Chocolate Shortages are Coming: Global Cocoa Bean Prices Hit Record Highs due to Climate Change
The cocoa bean market is facing a shortage that threatens to drive up the price of chocolate and other confectionery as producers face crop diseases due to floods and drought.
According to Bloomberg, cocoa prices have doubled over the past year as producers in West Africa, which produces the bulk of the world's supply, have been hit by extreme weather conditions.
The rains, which contributed to the spread of crop diseases and delayed harvest, were followed by a seasonal drought that could lead to a deterioration in overall production.
Paul Davies, President of the European Cocoa Association, said he does not rule out that prices will rise to $6,000 per tonne. After all, global cocoa supplies have not met demand for the third season in a row.
Sweets have already risen in price for consumers in recent years, and the growth in cocoa sales will hurt large chocolate producers. High commodity prices will limit profit growth this year, Hershey, Pennsylvania-based executives said on Thursday.
So, the worst may be yet to come as chocolate makers will run out of stocks booked earlier, and this will fully account for growth.
While previous gains have encouraged some producers to expand production, new trees may take several years to bear beans.
"We're in a very tight balance" that is likely to remain for another 18 months to three years, Paul Davies added in an interview at Amsterdam Cocoa Week.
Despite the rapid rise in prices, the industry is facing a recession of low profitability for producers. Better income is needed to attract investment in inputs and farm improvements, ensuring more reliable harvests in the future, said Joseph Boahen Aidoo, Chief Executive Officer of the Ghana Cocoa Board, during the event in Amsterdam.
The deforestation regulations recently adopted in the European Union, which come into force at the end of this year, may further increase the price, but in the long run this will be good for the environment.