loaded with raw cocoa.”]
After Reuters published a story on the crisis, the CCC said the claims were false! Is that as dramatic as The Bachelor or what? Rumors were circulating in the fall, but the CCC tried to deny any problems until recently.
Cocoa beans are a “commodity” cash crop and commodity-based economies are negatively affected by unexpected global price swings. However, attempts to regulate the variability away invariably cause new problems. In the end, the market price determines how much money flows into these economies.
Attempts to regulate the variability away invariably cause new problems.”]
The effect of the fall in cocoa prices can be compared in some ways to the fall in US home prices in 2008. Americans had made promises based on the assumption that home prices could only go up. Predicting how prices will change in the future is difficult because prices move as a result of the separate actions of billions of individuals. When real estate price suddenly fell, those promises were broken. The cocoa exporters say they can no longer buy and export beans because they would have to buy them for a higher (regulated) price than they are able to earn on the world market.
Speaking of promises, will your date promise to call you again? Would that promise be broken if prices unexpectedly change? To make sure he or she wants to see you again, you could also show them some more interesting economics of Valentine’s Day here.