Commodity Agreements under a Quasi-United Nations System

Attempts at negotiating an international cocoa agreement with the consumers started as early as 1957 and for about fifteen years no success was registered. The difficulties lay not only in the erratic nature of the cocoa market, in that it is very speculative, but also in the fact that the negotiating parties have always found it difficult to strike at an acceptable price range and the functioning principles of the buffer stock. The fall in prices in 1970/71 cocoa year could be attributed to the fact that there were expectations in many market circles that the 1970/71 cocoa production would be higher than the estimated consumption for 1971. Hypothetically, cocoa production was expected to be 1,720,000 metric tons if world estimated stocks, at approximately 256,000 tons, were added to 1,464,000 tons when the estimates of consumption were put at 1,418,000 tons. From 1965 to 1970 market prices were relatively high because consumer demands were higher than production. But between 1970 and 1971 there was a sudden fall in prices within six months from £360 sterling per ton in September 1970, to £230 per ton in March 1971 (see Table 11.1), this being the sharpest drop in recent years. Another notable period of price degradation was during the 1964–65 season when world production was at 1.5 million tons.