Dec. 13 National Cocoa Day

Gay Lynn HillBell Ringers, Economics(BR)

Dec. 13 is National Cocoa Day

Nothing means winter so much as hot chocolate with marshmallows!

Cocoa is referred to as the fruit of gods by the South Americans who discovered it (in Greece, the gods were partial to nectar and ambrosia).

Cocoa only grows in warm rainforests near the equator, and most of it is commercially produced in West Africa, with South America and Southeast Asia following. Because of the narrow region where it grows, cocoa production is subject to great fluctuations throughout the year, and from year to year.

To compensate, cocoa has a thriving futures market. In a futures market, producers are able to guarantee the price of a crop before they have harvested, which allows them to plan their planting and harvest more accurately, and avoid low prices when all the crops are delivered to market, while gaining some of the advantages of high prices at other times during the year.

We tend to think of prices as a trait associated with the product or service we’re buying. But in reality, prices serve as a communication tool, which is crucial and makes modern economies possible. By adjusting the price at which they are willing to sell, farmers tell the market what they will produce, and what they think other farmers will produce. Buyers tell farmers about the demand for their products, by raising or lowering their bidding price. And when shortages arise, higher prices for consumers tell them to conserve or switch to a complementary product, because there is not enough to go around!



Questions:
  1. Do you notice changes in the way sellers present their products this time of year? For instance, do grocery stores put their cacao in a more prominent location? Does the percentage of large, roasting marshmallows get reduced, and that of small, hot chocolate one’s increase? What other changes do you see in seasonal supply and demand as you shop this time of year?

Image Citation:

Sugar Dish Me.  [Photograph of glass of hot chocolate]. (2018)  Retrieved from https://www.pinterest.co.uk/pin/466544842629028862/