The International Cocoa Trade

Robin Dand

• Publisher: Woodhead Publishing
• Year: 2010
• eBook ISBN: 9780857091260
• Edition: 3
• Topic: Technology & Engineering
• Subtopic: Agribusiness
• Index: Technology & Engineering

'An overview of the history of cocoa, the factors affecting its production and consumption as well as how the trade is conducted, various risks mitigated, and by whom. …The International Cocoa Trade is a work designed to inform all on the subject of cocoa and an essential guide for those involved in its trade.'Dr J. Vingerhoets, Executive Director, ICCOCocoa is a valuable commodity, and the cocoa trade involves many different parties from growers and exporters through dealers and factories to those trading futures and options and the banks they deal with. The International Cocoa Trade provides an authoritative and comprehensive review of the cocoa trade at the beginning of the twenty-first century, and the main factors that drive and affect that business.The opening chapter of the third edition examines the history and origins of the international cocoa trade, and its recent developments. The agronomics of cocoa production are discussed in chapter two whilst chapter three deals with the environmental and practical factors affecting cocoa production. Chapters four, five and six cover issues around the export and trading of physical cocoa, including the actuals market, the physical contracts used and the futures and options markets. In chapter seven, the international consumption and stocks of cocoa are reviewed with chapter eight discussing the issue of quality assessment of cocoa beans for international trade. Finally, chapter nine focuses on the end product, examining the processing of cocoa beans and the manufacture of chocolate. Updated appendices provide copies of some of the most important documents used in the cocoa trade, including contracts, sale rules and world production statistics.This comprehensively updated third edition of The International Cocoa Trade ensures its continued status as the standard reference for all those involved in the production consumption and international trading of cocoa.- Provides an authoritative and comprehensive review of the cocoa trade at the beginning of the twenty-first century, and the main factors that drive and affect that business- Examines the history and origins of the international cocoa trade, and its recent developments featuring a discussion of environmental and practical factors affecting cocoa production- Explores issues concerning the export and trading of physical cocoa, including the actuals market, the physical contracts used and the futures and options markets

1

History and origins of the international cocoa trade

Abstract:

A background of the cocoa market is provided, from first discovery by the Europeans, its early production and methods of consumption as a drink, through to the spread of cocoa plantations from South America to Africa and the Far East, and the development of eating chocolate. Reference is made to labour in cocoa production, and health issues over early chocolate consumption are considered. Similarities in the market conditions in recent years to other periods are outlined to bring the subject up to current times with regard to prices and supply and demand issues.

Key words

cocoa beans

cocoa powder

cocoa liquor

cocoa butter

history

production

consumption

supply and demand

prices

Africa

South America

Far East

labour

slavery

coerced labour

1.1 The beginning

1.1.1 European discovery of cocoa

When Hernan Cortes first set foot on what was to become Mexico, little did he think of one of the lasting effects of his arrival. Out of favour with his king and the local Spanish governor in the West Indies, his main concern must have been that he needed to show success on this venture. Had he known that he would, in some cases literally, be propagating what was to become one of the largest traded food commodities in the world, his actions may have become more muted. However, arriving at a small village (he renamed it La Villa Rica de la Vera Cruz) on Good Friday 1519, he gave orders that the small fleet of ships be unloaded and, sometime later, burnt. He and his band of 600 men now had no option but to find their fortune in the area. Apart from the usual trappings of wealth that Cortes found at the Aztec court of Montezuma, he saw that the drinking of a beverage called xocoatl was highly regarded.

Myth had it that the tree was brought to man by the god of air, Quetzalcoatl, after man had been driven from the equivalent of the Garden of Eden. Having helped man, Quetzalcoatl departed, leaving the ‘quachahuatl’ tree. The Indians therefore included the tree and its fruit in many of their religious ceremonies. Two other reasons why the Indians rated cocoa so highly were first the taste, and second because the beans that were used to make the beverage were highly prized – rates of exchange of 100 beans for one slave were recorded amongst central Americans. In 1586 Thomas Candish recorded that 150 beans were the equivalent to a Real of Plate.¹ The fact that Montezuma had some 900 tonnes of dried beans in a store shows the comparative wealth of the Aztec king. Cortes saw that the beans were used for payment and arranged for a plantation to be started as a means of generating currency for Spain.

The drink was prepared from dried beans that had been roasted, the shells removed and remaining nib pulverised into a brown, fatty and, to our modern taste, gritty liquid. This was done on a special concave stone called a metate. Spices would have been added to the brown liquid, such as vanilla or pepper, as well as maize. The maize helped to reduce the cost of the xocoatl in addition to making the resulting brew milder. One method included the use of fermented maize, thereby giving the drink alcoholic properties. The resulting mixture was then made into small cakes and allowed to solidify in a cool place. When required, a cake would be mixed with water, either hot or cold, and beaten with a wooden instrument known as a molinet so that the drink became foamy. Montezuma reportedly drank 50 cups a day of xocoatl, mixed with honey and spices to reduce the bitterness. Before entering his harem he would be presented with a golden chalice of xocoatl, so the presumed aphrodisiac properties of cocoa are first noted.

The beans or ‘cacao nuts’ came from the cacao tree, not a native of Mexico but of the northern region of South America. Trade routes to this area of South America from Mexico existed, and it is presumably by this means that the cocoa moved northwards to the court of Montezuma. Cocoa has been used since at least 1000 BC, and the Maya, who also drank cocoa, had set plantations by 600 AD.

Grown under the shade of other trees in the forest, the cacao tree grows pods that develop out of its branches and trunk. Within each pod there may be up to 40 beans covered in mucilage, a viscous mass or pulp surrounding the beans in the pod, and attached to the placenta. In optimum conditions, a mature tree may easily produce more than 50 pods a year. Although the exact process the Aztecs and others followed when they picked the pods is not truly recorded, it is surmised that either the beans were removed from the pods and piled up for a while, or that the pods were kept for a time before being opened. Placing the beans in a pile is, as shall be explained later, an important stage as it allows the mucilage to ferment. It is this process that produces the precursors of the chocolate flavour in the beans. Some early accounts do not refer to this fermentation stage, but it would seem probable that some form of fermentation took place. One very good reason for this to have occurred is that those who grew and prepared cocoa also drank xocoatl and therefore had direct feedback as to what processes provided a better quality drink. Sadly this ‘feedback’ on quality has been lost with many of the current cocoa growers in the world since those who now grow cocoa rarely consume it. However, the Aztecs may have fermented the cocoa in order first to remove the mucilage as it becomes liquid and runs off (later plantation owners in the West Indies described it as the ‘sweatings’) and second to kill the beans which would otherwise begin to germinate, thereby spoiling their flavour. Once fermented, the beans were dried in the sun, which meant that they could be stored for future use, a practice they also undertook with potatoes. Drying the beans correctly is important because otherwise the beans become mouldy, thereby destroying the delicate chocolate flavour.

Cortes was not the first Spaniard to come across cocoa. While on his last and disastrous fourth voyage in 1502, just off the island of Guanaja near Honduras, Columbus came across a large Indian canoe with a cargo which included cocoa beans and saw how prized the beans were to the Indians. It is reported that he took some of these beans, or ‘almonds’ as they are recorded, back to the court of King Ferdinand of Spain. Perhaps Columbus did not discover the proper way of preparing the beans for a drink or, as likely, the beans were spoilt during the very arduous homeward voyage, but the king was not impressed with this gift and there was no demand for the drink. This changed when Cortes returned to Spain in 1528 and wrote to Charles I about a ‘divine drink’ that banished tiredness. The Spanish court accepted the drink, perhaps in part because of the recent discovery of sugar, which greatly enhanced the drink of chocolate.

In 1631 a recipe, supposedly based on Aztec practices, was published in Madrid (Colmenero 1631) that read as follows:

Take seven hundred cacao nuts, a pound and a half white sugar, two ounces of cinnamon, fifteen grains of Mexican pepper called Chile or pimento, half an ounce of cloves, three little straws or vanillas de Campecho or want thereof, as much aniseed as will equal the weight of a shilling, of archiot² a small quantity as big as a filabeard, which may be sufficient only to give colour, add thereto almonds, filabeards and the water of orange flowers.

The use of sugar is likely to be a later addition and not an original part of the recipe.

Spain kept the secret of chocolate for some 90 years after its discovery in Mexico. The religious element continued as monks took over the preparation of the cakes from the beans. Drinking chocolate was the preserve of the king, his court and presumably some inquisitive monks. Certainly the use of cocoa was not appreciated by the British during the first part of its progress into Europe. In 1604 Joseph Acosta described it as ‘loathsome to some such as are not acquainted with it’ (Acosta 1604). This was confirmed by John Parkinson, apothecary, who wrote ‘but to the Christians at first it seemeth a wash fitter for hogs, yet by use even accepted by also in the want of better’ (Parkinson 1640). Thomas Gage commented: ‘I have heard the Spaniards say that when we have taken a good prize, a ship ladened with cacao, in anger and wrath we have hurled overboard this good community, not regarding the worth and goodness of it, but calling it in bad Spain cagarruta de carnero or sheep dung English.’ (Gage 1648). Words continued to be backed up with deeds according to an account written in 1671 by Ogilby: ‘When the English commander Thomas Candish coming into the Haven Guatulco burnt two hundred thousand Tun of Cacao, it prov’d no small loss to all New Spain, the Provinces Guatimala and Nicaragua not producing so much in a whole year’ (Ogilby 1671). Tun here must mean a container or barrel. Two hundred thousand tonnes would be a prodigious level of production in the seventeenth century. English ships that captured Spanish merchantmen would throw overboard sacks of cocoa beans as they had no idea of their use. So things continued, the preparation of the drink not changing very much except for the inclusion of other spices: oranges, nutmeg, cloves, aniseed, almonds and even rose water, to name a few. Still served cold, it would come in a modified version of a coffee pot with an extra hole in the lid to accommodate a molinet to beat the mixture before serving.

At the beginning of the seventeenth century the secret seeped to the rest of Europe. In 1606 Antonio Carletti, travelling in Spain, took the drink to Italy. However, the seepage became a stream in 1615 when Louis XIII of France married Anne of Austria. She brought to the court of her husband the secret of chocolate. Like the Spanish court the French began to take to the new taste and the use of cocoa beans began to spread. Thomas Gage records that chocolate drinking was liked by all on the plantations without the inclusion of sugar or spices. Two years later in 1650 the first use of chocolate in England was noted to have taken place in Oxford. By 1657 chocolate, in the form of a drink or the ingredient to make a drink, was on sale in London. At a price of ten to fifteen shillings per pound, it was reserved for those who had a purse to match the price. The year 1660 saw the marriage of Spain’s Princess Maria Theresa to Louis XIV. The marriage further popularised chocolate drinking in Paris. What was the preserve of the Spanish court now became available to anyone with the money.

1.2 Early production

1.2.1 Spanish propagation

During the course of his voyages Cortes did more than carry the dead dried beans with him. He, and others, took seeds and planted them during their voyages. In a little over a century, from Java to Jamaica, the Spanish introduced cocoa as a crop. In 1525 cocoa was taken to Trinidad; 1560 saw the Celebes and Java with cocoa; and by the end of the century Haiti and Fernando Po (an island off the west coast of Africa, now part of Equatorial Guinea) had also joined the list. Whether by accident or design all the locations used by the Spanish to grow cocoa were islands, the last of which was Jamaica in about 1640.

1.2.2 The French influence

From about the middle of the seventeenth century, the spread of cocoa as a crop fell more to the French....

Table of contents

• Cover image
• Title page
• Table of Contents
• Copyright
• Foreword
• Preface
• Chapter 1: History and origins of the international cocoa trade
• Chapter 2: Agronomics of international cocoa production
• Chapter 3: Environmental and practical factors affecting cocoa production
• Chapter 4: The physical market in the international cocoa trade
• Chapter 5: Physical contracts used in the international cocoa trade
• Chapter 6: Futures and options markets in the international cocoa trade
• Chapter 7: International consumption and stocks of cocoa
• Chapter 8: Quality assessment of cocoa beans for international trade
• Chapter 9: Cocoa bean processing and the manufacture of chocolate
• Appendix I: Strategic/recorded pesticides for use in cocoa and those that must be avoided
• Appendix II: The Federation of Cocoa Commerce Ltd Cocoa Bean Rules for: contract, weighing, sampling and quality
• Appendix III: Specific FCC sale rules applicable for: cocoa beans in bags on CIF landed weights with payment by documentary credit
• Appendix IV: FCC contract rules for shipment of packed cocoa products
• Appendix V: CMAA cocoa contracts
• Appendix VI: NYSE Liffe Cocoa futures contract
• Appendix VII: NYSE Liffe Extracts from the ‘Grading and Warehousekeeping Procedures in respect of Cocoa and Robusta Coffee Futures Contracts’
• Appendix VIII: ICE Futures U.S.®, Inc. Cocoa Rules
• Appendix IX: List of recognised methodologies for cocoa beans and products as published by CAOBISCO and ISO
• Appendix X: Information to monitor and interpret while following the evolution of the cocoa market
• Appendix XI: ICCO statistics of the world production, grindings and summary
• Index