
The world's biggest chocolate-maker says we're running out of chocolate - r721
http://www.washingtonpost.com/blogs/wonkblog/wp/2014/11/15/the-worlds-biggest-chocolate-maker-says-were-running-out-of-chocolate/
======
matthewmcg
Periodically, the big candy makers try to get the FDA to relax the definition
of "chocolate" to allow non-cacao fats into the mix. This could signal the
beginning of another lobbying effort.

See a 2007 proposal here: [http://www.washingtonpost.com/wp-
dyn/content/article/2007/04...](http://www.washingtonpost.com/wp-
dyn/content/article/2007/04/26/AR2007042602824.html)

"Chocolate lovers read that as a direct assault on their palates. That's
because the current FDA standard for chocolate says it must contain cacao fat
-- a.k.a. cocoa butter -- and this proposal would make it possible to call
something chocolate even if it had vegetable oil instead of that defining
ingredient. Whoppers malted milk balls, for instance, do not have cocoa
butter."

~~~
DanBC
This was a problem between the UK and the rest of the EU that lasted something
like 25 years.

[http://news.bbc.co.uk/2/hi/europe/764305.stm](http://news.bbc.co.uk/2/hi/europe/764305.stm)

[http://news.bbc.co.uk/2/hi/uk_news/678141.stm](http://news.bbc.co.uk/2/hi/uk_news/678141.stm)

I don't have a "golden palette" but I think I can tell the difference. ("Dairy
Milk" is gritty; Galaxy is either creamy or greasy (but my prefered cheap
choc) and they have different mouthfeel).

Michel Cluizel is my prefered expensive chocolate, but that could just be
because I like the box. I'm not sure I'd be able to tell the difference
between that and other good chocolate if I was doing a blind taste test.

------
grayclhn
A more accurate title might be: "world's biggest chocolate-maker tries to
prepare customers for higher prices by disingenuously claiming that we will
run out of a renewable resource."

~~~
huhtenberg
Exactly.

I distinctly remember how several years ago Mexico manufactured Tequila
shortage by claiming that disastrous weather led to a shortage of agave fruit.
At least this was a story given by Canadian liquor stores to questions why
Tequila prices were hiked by close to 50% almost overnight. I kid you not.
They also issued assurances that once this pesky Mexican weather normalizes
the prices will go back to normal. You guessed it - they never did.

~~~
fosap
See the HDD "shortage".

~~~
vertex-four
In that particular case, there was a shortage - it was extremely difficult for
even large businesses to get hard drives. The issue was that hard drive
manufacturers were (are?) clustered around an area that got flooded.

~~~
uptown
Or the shortage was caused by the NSA filling their new data-center with as
much capacity as it could get its hands on, covertly, and the flood was used
as a convenient cover-story for the shortage.

~~~
Bluestrike2
Maybe the NSA even managed to engineer the flood itself? Yes, that sounds
about right.

------
SixSigma
Mystery trader buys all Europe's cocoa

17 Jul 2010

The purchase was enough to move the entire global cocoa market, sending the
price to the highest level since 1977, and triggering rumours and intrigue in
the City.

It is unclear which person, or group of traders, was behind the deal, but it
was the largest single cocoa trade for 14 years.

The cocoa beans, which are sitting in warehouses either in The Netherlands,
Hamburg, or closer to home in London, Liverpool or Humberside is equivalent to
the entire supply of the commodity in Europe, and would fill more than five
Titanics. They are worth £658 million.

[http://www.telegraph.co.uk/finance/markets/7895242/Mystery-t...](http://www.telegraph.co.uk/finance/markets/7895242/Mystery-
trader-buys-all-Europes-cocoa.html)

~~~
tedunangst
For those of use less familiar with the metric system, what's the conversion
rate between Titanics and Olympic swimming pools?

~~~
reubenmorais
~52.47:
[http://www.wolframalpha.com/input/?i=volume+of+the+titanic+%...](http://www.wolframalpha.com/input/?i=volume+of+the+titanic+%2F+volume+of+olympic+swimming+pool)

------
vosper
"Last year, the world ate roughly 70,000 metric tons more cocoa than it
produced. By 2020, the two chocolate-makers warn that that number could swell
to 1 million metric tons, a more than 14-fold increase; by 2030, they think
the deficit could reach 2 million metric tons."

How can the world be eating more cocoa than it produces? I can imagine there
might be stockpiles, but surely they're gone if we're talking about year-over-
year deficits.

I think the article means that the _demand_ for chocolate in 2020 could be 1
million metric tons more than supply. So prices will go up, and there will be
an economic incentive for suppliers to increase production and for
manufacturers to innovate with new products and efficiencies. Seems pretty
normal.

~~~
fennecfoxen
To be pedantic: if you're going to be all Economics about it, you can't say
the world _demands_ 2 million metric tons, because demand is a function of
price. If the price goes up the quantity actually demanded will go down...

------
sneak
We won't run out of chocolate. The supply is fixed, demand increases, price
rises. Demand falls to match available supply.

Chocolate will become more expensive.

Not really a story...

~~~
JshWright
How is the supply fixed? It literally grows on trees...

The article mentions a few obstacles to increased production, but those
certainly aren't insurmountable.

Price increases will inevitably result in both decreased demand and increased
supply.

~~~
tptacek
Those obstacles could easily be insurmountable at chocolate's current price
point, which is the point of the parent comment.

~~~
JshWright
The GP didn't assume a stable price, they said the price would increase. I
think it's very likely a price increase would result in increased supply.

------
dghughes
I wonder how Ebola will affect production since it's in the region where
chocolate is produced.

Isn't it weird chocolate native to South America is grown mainly in African
countries and coffee native to South American is mainily grown in South
America.

~~~
RockyMcNuts
[http://www.bloomberg.com/news/2014-10-22/nestle-says-
ebola-i...](http://www.bloomberg.com/news/2014-10-22/nestle-says-ebola-in-
ivory-coast-would-hurt-cocoa-output.html)

[http://www.pbs.org/newshour/making-sense/cocoa-traders-
make-...](http://www.pbs.org/newshour/making-sense/cocoa-traders-make-money-
ebola-scare/)

------
jeffdavis
Even the most liberal of economists must be thinking: "this sounds like a job
for... the market!"

~~~
EliRivers
Economic liberalism is pro free-market. Do you mean the _least_ liberal of
economists?

~~~
jeffdavis
"Liberal," like fairness, means different things to different people. In
America, where this forum is based, it means significant government
involvement. But I could have been less ambiguous.

~~~
ScottBurson
Yes, it's quite an unfortunate terminological collision. American "liberals"
tend to dismiss the power of the market. This is quite a different attitude
than that denoted by "liberal" in the context of economics.

~~~
guelo
I think it would be more correct to say that American liberals tend to dismiss
the power of the market to produce the optimal result across all concerns not
just GDP. Markets do a poor job at things like protecting the environment, and
egalitarianism. Also, markets in practice tend to obstruct the sharing of
information that is needed by theoretically ideal markets. Also, as capital
accumulates free markets tend towards forming monopolies.

------
raldi
Why not just raise the price?

~~~
adventured
That's exactly what the market will do. The world isn't going to run out of
chocolate, the only thing that might happen is the price goes up, then a lot
more cocoa gets planted or less people are able to afford it.

Chocolate running out headlines have existed probably as long as newspapers
and mass consumer chocolate.

~~~
abhaga
With diseases, world might actually run out of chocolate or at least some
varieties of it. Like Panama disease wiped out Gros Michel banana and is now
also threatening Cavendish banana. Similarly Frosty Pod Rot seems to be
spreading and threatening cocoa plantations.

~~~
mikeash
If the very existence of chocolate were actually threatened, the resources
that will be made available to save it would be almost incomprehensible.
People really like the stuff, and there is no real substitute.

Bananas aren't that big of a deal for most people, _especially_ if you're
looking at going from two popular varieties to one. If the Cavendish gets
wiped out too, I'd say that would just be due to people not caring all that
much about bananas. I can't imagine the same happening for chocolate.

~~~
abhaga
Actually bananas are a huge deal since they provide the basic nutrition for
large populations in many parts of the world. Also Cavendish is the dominant
set of varieties world over and there are not many real substitutes for it,
yet.

~~~
mikeash
They could grow something else to eat, at least in theory, right? A realistic
extinction event should leave plenty of time to switch to another crop.

If bananas went extinct (while people dependent on them were able to switch to
some other food), I'd basically just shrug and get on with life. If chocolate
went extinct I'd consider it a colossal disaster. I suspect I'm not alone.

~~~
abhaga
I understand that there are a lot of people who care about chocolate and who
don't care about banana. I know plenty in the other direction (majority around
me).

But there are two points. First is that you are underestimating the kind of
role a crop can play in a culture. It is not just a matter of replacing Banana
with another crop. It is a matter of changing significant cultural traditions
going back hundreds of years. If you think about it, the importance of
chocolate is also largely cultural.

Second, it is a philosophical debate that what is more important - something
that is basic nutrition for one group or something that is
cultural/emotional/luxury/(I can't find the right word for the role chocolate
plays) for another. Where the resources will be allocated will depend on who
controls those resources and which camp they fall in.

------
jimhefferon
Can we expect the deployment of US troops?

~~~
krapp
I wouldn't worry about it. The US doesn't know what actual chocolate is, they
won't even notice its absence.

~~~
adventured
Weak attempt at being funny. In fact, just about every grocery store in
America has _actual_ chocolate for sale. The US consumes immense amounts of
all types.

~~~
arethuza
Chocolate in the US does rather odd if you are not used to it - apparently
this is due to a fondness there for the taste of a small amount of butyric
acid in milk chocolate.

[http://en.wikipedia.org/wiki/Hershey_bar](http://en.wikipedia.org/wiki/Hershey_bar)

~~~
zzleeper
First time I tried an american chocolate (hersheys) I literally threw it away,
as it smelled like poo. Only later I realized they all do :/

This may be the reason..

~~~
ScottBurson
I've always disliked Hershey's milk chocolate. I didn't know why either; this
must be the reason.

We do have some excellent American chocolate, though:
[http://www.fearlesschocolate.com/](http://www.fearlesschocolate.com/)

------
imaginenore
Cocoa price indexes tell a different story:

[http://i.imgur.com/2WYy1pZ.png](http://i.imgur.com/2WYy1pZ.png)

Symbols: NIB or CHOC

------
brador
This reminds me of the weird hostile takeover of cadburys by kraft where they
purchased 90% of the worlds chocolate for delivery (not option, for actual
delivery).

~~~
prewett
Do you have a link? It sounds interesting, but I think you might be confusing
the Porsche short-squeeze of Volkswagen stock [1]. I'm thinking that if Kraft
bought 90% of the world's chocolate, Hershey would also be in trouble.
Besides, I would assume that these companies have delivery contracts already
in place for several years.

According to everything I found, what happened was that Kraft's price was too
low and they did not want to be part of Kraft's low-growth conglomerate
strategy. Once they discovered Kraft was actually planning on abandoning that
strategy, they they polled shareholders about what price they would be willing
to accept, and Kraft offered slightly more than that. [2]

[1] [http://radian.org/notebook/porsche](http://radian.org/notebook/porsche)

[2]
[http://www.ft.com/intl/cms/s/0/1cb06d30-332f-11e1-a51e-00144...](http://www.ft.com/intl/cms/s/0/1cb06d30-332f-11e1-a51e-00144feabdc0.html#axzz3JGM9Afip)

~~~
brador
I tried finding a link. The best I could find was a cocoa shortage in 2009
leading to a price surge, little talk of the cause.

I remember the article clearly. The cocoa was for delivery and the trades were
done anonymously (as anonymously as possible) and that"s what made the article
stand out. Then a few weeks or months later the talk of the kraft purchase.

Of course, 90% of the worlds chocolate was most likely for contracts that
month and not the full year, which I guess is what's making the article so
hard to find!

------
mmphosis
[http://vision.ucsd.edu/~kbranson/stopchocolateslavery/main.h...](http://vision.ucsd.edu/~kbranson/stopchocolateslavery/main.html)

------
bane
Solution:

1) Raise prices till consumption matches production.

2) Increase production.

3) Don't decrease prices.

4) Profit.

~~~
tptacek
Doesn't that strategy require a step 3.5, "repeal economics"?

~~~
parasubvert
Nominal rigidity (price stickiness) is pretty standard economics, though
admittedly Keynesian so I'm sure someone will disagree.

~~~
tptacek
That implies that chocolate houses are simply escaping a trap of artificially
depressed prices; that is to say, they were taking losses before. Right?

------
zkhalique
Human demand, meet underproduction. So what? This has happened before. Prices
go up and people adjust. Life goes on.

