Why are Chocolate Prices Increasing and How to Control them?
If you have observed an increase in chocolate prices at your local store, you’re not alone.
Chocolate prices have gone up in the last few months because of a surge in cocoa prices, reaching around $10,000 per metric ton in March 2024. Cocoa prices spiked 136% between July 2022 and February 2024, almost twice the highest 50 years ago.
The International Cocoa Organization estimates that global production could drop by around half a million tonnes this year, i.e., 10% of the total global production.
West Africa contributes to almost 80% of the global cacao supply, 38% coming from the Ivory Coast and 19% from Ghana. Thus, hindrances in cacao production in West Africa impact chocolate manufacturing worldwide.
Causes of Increase in Chocolate Prices
Climatic Conditions
Changing climatic conditions, such as El Niño, are the major cause of more expensive cacao, as many African cocoa plants are unable to produce the fruit like before. El Niño leads to drier and warmer climates in the region with unseasonal rainfall, making it difficult for farmers to cultivate cacao consistently.
Disease Spread
Climate shifts in the region have also led to diseases like the Swollen Shoot Virus and Black Pod Disease, which damage land intended for cacao cultivation. Swollen shoot virus is prevalent in West Africa and is spread by mealybugs. At the same time, black pod disease, a fungal infection, can destroy an entire harvest if not treated in time.
Unfair Wages
Furthermore, cacao is one of the most low-paid crops despite being high in value. Farmers are fighting for fair wages, and many struggle to depend on cacao for a living.
Tracey Allen, an Agricultural Commodities Strategist at J.P. Morgan, said, “Cocoa is a market where the grower produces a very high-value good but receives a very low share of the actual value chain. As a result, replanting rates are very low and cocoa trees are ageing.”
A large number of cultivators have lent their land to illegal gold mining. They receive more money from the mine owners with significantly less effort.
One cacao farmer said, “Every month he pays me $500 and I am happy with that because I am not going to make such an amount of money in my cocoa business.”
Old Trees
Considering the low profits in the cacao business, many cacao farmers have not planted new trees since the early 2000s. Nana Arofi Koram, Chief of Nuamakrom, who owns over 3,000 acres of cocoa farms, says that most of the trees were planted in the 1970s and 80s; even the young ones are at least 30 years old. He said, “The trees are stressed, the leaves are yellowing.” Koram further added, “It rains outside of the rainy seasons now. Dry seasons are hotter than they used to be.”
Future of Cacao Production and Chocolate Industry
As consumers are reacting to high prices, some chocolate manufacturers are moving to recipes that use less cacao to maintain retails rates.
For example, some have reduced the size of the chocolate bar instead of increasing prices; a few others have introduced chocolates with more fruits and nuts to reduce cocoa usage.
Though experts believe the prices may still increase, they might stabilize a few months later. The sea surface temperatures are expected to cool down, eventually making way for better rainfall conditions in West Africa.
Tracy Allen from J.P. Morgan mentioned, “This would be supportive of main crop output from over 80% of the world’s cocoa-producing countries, including Côte d’Ivoire and Ghana, paving the way for cocoa prices to ease off the historic highs. Increasing cacao plantings will be critical to boost longer-term supply.”
Sadly, farmers in West Africa are not benefiting from the price spike as the government is paying them according to the previous year’s rates ($1600 to $1800 per tonne). Fairtrade agreements and better compensation to cocoa farmers can help improve the overall situation of cacao production in the region.
Additionally, changing weather conditions in Africa make it challenging to rely on Ghana and Côte d’Ivoire for massive cacao production. Like Brazil and Ecuador, more countries in South America must initiate cacao cultivation to contribute to the global harvest.
