Cocoa Dinner 2001

Speech by Mr Stephen Button, Chairman of the Cocoa Association of London Ltd, at the Cocoa Dinner held on 4th May 2001 at the Grosvenor House.

"Ministers, Your Excellencies the Ambassadors and High Commissioners representing our many friends around the world, representatives of cocoa trade and industry organisations, ladies and gentlemen.

As Chairman of the Association, I am greatly honoured to welcome you a sunny London this evening to this, the third of our "themed" dinners. In 1997, we focussed on the Mayans and the history of cocoa, and in 1999, the international cocoa trade and liberalisation. Tonight, in what may be a most important year in the Association's history, we recall in music and atmosphere the late 1920's, which saw the birth of both the London Cocoa Terminal market in 1928, and the Cocoa Association of London itself in 1929. Looking around this evening, apart from a few exceptions that I spotted earlier, I believe that most of us were not around to experience these events first hand, especially with May/July Ghana trading at 41 shillings, a 5 shilling discount to the term.

Many of you will know that over the past year the CAL and the Fédération du Commerce des Cacaos have held discussions aimed at the merger of the two associations and harmonising their respective physical cocoa contracts. It is proposed that this newly merged body will be based in London. This fusion has been driven by the wishes of members of both Associations, and has been positively carried forward by both the Council of the CAL and the Comité Directeur of the FCC, and I am delighted to report that these deliberations have been conducted with a harmony not always witnessed in affairs relating to Anglo-French relations.

Indeed, It was particularly pleasing and relevant, that one of this years most popular films "Chocolat", brings together the talent of many different nationalities to extol the virtue of the food of the gods.

This evening, I do not intend to make a long speech, because I believe that the most important principles can be briefly expressed. The Lord's Prayer has 56 words; The Ten Commandments has 297; the American Declaration of Independence has 300; but an EU directive on the vegetable fat content in chocolate requires 26,911. The moral is obvious.

So, for those of you who have sold the length of my speech, you will be pleased to note that because of the full programme we have for you this evening my address will be brief, as will be the response from Mr. Sylvain Orebi, the President of the FCC, who will provide some thoughts on the progress of the merger between our two long established associations.

We believe this merger to be a logical and highly beneficial move for members of both Associations and for the wider international trade and industry generally. With one administrative centre, one underlying contract law, one driving force, for the cocoa trade, we have far more chance in succeeding in our objectives, with less counter productive effort than we have seen in the past. The new association will be a single international contract authority, as well as providing the basis for a more balanced and co-ordinated approach to our international cocoa business for all those associated with our trade.

I would like to make one final comment on the proposed merger, which may address some of the concerns that members have:

The position of both the CAL and the FCC continues to be, that as soon as contract harmonisation is substantially achieved, with the support of the membership of both organisations, then the detailed merger process can begin. This process will involve close discussion with the ECA and the German Verein, and such other associations as may be deemed appropriate at that time, whether in Europe or elsewhere. This input will be necessary in order to formulate a strategic plan, which reflects the current climate in which our respective members operate, avoiding duplication of effort, and seeking opportunities for development of the cocoa market, which will benefit the membership.

Turning now to thanks, and the list is long. There are many people to whom we should say thank you, for either their support and service to the association, or for their contribution to cocoa, but most of all I would like to thank the members of the Association for their continued support in what has been a difficult period for the cocoa market. It is of course our members who are providing their support by hosting tables tonight. I would like to invite the guests to join with me in a toast to the members.

What better place to start than to say thank you to Peter Robb, who retired as Chairman of the Association in February, after 9 years of service on the Council. I am delighted that Peter has been able to join us this evening in order that we may express our gratitude to him. Even though Peter was on the council as a representative of the chocolate industry, he was always able to maintain a very good sense of balance in relation to all the difficult issues the Association has to deal with, particularly in relation to contract and arbitration matters and helping us in our relations with the IOCCC and CAOBISCO. Thank you to Peter for his support and we wish him well in his new role as a broker, where after years of being a recipient of unashamed customer service, the boot is now on the other foot.

Thanks are also due to Hans Hendriksen who has recently retired from the Council, and indeed to all members of Council, the Committee members and the arbitrators for their continued support. Further to our recent Annual General Meeting, I am delighted to welcome Aldo Cristiano of Ferrero and Jean-Michel Boehm of ABN AMRO onto the Council.

My thanks go also to Silde Lauand for her tremendous efforts in keeping the administration of the Association in order, and especially for dealing with all the difficult table host members, in order to bring together the many components that are necessary to produce this dinner for you tonight.

My thanks also to our Chief Executive, Phil Sigley, for his industrious efforts on behalf of the Association, his indefatigable style, and his drive for an improvement in the organisation of the cocoa farmers and farmers groups, within the context of some of the progressive programmes in which we are engaged for the benefit of the cocoa trade and its members. The new Association is indeed fortunate to have Phil as its Chief Executive.

Thank you also to Mark Wolfe and Jim Howell of MAFF and a special thank you to Bob Eagle and Tony Lass of BCCCA, for their work with Cocoa Research UK, along with trade representation from Phil Sigley and Steve Wateridge, and many other cocoa related research bodies to which they make a significant contribution. MAFF, BCCCA and the CAL are the three partners who make up CRUK carrying out projects, from leading witches broom research, through to moisture and humidity trials for cocoa shipments.

We would take this opportunity to record our thanks to the cocoa research community, particularly Martin Gilmour and Maryse Methivier, and to the teams of the Universities of Aberystwyth, Reading and Nottingham, since, according to research, the researchers do not always receive the recognition for their efforts, in seeking to eradicate the many threats to cocoa production and sustainability.

To Robin Dand not only for his work with CRUK, but for his major contribution to the CAL generally, and in particular as Chairman of the Contracts and Regulations Committee. This Committee has contributed so much towards the reduction of significant differences between the CAL and FCC contracts.

To Larry Graham, Ian Taylor, and Tom Harrison, who represent the chocolate industry organisations - CMA, CAOBISCO and the IOCCC, in our trade/industry meetings. There has been much fruitful co-operation between us, particularly in the past two years, although we continue to skilfully and creatively avoid certain contract changes, despite Tom Harrison's dogged persistence. We also thank the secretariat of those organisations, in particular, Celine Anselme.

To Edouard Kouamé, Jan Vingerhoets and the ICCO team for their special role in the cocoa market. Congratulations to them on negotiating the new agreement, which now enables a much greater private sector involvement with the members of the ICCO, which are the governments of the cocoa producing and consuming countries.

To our sponsors this evening - LIFFE, BWAgencies, Enron, Fortis and SG Commodities & Fimat International Bank. Without their support we would not have been able to produce an event on this scale. A very special thank you to LIFFE for their particular support in enabling us to stage Chicago for you tonight.

It was with much regret that in November last year we learned of the sad loss at an early age of Rene des Cloiseaux after a period of illness. Rene was a stalwart of the AFCC for many years and was heavily involved in the contract harmonisation process.

We also say thank you to Rene's colleague during these negotiations, Mr. Frans van Luijk who is currently Délégué Générale of the FCC but cannot be with us tonight. Frans has been very much involved and of great assistance, not only in the process of contract harmonisation, but also in the underway merger negotiations.

To Peter Berkeley and Ken Jones for their design and production work for this special event.

To Jeff Hill of the US Agency for International Development, Stefan Weise and the support team of the International Institute of Tropical Agriculture. Carol Knight of CMA/ACRI and all who together with the CAL and representatives of the chocolate industry and donors and research institutions, comprise the steering committee of the Sustainable Tree Crop Programme. This programme holds significant potential for the future of the trade, in combination with our partners - working towards a new commercial framework, within which an improvement in the position of smallholder farmers can be achieved, with a real world perspective, which benefits the whole trade in cocoa beans and products.

The scope of the STCP's work is immense. Tonight, we can do no more than scratch the surface, because we have made time available to our guest speaker to deal with those very serious issues that have been the focus of press coverage in the past three weeks, and I will say a few words on this matter a little later in my speech.

The two subjects are, however, very much linked. It may be that the STCP is the most effective way in which a market solution can be brought to the assistance of farmers, and to address the issue of poverty, which is the principal cause of some of the other problems. BSE, Ochratoxin, Foot and Mouth, Slavery and Child Labour practices are just the headline issues that appear to be driving agriculture, particularly in the EU, faster and faster towards identity preservation of goods. Identity preservation requires significant infrastructure in its' more developed forms, but tracking of parcel histories would be a step in the right direction, and might be more easily achieved in the medium term. The internal Ghana model can lead us along the right lines, but market technology inevitably does need to be introduced to realise the potential benefits. On the one hand, there are food safety and poverty issues, and on the other, buyers who need to be sure that payments for goods purporting to contain the attributes they seek, actually reach the farmers. Identity preservation means audit trails.

We should bear in mind that consumers will be demanding increasingly higher standards, in all sorts of ways, and we must play our part as best as we can, in ensuring that the cocoa origins are not left even further behind, and indeed, must be enabled to close the gap. It is clear that markets, and not purely aid, need to be properly mobilised to produce solutions.

It is customary for the Chairman of the Association to take this opportunity to share with members the Associations' interpretation of significant events in the cocoa market since our last meeting. However, given my earlier comment about not wanting to take up too much of your time this evening, and in order to illustrate that the CAL is indeed a modern Association, you will shortly be able to read the Chairman's full report on our website www.calcocoa.com. A hard copy will be available from the Association.

We are delighted to inform you that the Association was particularly honoured to receive Otumfuo Osei Tutu II, the Asantehene, in May last year, and to contribute to the Education Fund that he has established. We await with interest the film "The Kingdom of Ashanti" which may include some footage of that meeting. We also met with the Asantehene during his recent visit to the ICCO.

If I may now turn to some of the events in the world of cocoa over the past two years. The liberalisation of the cocoa economy in the Côte d'Ivoire coincided with the seven year lows on the cocoa market. The December 99 coup signalled the beginning of a sustained period of instability in the country. This has in the past year been characterised by reports of ethnic differentiation, possible slavery, rioting and demonstrations in the streets of the major towns. We are confident that the leadership qualities of the President Mr. Gbagbo will permit the country to find a long-term solution to these difficulties, in particular to that of ethnicity. The reports of migrant labour leaving cocoa farms untended have obviously created concern for the longer-term availability of cocoa. Ghana too has recently undergone the election process. The final outcome, and how it was achieved, represented a democratic maturity that took many observers by surprise. Perhaps the respective camps of Messrs. Gore and Bush could have learned something from the manner in which the contestants handled themselves, in what was a close election result.

In November 1999, LIFFE introduced the No. 8 futures contract, bringing with it broader delivery options whilst at the same time challenging the cerebral capacity of many of the long time graders by introducing such terms as homogeneity and standard deviation.

Whilst the underlying traded volumes continue to be good, there are some issues which are being addressed with regard to both the validity of some of the grading analysis, and the overall ability of the grading room to properly service the requirements of the market users. The members trust that LIFFE will find its way to resolve this matter in a prompt and effective manner.

Towards the end of last year, we said goodbye to the floor traders on the open outcry market who have now been replaced by the LIFFE computerised trading system, Connect. This was obviously a difficult time for many involved and the end of 72 years of open outcry trading for the cocoa futures market. It has to be said that Connect, whilst not always reliable has somewhat surprisingly brought more volatility, and certainly a different type of liquidity to the marketplace, particularly on a Friday afternoon, conveying perhaps a far more sober image of futures trading than we had become used to.

I was wondering how long to speak for tonight when I was reminded by something I read to my children by Lewis Carroll: "Begin at the beginning," the king said gravely, "and go till you come to the end; then stop".

So, there remains little for me to add, except to thank you all, for coming to join us this evening. We have already had some splendid entertainment, and have even more lined up for you after dinner, so please enjoy the remainder of the party.

I now invite you to welcome Mr. Sylvain Orebi, President of the FCC to respond

To revert now to the very serious issue in our midst that has been heavily publicised in the UK and parts of Europe over the past month. This is the issue of child slavery in West Africa. I know we all have our own views as to whether or not child slavery actually exists, particularly in Cote d'Ivoire, and if so, why. However, rather than use this particular time to become embroiled in debate the Association has asked the Minister of Agriculture and Animal Resources of the Cote d'Ivoire, Mr. Alphonse Douaty to speak to us this evening, in part, on this subject. We are delighted that he has accepted our invitation. We are also extremely honoured to be joined by Mme. Henriette Lagou, the Cote d'Ivoire Minister of Family, Woman and Child.

I now invite you to welcome the Minister of Agriculture and Animal Resources of the Côte d'Ivoire, Mr. Alphonse Douaty."