Cocoa crisis: Soaring chocolate costs; global heatwaves, disease

As Easter approaches, the shadow of chocolate despair appears yet again. This time, the cause is the skyrocketing cost of cocoa, which has surged to an unprecedented high of $9,000 per metric ton.

These record-breaking prices are attributed to severe heat and drought conditions, especially in key cocoa-producing regions like Africa’s Ivory Coast and Ghana.

“Demand will continue to rise, while supply will continue to fall,” Balamine Koné, chairman of the management committee of the modern farmers’ cooperative in Daloa, Ivory Coast, said. “So naturally, the price will automatically go up.”

“So as much as the price of the raw material rises, the finished product will inevitably suffer the consequences,” Koné added. “I think this is already the case, because some chocolate makers have already started to raise the price of a bar of chocolate a little.”

Crazy stat in here.

The price of cocoa has surpassed more than $9,000 a ton for the first time ever, making it more expensive than copper (which admittedly doesn't taste as good).https://t.co/4pv9VbkWHZ by @megandurisin pic.twitter.com/NVaw8EyrrC

— Tracy Alloway (@tracyalloway) March 25, 2024

The exacerbating effects of the El Niño phenomenon and global warming have led to heatwaves, with temperatures climbing over 100 degrees, putting cocoa crops at risk due to forest fires and the rampant spread of black pod disease.

Fungal black pod disease — a significant concern for cocoa farmers — is only one of several challenges affecting their crops. The spread of this disease is worsened by prolonged periods of wet weather.

In addition to the black pod, farmers in Ghana and the Ivory Coast face the threat of the cacao swollen shoot virus, which is transmitted by insects. The common method to combat this virus involves the complete removal of infected trees, a drastic but necessary measure to protect the health of the remaining cocoa plants and ensure the continuity of cocoa production.

Given that these countries account for more than 60% of the global cocoa supply, the sharp increase in costs is set to make chocolate products more expensive in supermarkets as people head to stock up on festive treats.

Amid these challenges, major chocolate companies, including Lindt & Sprüngli, are contemplating price hikes. This comes in a context where — despite rising costs, chocolate manufacturers like Hershey and Mondelez, the maker of Cadbury eggs — have reported growing profit margins. Hershey’s reached 16.7% in 2023 from 15.8% the previous year and Mondelez saw a jump to 13.8% from 8.6%.

Yet, there’s a glimmer of hope, according to the U.S. National Confectioners Association. With an estimated 92% of Americans planning to enjoy candy and chocolate this Easter, confectionery sales are expected to exceed $5 billion during the season.