Cocoa growers continue to experience a myriad of problems, creating a bitter side to this sweet industry. Equatorial countries like Côte d’Ivoire, Ghana, Ecuador, Cameroon, and Nigeria form part of the cocoa belt thanks to their ideal geographical position for growing excellent cocoa.
However, cocoa growers face social, environmental, and economic challenges, threatening their livelihood and the sustainability of cocoa farming. The rising demand for cocoa means that cocoa growers struggle to keep up, while the price of cocoa futures has reached record prices. At $10,000 a ton, it’s more expensive than copper, creating several manufacturer challenges that ultimately affect consumers.
Cocoa Production Challenges
Cocoa production faces huge challenges, meaning that smallholder farmers feel the perpetuating cycle of income insecurity created by cocoa’s pricing. Environmental and socio-economic challenges include:
Deforestation
Cocoa production significantly contributes to deforestation and biodiversity loss. In West Africa, producers like Côte d’Ivoire and Ghana have lost a lot of forest cover to cocoa farm expansion, making sustainability essential. Côte d’Ivoire lost 50% of its forest cover between 1990 and 2015, while Ghana has lost 2% for several decades. These countries have come to a critical juncture regarding sustainability versus cocoa yields.
Climate Change
Cocoa production requires perfect climatic conditions found in a narrow equatorial geographic belt. Cocoa pods bearing the seeds used for cocoa production require abundant rainfall, nutritious soil, and warm temperatures. Its reliance on consistent rainfall patterns makes cocoa particularly vulnerable to the fallout of climate change. Evidence of more severe drought periods, like the recent effects of El Niño in West Africa, interspersed with intense rainfall, threatens to disrupt the delicate environmental balance needed for consistent cocoa cultivation and quality. Besides extremes like droughts and flooding, rising temperatures also increase the occurrence of cocoa diseases and the threat to pollinators.
Use of Fertilizers
Farmers have not benefitted from fertilizers because they constantly remain indebted to ensure a better crop. The war between Russia and Ukraine exacerbated the problem of higher prices. These fertilizers don’t always bring the expected yield increase either. There are several ways to maintain and improve soil health through sustainable practices like agroforestry, which discourages monoculture farming practices. They plant other trees to provide food and shade for diversification and improve farming practices, which means better regional ecology, increased pollinators, and enhanced carbon capture for their soil.
Farm Management and Demographics
Developing countries in West Africa often face a rural exodus when cocoa farming becomes unviable, with these farmers seeking job opportunities elsewhere. They return when prices improve, but re-establishing the neglected land takes time. A positive shift toward more professional farming has occurred in Latin America, where education levels have increased, leading to the wider adoption of agro-economics and agro-ecology. However, even in Latin America, urbanization means that coca farmers are getting older.
Child Labor Practices
Despite efforts to stop it, child labor, especially in West Africa, remains a significant problem in cocoa plantations in 2024. It’s primarily a problem for migrant groups whose children work instead of attending school to help sustain families.
Low Income
Cocoa plantation workers and smallholders, especially in West Africa, often earn less than a living wage. These workers cannot afford basic needs, contributing to their ongoing cycles of poverty and inability to improve their life quality.
The response to these challenges includes various initiatives like the Cocoa and Forest Initiative and Fairtrade Certification—these plan to foster sustainable cocoa farming practices and protect the farmers against price volatility. The levels of success vary, but change is possible, especially when export buyers demand compliance.
Cocoa Manufacturing Challenges
Several challenges and factors are currently driving the chocolate market. Growth projections for the next decade through 2033 are at a CAGR of 6.4%. That means that from the 2023 market value of $149.3 billion, it will reach $273.4.
As consumers become more health-conscious, many have changed their chocolate preferences, opting for dark and organic chocolate without artificial sweeteners. Organic chocolate retains more nutrients like magnesium and antioxidants thanks to being rich in flavonoids, meaning it has several benefits for our health while preventing skin aging. Besides protecting the cardiovascular system and our skin, research has shown that organic chocolate also promotes brain function.
Here are some insights into the dynamics of the chocolate market:
Health-Conscious Consumer Choices and the Chocolate Market Growth
Consumers have become more aware of cocoa’s health benefits. Thye are also making better dietary and lifestyle choices, creating a significant market growth in organic, vegan, low-calorie, sugar-free, and gluten-free chocolate products. Consumers will pay more for these healthier cocoa options. This consumer trend will lead to more product innovations.
Seasonal Demand Dynamics
Religious celebrations and holidays like Easter, Christmas, and Valentine’s Day continue to drive demand since chocolate gifting remains ingrained into various cultures.
Cocoa’s Industrial Application
The use of chocolate in the baking and confection industries continues to drive the cocoa market. The leading players in this market include Mars Incorporated, Ferrero International, Mondelez International Inc., Hershey’s Chocolate, and Nestle, resulting in an expanding industry with many innovations.
Cocoa Price Fluctuations Affect Market Growth
Cocoa’s raw price fluctuations and other ingredients required for the chocolate industry may hamper expansion. The current climatic conditions in West Africa and other economic factors are significant drivers of cocoa price volatility, which impacts the cost of production, leading to inconsistent pricing and lower profit margins for manufacturers. These problems may lead to slower expansion prospects for existing manufacturers and deter new market entrants, affecting the growth of the chocolate manufacturing industry.
Increased Competition Leads to Market Limitations
Increasing competition in the manufacturing industry between its significant players creates price wars and reduced profit margins to retain market share. The drawbacks of price wars mean that these companies focus on their pricing, cutting back on innovation. Therefore, market capture becomes their main priority instead of concentrating on sustainable development strategies.
Final Take
Chocolate preferences differ across the globe. Europe remains dominant with its deeply ingrained chocolate culture and sophisticated consumers. However, chocolate accounts for over 59% of candy sales in North America, with diverse consumer preferences. The Asian market is quickly catching up to these huge markets as consumers there, particularly in China and India, are shifting away from traditional sweets and embracing chocolate.
These insights show that the cocoa industry promises a bright future, particularly as demand for organic, high-quality dark chocolate grows. It’s up to the growers, manufacturers, and consumers to ensure that the world’s beloved treat remains viable for all, with everyone contributing to safeguarding its future.