The global chocolate industry faces a significant challenge as the world’s top cocoa-producing nations, Cote d’Ivoire (Ivory Coast) and Ghana, have been compelled to reduce or halt cocoa processing in major plants. This decision comes in the wake of escalating bean costs, triggered by a combination of extreme weather changes, diseases affecting cocoa pods, and the impacts of the El Nino weather phenomenon. These factors have not only diminished cocoa supplies from these West African countries but also propelled cocoa futures to record highs, signaling a potential surge in chocolate prices worldwide.
Cote d’Ivoire and Ghana, responsible for nearly 60% of global cocoa production, are experiencing unprecedented supply constraints. Afreximbank’s recent report reveals a significant drop in cocoa supplies from both nations, with exports from Cote d’Ivoire and Ghana plummeting by roughly 39% and 35%, respectively. These reductions have pushed cocoa futures on the Intercontinental Exchange (ICE) in New York to soar past historical benchmarks, raising concerns about the sustainability of global chocolate production.
The situation has been exacerbated by El Nino-induced droughts in West Africa, further threatening cocoa supply and prompting analysts to anticipate even higher bean prices. This scenario has led to operational disruptions for major cocoa processors and chocolate manufacturers. For instance, Transcao, a state-owned processor in Ivory Coast, has reported difficulties in purchasing beans at current prices, relying instead on existing stock. Similarly, global trader Cargill temporarily shut down its major processing plant in Ivory Coast due to challenges in sourcing beans.
In Ghana, operational suspensions have plagued the majority of its cocoa processing plants, including the state-owned Cocoa Processing Company (CPC), which is now operating at merely 20% capacity due to the bean shortage. These developments have significant implications for the global chocolate market, with major players like Hershey’s CEO Michele Buck warning of “historic cocoa prices” impacting earnings growth and necessitating price increases for chocolate products in 2024.
As the industry grapples with these challenges, stakeholders are calling for innovative solutions to mitigate supply constraints and stabilize cocoa prices. The current crisis underscores the importance of addressing the underlying issues of climate change, disease management, and supply chain resilience to ensure the long-term sustainability of the cocoa industry and prevent further disruptions in global chocolate production.
Source: My Joy Online
