Quality and grading
A bag of cocoa is not a commodity until someone has graded it. Grading is what turns a farmer's heap into a contract deliverable, and it is done differently at origin, on the exchange and in the factory.
At origin: the cut test
Grading at the buying depot and again before export uses the cut test: a sample of beans — three hundred is the standard — is split lengthwise and each half inspected. Defects are counted by category and the lot is graded on the percentages. Ghana's scale is the benchmark:
| Defect | Grade I | Grade II |
|---|---|---|
| Mouldy | ≤ 3% | ≤ 4% |
| Slaty (unfermented) | ≤ 3% | ≤ 8% |
| Insect-damaged, germinated or flat | ≤ 3% | ≤ 6% |
Anything worse is sub-standard and does not leave the country as Ghanaian cocoa. Côte d'Ivoire grades to a similar scale; its main-crop beans typically run at a small discount to Ghana's on the market because the fermentation is less uniform. Alongside the cut test the inspector checks moisture (7.5% or below), bean count (around 100 beans per 100 g for a good main crop; smaller mid-crop beans run higher) and foreign matter.
Grade is not flavour
The cut test measures whether fermentation and drying were done properly. It does not measure flavour. "Fine or flavour" cocoa — a designation the ICCO maintains for named origins, mostly Latin American and Caribbean — is judged by sensory panels and sold at premiums that have nothing to do with the Grade I line. Ecuador's CCN-51 can pass any cut test and is still not fine flavour; a Venezuelan Criollo lot can carry defects and still command several times the terminal price.
On the exchange
ICE contracts define deliverable origins and grades and pay differentials against them. The New York and London contracts each set grading standards and lists of deliverable growths; Ghanaian and most West African beans are deliverable at par or a premium, and beans from some origins at a discount. An exchange grader's decision — certified, or not — is what turns a shipment into a delivery against a futures contract, which is why the certified stock figure on the exchange is a physical fact, not a trading position.
In the factory
Processors care about what the grader does not measure: fat content (butter yield, typically 50–55% of the nib), free fatty acids, shell percentage, heavy metals — cadmium in particular, which the EU now caps in finished products and which binds hardest on some Latin American soils — and pesticide residues. These are tested on arrival and negotiated in the contract as allowances and rejections. A lot that passes Ghana Grade I can still be refused at Amsterdam on cadmium, and the EU records each refusal as a RASFF notification.
Why quality moves the market
Quality differentials are where origin policy meets price. When a country's grading slips, its differential narrows and its farmers earn less at the same terminal price. When drying is poor across a wet main crop, buyers pay less for the whole origin. The grade system is what lets a buyer in Hamburg trust a farm in Sefwi, and it is maintained entirely by inspectors paid out of the margin between the farmgate and the export price.