Supply shortages and signs of growing demand are driving cocoa prices

Hello, tyildirim92. Thank you for being patient. I was busy when your request came through earlier, so I am just now getting to this. In fact, I had not worked with this question before, so I took it on in the moment, just before writing this post. The question took me 1:37 to answer correctly. My breakdown:

Okay, this is a basic strengthen question. To strengthen the argument or reasoning, we have to ensure that we grasp the reasoning itself. We can start by deconstructing the passage.

Sentence 1 provides two reasons that cocoa prices are increasing: supply shortages and signs of growing demand.

Sentence 2 ties into the first reason above, namely that severe weather... has limited production.

Sentence 3 focuses on the other reason for increasing cocoa prices: stronger demand for cocoa.

Sentence 4 provides an off-the-wall consideration: apparently, grinding of cocoa beans has increased in both Europe and North America.

Sentence 5 is the conclusion, placing analysts front and center, who predict that cocoa's price will continue to rise for the time being.

The conclusion seems fitting. Supply shortages + growing demand = rising prices. We are seeking to justify the rationale that cocoa's price will continue to rise at least into the near future.

This information is loosely grounded (pardon the pun) in sentence 4. But this would present a problem. If ground cocoa beans could be stored for a long time, then perhaps the supply issue would be less of a concern. The passage seems to raise alarms at the prospect of demand increasing even as supply decreases, but a backup in stored ground cocoa beans might mitigate the issue. This is certainly not what we want in a strengthener.

Nothing about this new information reinforces the supply/demand equation above. What good is an improved processing capacity if there are no beans to process? Whether the manufacturers use the same old equipment or this new technology or technique, the concern remains, exactly as is. We need to look for information to bolster the notion that prices for cocoa products will, for the foreseeable future, continue to go up. In other words, we need a why behind the what, and this does not get us there. It merely offers another what.

An easy choice to write off if you have not practiced CR questions before, this one looks off-topic. But if current cacao trees (sorry, I am a purist when it comes to things chocolatey) are all tapped out and the industry might, in a panic, demand that more crops be planted to increase cacao yields, with this new information, we can appreciate how the issue of low supply and high demand leading to higher cocoa prices would most likely not be resolved in the near future. The current yield is not enough, that much is evident. Now we know that it is probably not going to be enough for the next few years. Provided demand for cocoa continues to rise, so, too, should the prices for cocoa products. There is nothing to find fault with in this one. This answer strengthens the reasoning of the analysts.

The problem here is that we do not know which way the coin will fall, since we have no information on the current restrictions on cocoa imports. Thus, we can only speculate on the policy changes and their likely outcomes:

1) Governments relax restrictions (to allow more cocoa imports)—There is not enough supply, plain and simple. The problem is unresolved, but there is no reason to project that current conditions will necessarily hold into the future.

2) Governments increase restrictions (to allow fewer cocoa imports)—The supply still does not change, and now demand might increase even more. You know, forbidden fruit and all. We would then expect cocoa products to increase in price. However, we cannot deduce that this will be the line the governments pursue, or for how long the governments may keep such policies, so this outcome is uncertain.

We cannot use anything less than a probable outcome of a course of action to strengthen the reasoning of the analysts, so this answer choice, in its open-endedness, is out.

GMAC™ loves these sorts of historical precedent answers, but they are almost always incorrect, and usually for the same reason: What happened in the past may not necessarily happen in the future, and that is as far as we need to pursue this answer choice. That is, there is no compelling reason to believe that the current problem will necessarily persist for the next few years. This cannot be our strengthener.

I hope that helps. If you have further questions, you need only ask. Thank you for the mention.

- Andrew