1 00:00:00,600 --> 00:00:03,880 Speaker 1: From Bloomberg News. I'm Jennifer's Abisaga and this is the 2 00:00:04,040 --> 00:00:08,080 Speaker 1: very first episode of the Next Africa Podcast, your weekly 3 00:00:08,200 --> 00:00:15,319 Speaker 1: dive into business stories from across the continent. I am 4 00:00:15,480 --> 00:00:19,640 Speaker 1: really excited to bring you this brand new podcast from money, 5 00:00:19,800 --> 00:00:24,640 Speaker 1: politics and economy, to technology and even fashion and sports. 6 00:00:24,720 --> 00:00:28,600 Speaker 1: Each week with one Bloomberg reporter or multiple, we're going 7 00:00:28,680 --> 00:00:33,040 Speaker 1: to be lifting the lid on the news driving Africa. 8 00:00:34,040 --> 00:00:36,360 Speaker 1: For our first episode, we're going to be talking about 9 00:00:36,400 --> 00:00:42,680 Speaker 1: one of my favorite topics and indulgences chocolate. Okay, delectly 10 00:00:42,800 --> 00:00:45,960 Speaker 1: doing chocolates and carols like creamy chocolate. Who is that 11 00:00:46,440 --> 00:00:46,920 Speaker 1: is enough? 12 00:00:47,000 --> 00:00:55,520 Speaker 2: Good Year? Anyone out a tast sensation rich, luxurious, unique. 13 00:00:54,320 --> 00:01:07,800 Speaker 1: You're assessably smooth chocolate put the world on pause. It's 14 00:01:07,800 --> 00:01:10,880 Speaker 1: hard to find someone who is not a fan of chocolate. 15 00:01:11,000 --> 00:01:13,760 Speaker 1: We all love it in so many different forms, from 16 00:01:13,840 --> 00:01:17,720 Speaker 1: kit Kats to Mars or Cadburry, take your pick. But 17 00:01:17,880 --> 00:01:21,280 Speaker 1: everywhere we go, companies are increasing the cost of your 18 00:01:21,280 --> 00:01:27,200 Speaker 1: favorite chocolate bars and products. But what's the reason behind 19 00:01:27,240 --> 00:01:29,760 Speaker 1: it and what does it mean for the overall industry. 20 00:01:30,240 --> 00:01:32,920 Speaker 1: That's something we are going to talk about today on 21 00:01:32,959 --> 00:01:35,760 Speaker 1: the podcast with momby guitar. Hey, moobooy, how are you? 22 00:01:36,080 --> 00:01:36,560 Speaker 3: I'm good. 23 00:01:36,640 --> 00:01:39,760 Speaker 1: Hi. You are the best positioned person I think in 24 00:01:39,760 --> 00:01:41,920 Speaker 1: our newsroom to be speaking about this, because you're our 25 00:01:41,920 --> 00:01:44,520 Speaker 1: soft commodities reporter. Are you just eating all day? 26 00:01:45,280 --> 00:01:49,680 Speaker 3: I am not eating all day volvos. I don't think 27 00:01:49,680 --> 00:01:50,680 Speaker 3: i'd be standing here. 28 00:01:51,400 --> 00:01:53,600 Speaker 1: You know. We brought you on because what we've been 29 00:01:53,640 --> 00:01:56,800 Speaker 1: covering across Bloomberg platforms for the past few weeks is 30 00:01:56,960 --> 00:02:00,600 Speaker 1: just the skyrocketing price of Coco right now. I just 31 00:02:00,600 --> 00:02:02,880 Speaker 1: saw a banner that said logo for Coco. I feel 32 00:02:02,880 --> 00:02:08,520 Speaker 1: like everybody is logo for Coco right now because now 33 00:02:08,520 --> 00:02:14,799 Speaker 1: it's more expensor the likes of copper. Coco has exceeded 34 00:02:14,880 --> 00:02:17,880 Speaker 1: nine thousand dollars for the first time ever as global 35 00:02:17,880 --> 00:02:23,000 Speaker 1: supplies order just grip the market. Why are you stop 36 00:02:23,040 --> 00:02:25,320 Speaker 1: piling chocolate? Do you really think that it's going to 37 00:02:25,400 --> 00:02:31,840 Speaker 1: get that much worse out there? Are you surprised by 38 00:02:31,840 --> 00:02:32,440 Speaker 1: what we're saying? 39 00:02:33,400 --> 00:02:36,120 Speaker 3: No, I'm not surprised. And it almost feels like everywhere 40 00:02:36,160 --> 00:02:38,800 Speaker 3: I turn in this newsroom, everyone is asking me what's 41 00:02:38,800 --> 00:02:43,639 Speaker 3: happening to the price of Coco? But it's was expected. 42 00:02:44,000 --> 00:02:46,760 Speaker 3: Everyone you speak to the trader say we were going 43 00:02:46,800 --> 00:02:49,640 Speaker 3: to get here. But it's also fascinating the pace at 44 00:02:49,639 --> 00:02:51,760 Speaker 3: t Whitich we've gotten here. In just a span of 45 00:02:51,840 --> 00:02:55,200 Speaker 3: three months, prices have doubled. We started the year at 46 00:02:55,240 --> 00:02:59,000 Speaker 3: four thousand dollars a ton. It's a vertical rise. It 47 00:02:59,040 --> 00:03:01,920 Speaker 3: almost looks like a rocket launch. I think that's been 48 00:03:01,960 --> 00:03:05,320 Speaker 3: the most fascinating thing about the ratley in the cocoa market. 49 00:03:05,520 --> 00:03:07,959 Speaker 1: Let's just take a step back and try to contextualize 50 00:03:08,080 --> 00:03:11,040 Speaker 1: how we got here. As somebody who's been watching these 51 00:03:11,040 --> 00:03:13,800 Speaker 1: commodities for quite a while, where should we start. 52 00:03:14,360 --> 00:03:18,359 Speaker 3: We should start from West Africa. So in West Africa 53 00:03:18,440 --> 00:03:21,079 Speaker 3: we have every coast and Ghana. They are the biggest 54 00:03:21,200 --> 00:03:24,800 Speaker 3: producers of coco, and just West Africa alone accounts for 55 00:03:25,000 --> 00:03:28,600 Speaker 3: seventy five percent of global production of coco. So without 56 00:03:28,680 --> 00:03:32,280 Speaker 3: West Africa, we would basically not have coco or chocolate 57 00:03:32,320 --> 00:03:35,320 Speaker 3: in the world. The rest comes from Latin America, so 58 00:03:35,400 --> 00:03:38,120 Speaker 3: that accounts for about twenty five percent. And I was 59 00:03:38,160 --> 00:03:40,680 Speaker 3: in West Africa about three months ago. I think we 60 00:03:40,760 --> 00:03:43,520 Speaker 3: had started to see that there's a problem there, and 61 00:03:43,640 --> 00:03:46,280 Speaker 3: back then prices were not shooting as much as they 62 00:03:46,280 --> 00:03:48,800 Speaker 3: are right now, and as they went through the fields. 63 00:03:48,880 --> 00:03:52,040 Speaker 3: You could see fields that were flooded, that's because of rains. 64 00:03:52,040 --> 00:03:54,440 Speaker 3: You could see sick trees. We went to a farm 65 00:03:54,440 --> 00:03:58,640 Speaker 3: where half the plantation had sick trees that were infected 66 00:03:58,680 --> 00:04:01,600 Speaker 3: with either black pod or stall enshoot. So it's just 67 00:04:01,680 --> 00:04:04,960 Speaker 3: a perfect storm of things. We've had climate change, you 68 00:04:05,080 --> 00:04:08,760 Speaker 3: have diseases, and then the top that is farmers have 69 00:04:08,880 --> 00:04:12,760 Speaker 3: been paid poorly for the last forty years, and so 70 00:04:12,920 --> 00:04:15,840 Speaker 3: if you're not well paid, you don't invest back into 71 00:04:15,880 --> 00:04:18,719 Speaker 3: your farm. And we've had high inflation in the last 72 00:04:18,800 --> 00:04:21,680 Speaker 3: two years, so farmers have not been able to afford 73 00:04:21,680 --> 00:04:26,279 Speaker 3: fertilizers chemicals to tackle diseases. As you can imagine, lack 74 00:04:26,320 --> 00:04:30,600 Speaker 3: of investment on anything means that investment will not succeed. 75 00:04:30,720 --> 00:04:35,520 Speaker 3: So it's the lack of pay for farmers, diseases, climate 76 00:04:35,640 --> 00:04:38,840 Speaker 3: change just the perfect storm that the cocoa market needed 77 00:04:38,880 --> 00:04:40,240 Speaker 3: for us to have a deficit. 78 00:04:40,920 --> 00:04:43,480 Speaker 1: Is this a uniquely West African problem or is it 79 00:04:43,520 --> 00:04:46,400 Speaker 1: something that we are seeing in other parts of the world. 80 00:04:47,040 --> 00:04:50,760 Speaker 3: It's a uniquely West African problem because West Africa has 81 00:04:50,800 --> 00:04:54,000 Speaker 3: been the sole producer of cocoa, so they have many 82 00:04:54,040 --> 00:04:56,440 Speaker 3: trees and the problem is that some of those trees 83 00:04:56,480 --> 00:04:59,039 Speaker 3: are aging. As you know, as you get older, you 84 00:04:59,160 --> 00:05:02,159 Speaker 3: become less bread active, and so is that tree, even 85 00:05:02,240 --> 00:05:05,320 Speaker 3: cocoa tree. As the longer it takes it's in the farm, 86 00:05:05,440 --> 00:05:08,920 Speaker 3: the less productive it gets. So in Latin America we're 87 00:05:08,960 --> 00:05:13,039 Speaker 3: having them plant more neu trees. We have new plantations there, 88 00:05:13,080 --> 00:05:16,640 Speaker 3: so they're a bit more productive. I'd call them useful trees, 89 00:05:16,839 --> 00:05:20,400 Speaker 3: whereas in West Africa we have old trees. Because of that, 90 00:05:21,000 --> 00:05:24,800 Speaker 3: West Africa's production is falling and now the world is 91 00:05:24,839 --> 00:05:27,440 Speaker 3: going to have a third day of deficit. What that 92 00:05:27,560 --> 00:05:30,400 Speaker 3: means is that we're consuming more chocolate than we are 93 00:05:30,400 --> 00:05:31,280 Speaker 3: producing coco. 94 00:05:32,080 --> 00:05:34,679 Speaker 1: I mean it is eating less chocolate. Really the solution 95 00:05:34,800 --> 00:05:35,960 Speaker 1: here for consumers. 96 00:05:36,320 --> 00:05:38,520 Speaker 3: I don't know if you're like me, but every time 97 00:05:38,600 --> 00:05:40,719 Speaker 3: I go to the supermarket and I go to the 98 00:05:40,800 --> 00:05:45,160 Speaker 3: chocolate aisle, I cover the market so I know what's coming, 99 00:05:45,360 --> 00:05:48,159 Speaker 3: I know why price is arising. But when I look 100 00:05:48,240 --> 00:05:52,040 Speaker 3: at that cost, I'm thinking to myself, do I buy carrots, 101 00:05:52,240 --> 00:05:53,240 Speaker 3: do I buy chocolate? 102 00:05:54,000 --> 00:05:54,960 Speaker 1: And what to do? 103 00:05:55,680 --> 00:05:59,240 Speaker 3: I'm assuming chocolate chocolate, But then the next day I'll 104 00:05:59,279 --> 00:06:02,359 Speaker 3: take carrots, which is much cheaper, so I'm having to 105 00:06:02,440 --> 00:06:05,599 Speaker 3: trade off and so that's a choice that consumers will 106 00:06:05,600 --> 00:06:08,479 Speaker 3: have to make. Companies will still have to buy Coco 107 00:06:08,560 --> 00:06:11,600 Speaker 3: to meet their products and to be able to supply 108 00:06:11,680 --> 00:06:14,320 Speaker 3: their consumers with their favorite chocolates. And I don't think 109 00:06:14,320 --> 00:06:17,240 Speaker 3: there's a way around it, as these costs will have 110 00:06:17,279 --> 00:06:19,520 Speaker 3: to be passed on to consumers. And we had the 111 00:06:19,920 --> 00:06:23,320 Speaker 3: Mondolist chairman and CEO speak on Bloomback TV the other 112 00:06:23,400 --> 00:06:24,239 Speaker 3: day about this. 113 00:06:25,400 --> 00:06:28,200 Speaker 2: Our input costs keeps from going up. Some are flats 114 00:06:28,320 --> 00:06:31,240 Speaker 2: are coming down, but Coco, sugar in fact also and 115 00:06:31,360 --> 00:06:35,880 Speaker 2: hazelnuts are the ones that are going quite high, and 116 00:06:35,960 --> 00:06:39,360 Speaker 2: they're important in our products. So we unfortunately have to 117 00:06:39,360 --> 00:06:40,159 Speaker 2: increase prices. 118 00:06:40,200 --> 00:06:40,479 Speaker 1: Again. 119 00:06:41,440 --> 00:06:44,880 Speaker 3: They say the QRE four high prices is high prices, 120 00:06:45,279 --> 00:06:47,560 Speaker 3: and you have to come to a point where these 121 00:06:47,680 --> 00:06:52,600 Speaker 3: high prices bring down demand significantly that prices come down, 122 00:06:52,839 --> 00:06:56,680 Speaker 3: so it will be less demand that will bring prices 123 00:06:56,760 --> 00:07:00,440 Speaker 3: back to the point of equilibrium. Otherwise, if we continue 124 00:07:00,440 --> 00:07:03,400 Speaker 3: to eat more chocolate, then prices continue to go up. 125 00:07:04,240 --> 00:07:07,640 Speaker 1: So maybe is this going to start eroding the bottom 126 00:07:07,640 --> 00:07:09,920 Speaker 1: line of some of these companies to the point where 127 00:07:09,960 --> 00:07:15,480 Speaker 1: they may even start rethinking how much exposure their portfolios 128 00:07:15,480 --> 00:07:16,640 Speaker 1: actually have to chocolate. 129 00:07:17,680 --> 00:07:20,080 Speaker 3: What the companies are trying to do fast is to 130 00:07:20,520 --> 00:07:24,800 Speaker 3: cut production costs. We've seen companies that have started laying 131 00:07:24,800 --> 00:07:26,880 Speaker 3: off some of their stuff that they think they can 132 00:07:26,960 --> 00:07:30,800 Speaker 3: do without because they're automating more. We've seen companies consider 133 00:07:30,960 --> 00:07:34,280 Speaker 3: closures or factories that they think are too expensive to run, 134 00:07:34,360 --> 00:07:37,440 Speaker 3: either because they've been there for too long and therefore 135 00:07:37,520 --> 00:07:40,600 Speaker 3: running them is a lot more expensive, so they'll consider 136 00:07:40,960 --> 00:07:44,320 Speaker 3: cutting production costs to where they can, and then in 137 00:07:44,360 --> 00:07:47,000 Speaker 3: the long run, they will try and push products that 138 00:07:47,080 --> 00:07:50,360 Speaker 3: have less cocoa in them, or try and push products 139 00:07:50,360 --> 00:07:53,800 Speaker 3: that do not cut into their bottom line to make 140 00:07:53,840 --> 00:07:56,600 Speaker 3: sure that they are still running. Some of these companies 141 00:07:56,640 --> 00:08:00,240 Speaker 3: don't just thrive on cocoa alone or on chocolate. They 142 00:08:00,280 --> 00:08:03,040 Speaker 3: have other products on their portfolio, so they might try 143 00:08:03,080 --> 00:08:06,240 Speaker 3: to push consumers to buy those cheaper products as they 144 00:08:06,280 --> 00:08:09,400 Speaker 3: wait for cocoa prices to come down. That's if they 145 00:08:09,400 --> 00:08:12,200 Speaker 3: will ever come down to levels that we've seen before. 146 00:08:12,640 --> 00:08:16,400 Speaker 1: Well, and membe that's on the end of the supply chain. 147 00:08:16,480 --> 00:08:19,840 Speaker 1: Let's just start at the beginning with the actual cocoa farmers. 148 00:08:20,920 --> 00:08:24,120 Speaker 1: How is this all affecting them? Because you mentioned this 149 00:08:24,160 --> 00:08:26,640 Speaker 1: has been slow and steady getting to this point. But 150 00:08:27,240 --> 00:08:28,520 Speaker 1: where are they at right now? 151 00:08:29,240 --> 00:08:32,280 Speaker 3: I think farmers are looking at the rally, or they're 152 00:08:32,320 --> 00:08:36,200 Speaker 3: probably hearing about the rally in the prices and they're wondering, 153 00:08:36,280 --> 00:08:39,040 Speaker 3: when are we going to greap benefits of this. So 154 00:08:39,200 --> 00:08:43,560 Speaker 3: farmers in Cameroon, in Nigeria, in other parts of the 155 00:08:43,559 --> 00:08:47,400 Speaker 3: world that are more liberalized are realizing the benefits of 156 00:08:47,440 --> 00:08:51,640 Speaker 3: this rally. But farmers in Ivory Coast and Garner the 157 00:08:52,000 --> 00:08:55,240 Speaker 3: prices their asset by the government and they usually set 158 00:08:55,280 --> 00:08:58,080 Speaker 3: anyar in advance, so that means they've not seen the 159 00:08:58,120 --> 00:09:01,880 Speaker 3: benefits of this rally. Hearing that, there's more pressure on 160 00:09:01,920 --> 00:09:06,000 Speaker 3: the government to make sure that they start to push 161 00:09:06,080 --> 00:09:09,800 Speaker 3: on these prices to the farmers, that the prices for 162 00:09:09,880 --> 00:09:12,120 Speaker 3: farmers are raised. If they don't do that, then we 163 00:09:12,120 --> 00:09:15,600 Speaker 3: won't have more cocor growing in the farm. So it's 164 00:09:15,679 --> 00:09:18,280 Speaker 3: I think in the government's interests to make sure that 165 00:09:18,600 --> 00:09:22,760 Speaker 3: farmers are well remunerated and that this rally that is 166 00:09:22,840 --> 00:09:27,960 Speaker 3: meant to benefit the farmers does actually benefit the farmers. 167 00:09:28,720 --> 00:09:31,840 Speaker 1: Are we seeing any of the governments really take some 168 00:09:31,880 --> 00:09:34,960 Speaker 1: serious measures into consideration here to help with that. 169 00:09:35,720 --> 00:09:39,360 Speaker 3: It's not clear right now, because as I said, every 170 00:09:39,440 --> 00:09:43,680 Speaker 3: constant gunners sell forward, so they've already reached agreements with 171 00:09:43,840 --> 00:09:47,720 Speaker 3: exporters for this season and yeah, da advance, so there's 172 00:09:47,840 --> 00:09:51,040 Speaker 3: little wig room for them in this season, but they 173 00:09:51,040 --> 00:09:53,960 Speaker 3: can do that in the next season as they sell 174 00:09:54,040 --> 00:09:56,719 Speaker 3: forward for the next crop. So we might see more 175 00:09:56,800 --> 00:10:01,040 Speaker 3: changes maybe starting October when this is on starts, but 176 00:10:01,160 --> 00:10:04,160 Speaker 3: between now and October there's very little will go room 177 00:10:04,200 --> 00:10:05,959 Speaker 3: for the governments to work around. 178 00:10:07,440 --> 00:10:11,240 Speaker 1: Is there a risk of maybe doing too much, especially 179 00:10:11,240 --> 00:10:13,200 Speaker 1: because we don't really know where the price of cocoa 180 00:10:13,240 --> 00:10:17,520 Speaker 1: is going or is this needed for the farms across 181 00:10:17,559 --> 00:10:18,600 Speaker 1: Ivory Coast and Ghana. 182 00:10:19,679 --> 00:10:22,400 Speaker 3: I wouldn't say there's a risk of doing too much, 183 00:10:22,520 --> 00:10:25,679 Speaker 3: as not much has been done. So if you look 184 00:10:25,720 --> 00:10:29,040 Speaker 3: at the where the price is, farmer is earning less 185 00:10:29,040 --> 00:10:31,600 Speaker 3: than a sixth of where the price is, so there's 186 00:10:31,600 --> 00:10:35,520 Speaker 3: still room for us to close the gap between what 187 00:10:35,600 --> 00:10:38,400 Speaker 3: the price on the futures market is and what the 188 00:10:38,440 --> 00:10:41,440 Speaker 3: farmer gets. So I think that is where the industry 189 00:10:41,480 --> 00:10:45,480 Speaker 3: wants to get at and this was probably going to come. 190 00:10:45,960 --> 00:10:49,040 Speaker 3: I think there's just a lot that has been happening 191 00:10:49,080 --> 00:10:51,800 Speaker 3: for the sector and this is the point where they 192 00:10:52,080 --> 00:10:55,480 Speaker 3: have to realize that farmers need the money to grow 193 00:10:55,520 --> 00:10:59,200 Speaker 3: more and unless they're well remunerated, then you won't be 194 00:10:59,240 --> 00:11:02,680 Speaker 3: getting the cocoa, and then that's going to increase the 195 00:11:02,760 --> 00:11:05,640 Speaker 3: cost for you and you may probably lose your consumers. 196 00:11:06,240 --> 00:11:09,360 Speaker 1: So this is just one of the many challenges as 197 00:11:09,400 --> 00:11:12,360 Speaker 1: you mentioned that farmers are facing. I mean, what else 198 00:11:12,440 --> 00:11:14,840 Speaker 1: is sort of hitting the industry right now that is 199 00:11:14,920 --> 00:11:17,600 Speaker 1: having a significant impact on what's happening on the ground 200 00:11:17,600 --> 00:11:18,520 Speaker 1: at some of these farms. 201 00:11:19,120 --> 00:11:21,920 Speaker 3: I think the biggest one, apart from prices that is 202 00:11:22,000 --> 00:11:25,800 Speaker 3: keeping them awake, is what we call the EUDR, that's 203 00:11:25,840 --> 00:11:30,200 Speaker 3: European Deforestation Law. That law is going to change how 204 00:11:30,240 --> 00:11:33,800 Speaker 3: the coco market works, particularly in Europe. That law will 205 00:11:33,840 --> 00:11:38,800 Speaker 3: require every farmer, I mean, every trader, every important of coco, 206 00:11:39,160 --> 00:11:42,720 Speaker 3: whoever brings coco into the European Union to show that 207 00:11:42,720 --> 00:11:46,120 Speaker 3: that coco was not grown on deforested land. Now that's 208 00:11:46,160 --> 00:11:49,960 Speaker 3: a big ask for an important If you bring iner shipment, 209 00:11:50,360 --> 00:11:52,480 Speaker 3: you have to show that it was not grown on 210 00:11:52,600 --> 00:11:56,160 Speaker 3: land that was recently deforested. What does that mean? They 211 00:11:56,200 --> 00:12:00,200 Speaker 3: have to have the GPS coordinates of every farm where 212 00:12:00,200 --> 00:12:04,440 Speaker 3: they source their cocoa. That's additional costs because these company 213 00:12:04,520 --> 00:12:08,200 Speaker 3: is from Cargill to e Comm to Teuton. All these 214 00:12:08,200 --> 00:12:11,199 Speaker 3: companies need to have boots on the ground and map 215 00:12:11,320 --> 00:12:14,440 Speaker 3: every farmer and make sure that that farmer is not 216 00:12:14,679 --> 00:12:19,440 Speaker 3: enforested land. So apart from the rising coco prices, they 217 00:12:19,480 --> 00:12:22,640 Speaker 3: have a regulation that will be implemented at the end 218 00:12:22,679 --> 00:12:25,920 Speaker 3: of this year that they have to follow that they 219 00:12:25,960 --> 00:12:28,760 Speaker 3: have to add THEA too, So most companies are concerned 220 00:12:28,920 --> 00:12:32,400 Speaker 3: us about cocoa prices, but they're also looking at the timeline. 221 00:12:32,440 --> 00:12:36,440 Speaker 3: They have to comply with the EUDR and make sure 222 00:12:36,520 --> 00:12:40,920 Speaker 3: that by December twenty ninth of December thirtieth that they 223 00:12:40,920 --> 00:12:44,160 Speaker 3: are able to trace every coco that they bring into 224 00:12:44,200 --> 00:12:44,640 Speaker 3: the EU. 225 00:12:45,440 --> 00:12:48,360 Speaker 1: How does that even work? I mean in rural parts 226 00:12:48,400 --> 00:12:50,480 Speaker 1: of Africa, I mean, how are you going to have 227 00:12:50,559 --> 00:12:53,360 Speaker 1: the coordinates and some of these details that the EU 228 00:12:53,480 --> 00:12:54,120 Speaker 1: is looking for. 229 00:12:54,679 --> 00:12:57,040 Speaker 3: First of all, the supply chain is just so complex. 230 00:12:57,840 --> 00:13:01,560 Speaker 3: The farmer and the trader, they're all like six intermediaries 231 00:13:01,600 --> 00:13:05,160 Speaker 3: between them, and so that coco is just constantly switching hands. 232 00:13:05,440 --> 00:13:07,120 Speaker 3: And then how are you going to tell a farmer 233 00:13:07,200 --> 00:13:10,560 Speaker 3: to map their land? They probably do not own a smartphone, 234 00:13:10,800 --> 00:13:12,640 Speaker 3: so it's going to be really the bad end of 235 00:13:12,679 --> 00:13:16,360 Speaker 3: the importer to do that. And trust me, if they 236 00:13:16,360 --> 00:13:19,400 Speaker 3: have to take on more costs, there is no way 237 00:13:19,400 --> 00:13:22,280 Speaker 3: they're going to absorb it into their own bottom line. 238 00:13:22,320 --> 00:13:25,040 Speaker 3: They'll probably make sure that the consumer pays for that, 239 00:13:25,520 --> 00:13:28,640 Speaker 3: but it's a huge ask for importers. Coco has been 240 00:13:28,679 --> 00:13:32,559 Speaker 3: blamed for driving deforestation in every cost and in Ghana. 241 00:13:32,679 --> 00:13:35,360 Speaker 3: To make sure that that doesn't happen. They want to 242 00:13:35,400 --> 00:13:39,360 Speaker 3: make sure that importers take responsibility of where the coco 243 00:13:39,520 --> 00:13:40,959 Speaker 3: is coming from. 244 00:13:41,400 --> 00:13:43,840 Speaker 1: And maybe just getting back to cocoa and what we've 245 00:13:43,880 --> 00:13:46,439 Speaker 1: seen over the past three months, when we think about 246 00:13:46,480 --> 00:13:49,480 Speaker 1: the end of the year, can you use your crystal 247 00:13:49,520 --> 00:13:53,200 Speaker 1: ball and give us your ideas or your outloock for 248 00:13:53,240 --> 00:13:55,880 Speaker 1: what you think, because there's some analysts who we've been 249 00:13:55,920 --> 00:13:58,439 Speaker 1: speaking to who think that we could see a crash soon. 250 00:13:58,679 --> 00:14:00,400 Speaker 1: What do you think? What's the trajectory here? 251 00:14:01,760 --> 00:14:04,120 Speaker 3: I wish I had the crystal ball to begin with, 252 00:14:04,880 --> 00:14:09,800 Speaker 3: but just looking at the market fundamentals, it's unlikely we'll 253 00:14:09,840 --> 00:14:14,680 Speaker 3: get a supply response to see production come out of nowhere. 254 00:14:15,000 --> 00:14:17,800 Speaker 3: It takes four or five years for a cockol tree 255 00:14:17,840 --> 00:14:20,200 Speaker 3: to start producing, So even if farmers went to the 256 00:14:20,200 --> 00:14:23,280 Speaker 3: field and planted coco right now, we won't see those 257 00:14:23,360 --> 00:14:26,240 Speaker 3: pods until after three to four years. That's when we'll 258 00:14:26,240 --> 00:14:30,480 Speaker 3: see that production. Prices may correct, they may come down 259 00:14:30,520 --> 00:14:33,160 Speaker 3: from the level we're seeing right now, but they won't 260 00:14:33,200 --> 00:14:36,360 Speaker 3: go back to the levels that we saw a year 261 00:14:36,360 --> 00:14:40,200 Speaker 3: ago or two years ago. Prices will still remain high 262 00:14:40,240 --> 00:14:44,000 Speaker 3: because it's about balancing supply and demand. We are heading 263 00:14:44,040 --> 00:14:47,280 Speaker 3: into the third year of deficit. Supply response will not 264 00:14:47,440 --> 00:14:50,480 Speaker 3: be there, so it's just a matter of finding that equilibrium, 265 00:14:50,720 --> 00:14:54,880 Speaker 3: and that equilibrium will still be higher prices, so consumers 266 00:14:54,960 --> 00:14:57,760 Speaker 3: have to get used to higher prices until when we 267 00:14:57,840 --> 00:15:00,640 Speaker 3: see the supply response from this kind trees, which is 268 00:15:00,640 --> 00:15:04,800 Speaker 3: not this year, not next year. So there's no relief 269 00:15:04,840 --> 00:15:05,760 Speaker 3: insight for now. 270 00:15:06,280 --> 00:15:09,480 Speaker 1: So Mumbi, it's the future of what's really happening right now. 271 00:15:09,920 --> 00:15:12,200 Speaker 1: Are we heading to a state where it's going to 272 00:15:12,240 --> 00:15:15,040 Speaker 1: be a luxury, will be a luxury for kids to 273 00:15:15,120 --> 00:15:16,440 Speaker 1: eat chocolate down the road? 274 00:15:16,840 --> 00:15:21,200 Speaker 3: Yes, but I think Europe, which is the largest consumer 275 00:15:21,240 --> 00:15:25,320 Speaker 3: of chocolate, will probably still consider it an essential item. 276 00:15:25,680 --> 00:15:28,880 Speaker 3: But for other parts of the world, maybe Asia or Africa, 277 00:15:28,960 --> 00:15:32,320 Speaker 3: that will remain a luxury. As we see these increases, 278 00:15:32,440 --> 00:15:36,440 Speaker 3: it will be out of reach for other people, maybe 279 00:15:36,480 --> 00:15:41,480 Speaker 3: in middle income areas, probably in the developing countries, but 280 00:15:41,560 --> 00:15:44,680 Speaker 3: I think for developed countries like Europe and the US, 281 00:15:45,280 --> 00:15:48,960 Speaker 3: chocolate will still be a nice street to have every 282 00:15:49,280 --> 00:15:51,160 Speaker 3: weekend of every once in a while. 283 00:15:51,840 --> 00:15:54,520 Speaker 1: All Right, thank you so much Mumby for this insight 284 00:15:54,560 --> 00:15:57,440 Speaker 1: into the cocoa industry and also all the soft commodities 285 00:15:57,440 --> 00:16:00,920 Speaker 1: that you're covering day and day out. We reallyppreciate having 286 00:16:01,120 --> 00:16:04,560 Speaker 1: you on the first pod. I think the big takeaway 287 00:16:04,600 --> 00:16:07,800 Speaker 1: here is that there's real challenges across the board in 288 00:16:07,840 --> 00:16:11,680 Speaker 1: the industry. It's really hitting farmers on the ground. Farmers 289 00:16:11,720 --> 00:16:14,800 Speaker 1: need the support, the financial support to be trickling to 290 00:16:14,960 --> 00:16:18,240 Speaker 1: their pockets in order to help support a lot of 291 00:16:18,280 --> 00:16:21,200 Speaker 1: the disease and the decay that we've been seeing on 292 00:16:21,240 --> 00:16:23,080 Speaker 1: a lot of these farms for the past few years. 293 00:16:23,400 --> 00:16:25,480 Speaker 1: But that needs to come in the form of government 294 00:16:25,520 --> 00:16:29,080 Speaker 1: stepping in to help with some of this regulation and 295 00:16:29,200 --> 00:16:33,640 Speaker 1: hopefully then the higher prices will at least even themselves out, 296 00:16:33,640 --> 00:16:36,120 Speaker 1: although I think some of us hope that they'll come 297 00:16:36,200 --> 00:16:38,840 Speaker 1: down a bit, so we'll have to wait and see 298 00:16:39,120 --> 00:16:42,479 Speaker 1: how that pans out, and also how the EU regulation 299 00:16:42,600 --> 00:16:47,280 Speaker 1: around deforestation really affects the industry more broadly, and whether 300 00:16:47,360 --> 00:16:50,080 Speaker 1: we're going to see some of these big chocolate makers, 301 00:16:50,120 --> 00:16:54,080 Speaker 1: these big companies taking a hit. But for me at 302 00:16:54,080 --> 00:16:56,400 Speaker 1: this time, I think I'm just going to focus on 303 00:16:56,480 --> 00:16:59,200 Speaker 1: stocking up on as much chocolate as I can while 304 00:16:59,240 --> 00:17:07,120 Speaker 1: the prices stay where they are. This program was produced 305 00:17:07,200 --> 00:17:11,000 Speaker 1: by Christopher Pitt and Leone Drago and you can hear 306 00:17:11,000 --> 00:17:13,879 Speaker 1: more stories like this one on the Next Africa podcast, 307 00:17:14,000 --> 00:17:18,560 Speaker 1: available every week wherever you usually get your podcasts. I'm 308 00:17:18,640 --> 00:17:21,639 Speaker 1: Jennifer Zabisagia. Thanks so much for listening. We'll see you 309 00:17:21,680 --> 00:17:22,120 Speaker 1: next time.