Feature: Spilling the Beans – The Cocoa Crisis

With demand rising and cocoa prices soaring as disease, extreme weather and ageing trees hinder production, Jane Wolfe investigates the fallout for stakeholders – from farmers to customers. 

Global cocoa supply is predicted to fall by nearly 11% to 4.449 million tonnes in the 2023/24 season [ICCO] as production in Côte d’Ivoire and Ghana – the two leading producers – has decreased by 467,000 tonnes and 448,000 tonnes respectively over the past three seasons. 

The shortage is due to a combination of factors, including: cacao swollen shoot virus; adverse weather; illegal mining; and ageing trees – it takes ten years for new trees to reach maximum yield. With speculators and stockpiling exacerbating the situation, along with an ever increasing demand, it is unsurprising that prices have skyrocketed, reaching all-time highs in April of US$12,261 per tonne, up 65% from the start of 2024. 

The price hikes will hit smaller brands hardest, with ‘Big Chocolate’ likely to weather the storm more easily. “Smaller brands have less power and control over the cocoa system and less influence over the supply chains,” says Gerrit Wiezoreck, MD of organic chocolate manufacturer EcoFinia (Vivani, iChoc). “They also don’t have the opportunity to store larger stocks of beans. They are therefore more quickly confronted with having to adjust products or increase prices.”

Passing on the cost

With the massive impact on production costs, Wiezoreck predicts the price of chocolate will rise by 20-40%. “After corona and the start of the Ukraine war, which led to an energy crisis and inflation, many brands have absorbed increases, resulting in lower profit margins, so manufacturers are already at the limit. Despite all goodwill, price increases are unavoidable, and most brands have to pass the costs on to customers.”

“Prices of chocolate have definitely crept up,” notes Jon Inder, marketing manager at Greenlife health store, Totnes. “Some bars have increased in price more than once, but at the moment sales haven’t been adversely affected – perhaps because there has been a lot of bad news about the UK economy and some very depressing international news, people are reaching for chocolate to cheer themselves up. Much of our customer base have a reasonable amount of expendable income, and many are prepared to pay a bit more for products that are in line with their principles.” However, he doesn’t discount a tipping point at which sales may start to fall as some customers start to look for cheaper options.

“I think it’s absolutely fine that prices are passed down to the consumer,” he adds. “This is especially true of ethical and Fairtrade brands as the livelihoods of cocoa farmers in the Third World should be protected. And when you think about it, cocoa is a luxury after all. Even though we take low cocoa prices for granted, chocolate never used to be as cheap as it is today (relatively speaking).”

Ethical sourcing

Vivani sources organic cocoa from Latin America, where the brand has long-term partnerships with small organic co-ops, guaranteeing them a fair price. However, Wiezoreck says direct ethical partnerships don’t necessarily help in the current crisis. 

Richard Turner, MD of Mood Foods (Ombar) says that despite having five-year direct agreements with farmers’ co-ops in Ecuador and consistently paying 33% higher than the market’s fair trade price, when the global market price significantly exceeded the regular price it pays, farmers wanted the market price. “It is understandable, but makes it very difficult for us as we had to pay more than double for our chief ingredient. They were being approached by middlemen paying high prices, so farmers sold to them rather than their own co-ops. This is damaging for the co-ops as they can’t then fulfil sales contracts with their customers. The global peak will be fairly short-lived, but the consequences may be longer term.”

“Higher prices offset by lower productivity simply perpetuates the income insecurity that keeps farmers trapped in poverty and threatens the future of cocoa,” says Jon Walker, Fairtrade International senior advisor for cocoa. “To make progress on environmental and living income goals, stable minimum prices and long-term contracts between buyers and cocoa producers are necessary. Strong partnerships and co-investment will be key to weathering the current price shocks and building more sustainable cocoa livelihoods and supply chains.”

Future gazing

Turner believes prices will stay high for a few years at least, ‘not because the industry suddenly wants to pay farmers a proper living wage’, but because of the scarcity of cacao. “Prices will rise to protect profits, but sadly nothing ever seems to change on the ground in the West African countries contributing 60-70% of the world’s cacao. It may lead to more news articles which may increase awareness of what’s happening, but I remain sceptical that it will bring real change where it is so badly needed.”

“If we are honest, chocolate has been too cheap for decades when we consider the effort and costs involved in farming,” Wiezoreck adds. “It is difficult to live on prices below US$2,700 per tonne. If we look at it positively, the crisis has raised awareness of the issue and brought more understanding that cocoa prices need to stabilize at a level from which producers and farmers can live and which keeps chocolate accessible to everyone. That would be the ideal situation.”

By Jane Wolfe, sub-editor and features writer