Why are chocolate prices rising? Cost of cocoa soaring
While consumers may have to pay more for their indulgences, the true hardship falls on the shoulders of cocoa farmers struggling for survival.
A shadow hangs over the world’s love affair with chocolate. A confluence of factors is driving a global cocoa shortage, threatening not only the affordability of our favorite treat but also the livelihoods of cocoa farmers.
West Africa, particularly Ivory Coast and Ghana, is the cornerstone of global cocoa production. However, these regions have been plagued by extreme weather events in recent years. Droughts and severe downpours have devastated cocoa crops, significantly reducing yields.
Major cocoa processing plants in Ivory Coast and Ghana have halted operations due to insufficient funds for bean purchases, according to four trading sources, meaning chocolate prices around the world are likely to soar https://t.co/lY5pi7M0yU pic.twitter.com/ZtEp56X6V0
— Reuters (@Reuters) March 14, 2024
Furthermore, these harsh conditions have created a breeding ground for plant diseases, further jeopardising cocoa production. The International Cocoa Organisation (ICCO) believes production will fall by 10.9% this year.
Beyond environmental challenges, economic hardship is pushing some farmers away from cocoa. Stagnant cocoa prices coupled with rising production costs have eroded profitability. This harsh reality is forcing some farmers to abandon cocoa trees in favor of crops offering a more reliable income. The further reduction in cocoa growing only exacerbates the price problem.
While cocoa supply dwindles, demand remains robust. This imbalance is driving cocoa prices to record highs. In just six months the price of cocoa has doubled.
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Chocolate manufacturers face a difficult choice: absorb the increased costs and potentially face reduced profits, or pass the cost on to consumers through higher chocolate bar prices. The latter scenario seems more likely, translating to a potential price hike for consumers. The ramifications extend beyond consumer wallets; the cocoa shortage threatens the livelihoods of millions of farmers.
“We need massive demand destruction to catch up with the supply destruction,” Tropical Research Services’ Steve Wateridge, a world expert on cocoa, told Reuters..