Assessing the Impact of New NISA on Japanese Stocks by Analyzing Corporate Costs with Product Indicators

In its November 2011 report on the cocoa bean market, the International Cocoa Organization (ICCO) announced that the supply of cocoa beans for the ’23/’24 harvest season has decreased dramatically. This was due to heavy rains that hit major production areas in West Africa, including Cote d’Ivoire and Ghana, flooding cocoa plantations and affecting the growth of cocoa beans, farming and transportation operations in the harvest season.

However, the above announcement is also predictable, given the upstream information that Cote d’Ivoire is suffering from heavy rains due to abnormal weather conditions, the supply decrease is predictable. In July, Cote d’Ivoire announced that it would temporarily suspend cocoa bean futures sales due to supply concerns caused by the heavy rains. Upstream information comes to us when we have our antennas up.

Then, in October, shipments of cacao beans for the ’23/’24 harvest season began in Cote d’Ivoire. The guaranteed price for producer purchases was raised by 11% from the previous year. The upstream price increase affects manufacturers’ cost control and sales strategies, which is reflected at the Valentine’s Day fair in Japan.

If the cost increase can be passed on to the selling price, profits will be secured. However, if the psychological line is crossed, it will lead to a loss of customers and a drop in sales volume. The nature of the company’s efforts toward consumers should also be a hint in choosing where to invest.

A_Select a company that “turns a pinch into an opportunity

The supply of cacao beans is declining, and there is competition for cacao mass and cacao butter. This is no time to sit on your hands. In Europe and the United States, palm oil and sunflower oil are being used as substitutes for cacao butter, and efforts to manufacture chocolate using grapes and sunflower seeds instead of cacao beans have been put into practical use. Although the development and manufacturing costs will be a heavy burden, identifying such venture companies and making them potential investment targets is also an option. We would like to pay attention to the strategies of major manufacturers.

B_Support developing countries through investment

Did you know that the production of cacao beans involves serious issues such as child labor and deforestation? Many cacao bean producers are small-scale farmers, and the purchase price is low, making poverty among producers an issue. Children who are responsible for farm work are unable to go to school, and opportunities to improve literacy are lost. In addition, global climate change and declining crop yields due to the aging of cacao trees are also increasing the seriousness of the situation. Producers will try to secure yield and increase income through deforestation. They have no idea that they are contributing to climate change.

C_The Fair Trade Choice

When enjoying sweet chocolate, we should also be aware of the bitter cacao story mentioned above. Fair trade is a system of trade that aims to improve the lives of producers and workers in developing countries who are in a weak position and to help them become self-reliant by continuously purchasing raw materials and products from cacao bean-producing countries at a fair price.

There are things you can do as a consumer to purchase Fairtrade products and as an investor to support Fairtrade certified companies.

The new NISA has just started. You can buy investment trusts, or you can choose the companies you want to support with the growth investment quota yourself. I want to invest my precious money in companies that society needs and that continue to grow. It is also fun to watch the commodity market from the perspective of what products have the greatest impact on the costs of the companies in which you invest. Take advantage of upstream information.