Chocolate lovers of the world are facing a bitter challenge with the recent global cocoa shortage. The shortage is not just a sacrifice for aficionados; it’s a significant issue that’s affecting everything from local chocolate shops to global supply chains, and ultimately, even national economies.
The surge in cocoa prices has been a boon for some, like the farmers in Papua New Guinea, who are seeing a silver lining as they modernize and invest in their communities with the profits from the high cocoa prices. However, for chocolatiers and confectionery businesses, it’s an existential threat to their industry, according to FoodNavigator, a food and beverage industry news site. Already higher retail chocolate prices are expected to rise by as much as 8 percent more over the next few months as cocoa suppliers pass their costs on to their customers, according to FoodNavigator.
Embedded in the crisis experienced by chocolate lovers is a much more significant issue related to the delicate balance between nature and commerce. It underscores the importance of sustainable practices in agriculture and the need for innovation in times of crisis.
Farmers in West Africa, along the Ivory Coast and in Ghana, where roughly two-thirds of the world’s cocoa supply originates, face a new threat, on top of deep systemic issues and climate change. Virus-spreading mealybugs are attacking trees and chomping at the cacao seeds, or beans, needed to make the world’s most popular sweet treat. The crop is largely cultivated by subsistence farmers who struggle to make a living and have no money left over to plant new trees and make additional reinvestments in their land, which translates to lower yields over time.
Some major African cocoa producers have stopped or reduced processing because they can’t afford to buy beans, various news outlets have reported.
And that means chocolatiers in the United States and other parts of the world may not only have trouble finding cocoa but paying for it.
“When you need roughly 200,000 pounds a month, it changes that whole scenario as far as even [being] able to get the beans,” Bill Sarris, the CEO of specialty candy maker Sarris Candies in Canonsburg, Pennsylvania, told news station WTAE.
Sarris has already raised candy prices by 25 percent. “You’re going to raise prices,” Sarris told the news station. “You have to, to maintain your base, and you start looking for efficiencies.”
Cocoa prices have been increasing for the past year, setting new records. The massive shortage and soaring cost of long-term contracts for beans are strangling the cocoa industry. Costs are more than $3,000 more per ton than a year ago.
In New York, cocoa prices reached an all-time high of $12,000 a ton in April, although news of rain in West Africa brought prices down to $9,000 a ton.
Financial Times commodities correspondent Susannah Savage wrote Tuesday from London, “But traders say the rollercoaster moves are putting [the] most strain on longer-term futures contracts, with traders increasingly fearing that both Ghana and Ivory Coast will not be able to deliver the beans they have promised.”
Nicko Debenham, the former head of sustainability at the chocolate giant Barry Callebaut, told The Atlantic’s Yasmin Tayag that “climate change is definitely a challenge” because it makes rainfall, which cacao trees need to grow, less predictable. Also, he said, rising temperatures and more frequent droughts could make some cocoa-growing regions unusable.
One thing is pretty sure as we go forward: not only is sticker shock on the way, but you can expect your candy bars to shrink.
Hershey CEO and President Michele Buck told analysts in a February earnings call that the company expects to raise prices to offset the record-high cocoa prices. “Given where cocoa prices are, we will be using every tool in our toolbox, including pricing, as a way to manage the business,” Buck said.
